Reviving Your Financial New Year’s Resolutions

It is spring, and typically your thoughts may turn to taking care of your taxes or spring cleaning. How about checking in on your resolutions? Check on those goals and priorities you set back on January 1st, when the calendar pages were blank and the year was shiny and new.

Maybe you are still going strong, sticking to your resolutions and getting things done. Good for you! Or perhaps you ran into some stumbling blocks and your plans got derailed a bit. Maybe you just aren’t seeing the results you hoped for. Here are some easy steps to reboot your resolutions and kick start a new routine.

  • Revisit your goals. Hopefully you wrote them down. You are more likely to stick to resolutions if you do. Are they working for you? Maybe they need some tweaking. (No, I did not mean twerking.)
  • Refine your finances. Did you resolve to get your finances in order? Are you working on paying down your debt? Or maybe you are just fattening up your emergency fund. If money issues are getting you down or you don’t see the progress you hoped for, take some time to refine your goals. Maybe you are trying to do too many things at once. Concentrate on one area of finances like sticking to a doable budget or paying off one credit card at a time. Breaking your goals down into smaller steps will get you back on track.
  • Reward yourself with a small splurge whenever you reach a goal, no matter how small. The victories will motivate and inspire you to keep going. Don’t break the budget, though!
  • Recover from setbacks. Maybe your goals aren’t working out because you encountered some kinks in the plan. If you were working on a budget, maybe your plan was too strict. Figure out what went wrong and the steps to take to overcome them. Keeping a spending journal will help pinpoint problem areas.
  • Research new tools to help you accomplish your goals. If your tried and perhaps tired methods aren’t working, find new ways to do it better. Check out all the free money saving tools on sites like The Dollar Stretcher.com or Bankrate.com. Sign-up for a personal finance newsletter such as Surviving Tough Times and get money savings tips and advice right in your inbox.
  • Reach out to professionals. It doesn’t always cost a fortune to ask for some expert advice. Many banks offer free account overviews, while some churches offer money counseling. You can also check with your local Human Services center for free or low-cost financial services.
  • Reenergize your saving plan. Everyone needs an emergency fund, but it seems like there is never enough money left over to save. Pay yourself first! Make it an ironclad amount, no matter how small, and it will grow over time. Increase the amount you save when your finances start to improve.
  • Refresh with vegetables and fruit. If your goal was to eat better, dive into the fresh spring produce available now. Farmers’ markets across the nation will be opening soon with a new crop of fresh food. It is always cheapest to buy when fruits and vegetables are in season. Better eating means better health, which means less money spent on doctor visits.
  • Reinvest in family time. Maybe you wanted to get closer as a family. One way to do this is to eat meals together. With our busy schedules this isn’t always possible, but committing to one meal a day or even eating together on the weekends will foster a closer relationship with the ones you love the most. Eating at home also saves money.
  • Revamp your routine. Maybe you are stuck in a rut, doing the same things over and over again. Shake things up! Go to a movie in the middle of the week just because or take up a hobby that brings you joy. Life isn’t just about work and chores; you have to live, too.
  • Revise your goals moving forward. Now that you’ve identified some areas to work on, revise your goals so they become an ingrained part of your routine. Good habits are just as easy to get into as bad ones, so concentrate on doing what is best for you and your family.
  • Remind yourself why you set these goals. Picture how much better your life will be when you accomplish them!

Sometimes when we make resolutions, we bite off more than we can chew. Don’t throw in the towel just yet! With some careful revising and revamping, you can reboot your resolutions and make this your best spring ever!

This article by Shaunna Privratsky first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


Guard Your Wallet as Well as your Heart: Romance Scams

Judging by the flowers, stuffed animals, and chocolates on store shelves, Valentine’s Day is upon us. If you or your friends and family members are looking for romance, make sure to be choosy about that next sweetheart because anyone can become a victim of a romance scam. Perhaps your friend meets someone new and they both seem smitten quickly. After a few weeks, the new darling asks your friend to loan them money or wants control over your friend’s bank account. And that’s when you realize that your friend has fallen for a scam instead of a new love. These scams happen when a new love pretends to be interested in you as a way to get your money. In fact, they may not even be who they say they are. 

Romance scammers focus on single people, often older adults who might be more trusting. Widows and widowers, LGBT elders, and isolated single adults are common targets, but scammers look for anyone eager for a new relationship. Romance scams can happen in person, but often happen online through social media or dating websites and smartphone apps.

New romance scam placemat

The CFPB created a new romance scam prevention placemat to help older adults who might fall under the spell of a scam artist. The placemat is part of a series of consumer education placemats that meal service providers deliver to homebound seniors and senior meal sites. The placemats are free to download or order in bulk.

Read and share warning signs of a romance scam

Here are some common scenarios that may be a scam:

  A new love who lives far away asks you to wire them money or share your credit card number with them—even if they say they’ll pay you back.

  Your new romantic interest asks you to sign a document that would give them control of your finances or your house.

  Your new sweetheart asks you to open a new joint account or co-sign a loan with them.

  Your new darling asks for access to your bank or credit card accounts.

Protect yourself and others from romance scams. 

Romance scams are not limited to Valentine’s Day, so be smart about who you connect with, and save yourself the worry about Cupid’s arrow striking your wallet instead of your heart! Here are some ways you can protect yourself and your friends and family from romance scams: 

  • Don’t give a new friend access to your money—including ATM cards, bank accounts, credit cards, or investment accounts. 
  • Place an order of our romance scam prevention and awareness placemats and share with people in your community. The placemats can be used year-round to help educate older adults and others about romance scams. 
  • Report any crimes to your law enforcement’s non-emergency number. If you suspect that someone is a victim of elder abuse or financial exploitation, report it to Adult Protective Services (APS). Find your local APS at eldercare.gov. If you think the person’s safety may be at risk, call 911.
  • Report romance scams and financial abuse to your state attorney general.

This article by was distributed by the Personal Finance Syndication Network.


Looking for a Web Host for Your Small Business?

Running a small company or a home-based business requires laser-like focus. Of course, you want a web presence, but with everything else you have to do, you may decide to hire a web-hosting company to support your website. Web hosts offer an array of options – email, storage, integrated e-commerce, etc. But according to the FTC, there’s another feature you should factor in when comparison-shopping for web hosting services: security.

There’s not a small business in the country that isn’t concerned about the security of its site. Before selecting a web host, the FTC’s Office of Technology Research and Investigation (OTech) advises small businesses to consider the security features the web host offers as part of the package.

OTech just released a study of some of the most popular web hosts used by small businesses. One thing they looked at was whether the web host included SSL/TLS in the set-up of clients’ sites. (SSL/TLS is a method for establishing a safer connection between a user’s computer and a company’s website.) Here’s the good news: Most of them included it as part of the package or offered it for an extra fee. Either way, it’s something small businesses need.

OTech also looked at whether the web hosts included email authentication technologies. Tech types use names life SPF, DKIM, or DMARC, but it boils down to this. Those protective services reduce the risk that a hacker can steal your email address to use it in a phishing scam. OTech learned that only 3 of the 11 sites they looked at included those protections by default.

What should this mean for your small business? When hiring a web host, pay close attention to the security features of available plans. Plans with SSL/TLS and strong email authenticating technologies can better protect your business and your customers. If it’s not clear what the hosting company is offering, call the customer service line and ask. Make sure that the web host you choose shares your commitment to security.

This article by the FTC was distributed by the Personal Finance Syndication Network.

UpRight Law, Kevin Chern, Darren Delafield, and John Morgan, Jr. Sanctioned for Harming Financially Distressed Consumers and Auto Lenders

After a four-day trial, a national consumer bankruptcy law firm and its local partner attorneys were sanctioned and enjoined by the U.S. Bankruptcy Court for the Western District of Virginia for causing “unconscionable” harm to their clients. The court found that the law firm and its attorneys, among other things, systematically engaged in the unauthorized practice of law, provided inadequate representation to consumer debtor clients, and promoted and participated in a scheme to convert auto lenders’ collateral and then misrepresented the nature of that scheme, Director Cliff White of the Executive Office for U.S. Trustees announced today.

On Feb. 12, the U.S. Bankruptcy Court for the Western District of Virginia entered orders in two actions brought by the U.S. Trustee. The court sanctioned Law Solutions Chicago, doing business as “UpRight Law” (UpRight), and its principals $250,000; imposed additional sanctions of $50,000 against UpRight’s managing partner Kevin Chern, and $5,000 each against UpRight’s affiliated partner attorneys Darren Delafield and John C. Morgan Jr.; and ordered UpRight to disgorge all fees collected from the consumer debtors in both bankruptcy cases. The court also revoked UpRight’s bankruptcy filing privileges in the Western District of Virginia for not less than five years, and those of its local partners for 12 and 18 months, respectively. The bankruptcy court also sanctioned Sperro LLC (Sperro), an Indiana towing company that did not respond to the U.S. Trustee Program’s complaints, and ordered the turnover of all funds it received in connection with bankruptcy cases in the district.

“Lawyers who inadequately represent consumer debtors harm not only their clients, but also creditors and the integrity of the bankruptcy system,” said Director White. “The damage caused increases exponentially when they operate nationally, like UpRight. This case is demonstrative of the vigorous enforcement actions that the U.S. Trustee Program can and will take to protect all stakeholders in the bankruptcy process.”

According to trial testimony and evidence presented in court, UpRight operates a website offering legal services to consumers in financial distress. Prospective clients contact UpRight via the Internet and are routed to UpRight’s sales agents. These non-attorney “client consultants” were trained to “close” prospective clients by using high-pressure sales tactics and improperly provided legal advice to encourage them to file for bankruptcy relief. In many instances, UpRight arranged payment plans for its prospective clients to pay bankruptcy-related attorney’s fees and costs over time, and refused to refund fees it collected from its clients for whom UpRight did not file a bankruptcy case. The bankruptcy court found that UpRight had “serious oversight issues” in failing to adequately supervise its salespeople to prevent their unauthorized practice of law, and that UpRight demonstrated a “focus on cash flow over professional responsibility.”

Additionally, UpRight worked in concert with Sperro to implement a program through which UpRight’s clients could have their bankruptcy legal fees paid through a “New Car Custody Program.” The bankruptcy court described the New Car Custody Program as “a scam from the start.” UpRight’s salespeople and attorneys counseled bankruptcy clients to “surrender” vehicles fully encumbered by auto lenders’ liens to Sperro without the lienholders’ consent, and enter into an agreement obligating the clients to pay Sperro the costs of towing the vehicle, transporting it across state lines – often over a long distance – and storing it. UpRight assured its debtor clients that they would not have to pay any fees to Sperro, and in some instances advised its clients to hide their vehicles from lenders looking to repossess them until Sperro could pick up the vehicles.

After Sperro took a vehicle, it asserted a statutory “warehouseman’s lien,” claiming the right to keep the vehicle until the sham towing, transportation, and storage fees were paid. Then it offered the vehicle for sale at auction, despite the auto lender’s continuing security interest. Out of the sale proceeds, Sperro paid the debtor client’s bankruptcy fees directly to UpRight. Sperro kept the rest of the sale proceeds. In some cases, UpRight prepared bankruptcy court filings omitting the debtor clients’ transactions with Sperro.

The “New Car Custody Program” harmed auto lenders by converting collateral in which they had valid security interests. And the bankruptcy court found that UpRight “preyed upon some of the most vulnerable in our society” – its debtor clients – “while they were under great stress” by providing “unconscionable” advice to participate in the Sperro scheme, exposing them to undue risk by causing them to possibly violate the terms of their contracts with their auto lenders as well as state laws.

The cases discussed above are captioned Robbins v. Delafield et al., Adv. No. 16-07024 (Bankr. W.D. Va. Feb. 12, 2018), and Robbins v. Morgan et al., Adv. No. 16-05014 (Bankr. W.D. Va. Feb. 12, 2018).

Director White commended the trial team of Assistant U.S. Trustee Margaret Garber and Trial Attorneys Joel Charboneau, Nick Foster and Joan Swyers for their handling of these matters.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The Program has 21 regions and 92 field office locations. Learn more information on the Program at: https://www.justice.gov/ust.

This article by the Department of Justice was distributed by the Personal Finance Syndication Network.

How to Avoid the Grocery Store for a Month

Looking to find some extra money in your budget without feeling like you’re stretched to your limit? Tired of finding all those random canned or dried goods long past their expiration date in the back of the pantry? If you’re looking to free up some cash and waste less of what you’ve already spent, try a pantry challenge.

The idea of a pantry challenge is to eliminate or greatly reduce your grocery shopping for a specified amount of time by utilizing the food you already have on hand. It’s a great way to free up some cash while cleaning out those cupboards. You’ll be amazed how much money you’ll save and just how much food you already have without even setting foot in the grocery store!

There are no hard and fast rules for a pantry challenge. Only you can decide what will work best for your household. Some go cold turkey with no grocery store visits at all. They eat only what they have with no exceptions. Others still shop but reduce their spending drastically by only purchasing perishable items during the challenge. Do whatever is comfortable for your household as long as it keeps in the spirit of temporarily and drastically reducing your grocery budget.

The length of a pantry challenge can vary depending on how much food you have on hand when you begin. A month seems to be an ideal amount of time for many. Even if you don’t have enough to make it a whole month with no or only minimal grocery shopping, even a few weeks of a pantry challenge can do wonders for your budget.

I did my first pantry challenge back in May and bought only perishables like dairy and produce items for the month. Not only did I save about $250 by drastically reducing my grocery budget, I also refreshed my culinary know-how and my commitment to keeping our grocery budget to a low but reasonably comfortable level.

To begin planning a meal with what was on hand, I chose my protein first and then built the rest of the meal around that. Eggs from the fridge, meat in the freezer, or canned meats or beans got me started and then all I had to do was put together a few side dishes. Sometimes it was easier said than done! The longer I stuck with the pantry challenge, the harder it became to piece together a tasty, well-rounded meal from only the ingredients I already had in the house. There was a night or two where I became tempted to dash to the store just to pick up a few things to make a recipe when I lacked a few key ingredients, but I was able to stick to the plan with a little help.

Online recipe websites saved the day. Websites like AllRecipes.com, Epicurious.com , and SuperCook.com became my go-to sources when I got stuck. These websites allow users to input one or more ingredients and then provide a wide variety of recipes utilizing the given ingredients. The ingredients you input don’t even have to be the star of the meal. I found myself overrun with canned carrots and was at a loss as to what to do with them after my usual gingered honey or butter to jazz them up as a vegetable to accompany the meal. When I searched for “canned carrots” recipes at AllRecipes.com, I suddenly had 833 recipes to choose from, including side dishes, desserts, and hearty main dishes that utilized canned carrots. It took just one quick search to have a bounty of canned carrot recipes right at my fingertips. Utilizing the online recipe websites really helped me to follow and complete my pantry challenge goals.

So, if your wallet needs some fattening up or your pantry needs a slim down, consider trying a pantry challenge tailored to your household’s needs for whatever amount of time feels right to you. You’ll save money by reducing your grocery bill, waste less food, and expand your culinary horizons.

My first pantry challenge was such a huge success that I plan to repeat the challenge twice a year, once in the early summer and then again after the holidays. While I ran into a few challenges along the way when my list of ingredients dwindled, the online recipe websites kept me on track. The extra money in our budget and my cleaner cupboards made it well worth my efforts and I look forward to making a pantry challenge a regular part of our yearly schedule. Try one for yourself and reap the rewards!

This article by Kara Haskins first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


Tax Refund Tips: Understanding refund advance loans and checks

At this time of year, many people are thinking about filing their tax returns and about if and when they will receive their refunds. When filed electronically (e-file), the IRS issues most tax refunds within 21 days. It can take about six weeks to receive a tax refund for a return filed by mail. Using direct deposit for your refund can speed up the process—whether you e-file or mail your return.

Filing your return 

The first step to obtaining your refund is filing your tax return. Free tax preparation assistance is available from several sources such as the IRS website, which can provide you with tax filing forms if you plan to prepare your own return. If you meet certain income thresholds, have disabilities, or have limited English speaking skills, Volunteer Income Tax Assistance (VITA) organizations can provide you with assistance in preparing your own taxes. Learn more about other resources that are available to you

There are also several software packages and websites you can use to prepare and file your tax returns. Some of these products may offer free e-filing.

Using a tax preparer

Another option to file your tax return is to use a commercial tax preparation firm or an individual accountant or tax preparer. These preparers charge a fee to prepare your taxes and there may be e-filing and other fees. Total costs may vary depending on your situation. 

You may be offered a refund anticipation check (RAC) or refund transfer by a tax preparer. If you agree to a RAC, you typically agree to pay a fee to delay paying the price charged for the tax preparation services. The tax preparation charges and the fee for the RAC itself will be deducted from your refund before you receive the money. 

Although you should review the terms of the specific RAC carefully, here is how a RAC typically works:

  1. You have a tax preparer file your tax return.
  2. A temporary bank account is set up in your name.
  3. The refund is deposited directly to that account.
  4. The tax preparation service charges, RAC fees, and any other applicable fees are deducted from the refund amount in the account.
  5. You are paid the remaining refund amount.

RAC fees typically range from $30 to $50. 

Getting your money early

No one can provide you with immediate access to all or a portion of your tax refund before it is issued by the IRS. Some tax preparation firms may offer you an advance, which is a loan against a portion of the estimated amount of your tax refund. This loan is called a refund advance loan (RAL). The amount of the advance loan is typically based on a portion of the full amount of your estimated tax refund minus tax preparation service charges and other fees. This is a short-term loan, usually for less than one month or until the IRS sends your full refund to the tax preparer. 

All tax preparation firms are different. Some firms offer refund advance loans with no fees or interest, but others may charge fees and interest. 

While you should always review the terms of the specific RAL, this is how a RAL typically works:

  1. To access a RAL, you typically must have the tax preparation provider prepare and e-file your return.
  2. The RAL provider reviews your tax return, may consider your income and credit information, and issues your loan.
  3. A temporary bank account is set up in your name by the tax preparation provider.
  4. The refund is deposited directly into that account.
  5. The amount of the RAL, the tax preparation service charge, a RAC fee if you used a RAC to delay the tax preparation service costs, any RAL fees, and any other fees are deducted from the remaining refund amount in the account.
  6. You are paid the remaining refund amount.

In some cases, your RAL may be loaded onto a specific prepaid card rather than being deposited into a bank account. Ask about the fees associated with prepaid cards. 

Making your decision

Keep in mind that refund anticipation checks and refund advance loans do not mean that the IRS will issue your tax refund more quickly. With a refund anticipation check, you pay fees to delay paying tax preparation costs. With a refund advance loan, you borrow the cash now but if charged by the provider, fees and any interest will be taken out of your tax refund. The IRS still needs to review and process your return, so you could be responsible for RAL fees and other charges even if your refund is smaller than expected. As with any financial product or service, consider all fees, charges, and timing to help you make a financial decision that is best for your situation. 

This article by was distributed by the Personal Finance Syndication Network.


FTC Returns Money to Consumers Harmed in Alleged Payday Loan Scheme

The Federal Trade Commission is mailing 72,836 checks totaling more than $2.9 million to people who lost money to an alleged scheme that trapped them into payday loans they never authorized or whose terms were deceptive.

According to the FTC, CWB Services, LLC and related defendants used consumer information from online lead generators and data brokers to create fake payday loan agreements. After depositing money into people’s accounts without their permission, they withdrew recurring “finance” charges every two weeks without applying any of the payments to the supposed loan. In some instances, consumers applied for payday loans, but the defendants charged them more than they said they would. Under settlements with the FTC, the defendants are banned from the consumer lending business.

The average refund amount is $40.61. Recipients should deposit or cash checks within 60 days. The FTC never requires people to pay money or provide account information to cash a refund check. If recipients have questions about the case, they should contact the FTC’s refund administrator, Epiq Systems, Inc., at 888-521-5208.

FTC law enforcement actions led to more than $6.4 billion in refunds for consumers in a one-year period between July 2016 and June 2017. To learn more about the FTC’s refund program, visit www.ftc.gov/refunds.

The Federal Trade Commission works to promote competition, and protect and educate consumers.

This article by the FTC was distributed by the Personal Finance Syndication Network.

Credit One Bank Debt Settlement and Payment Plans

If you find yourself unable to keep up with bills, and you get to the point where your payments with Credit One Bank are going to be late, it may be time to look into your options.

Credit One is closer to the sub prime credit card category. They are a great option for rebuilding or starting to build your credit. The credit limits they offer are generally on the low side, and the interest rates on the cards not as competitive. And for that reason, lets start with some conventional wisdom.

Credit One

Can you afford to pay all of your monthly bills and still have enough left to apply $50 (or so) to your highest interest credit card? If so, look into using a debt snowball strategy to paying off debt quickly.

Getting Credit One to lower your interest rate.

If you cannot apply the debt snowball method, what if you were to get Credit One to reduce your interest rate? In fact, you may want to look at your options for lowering your interest rates on all of your credit cards.

Get Your Debt Settlement Estimate

Get a debt settlement estimate and settle your debt using our platform without ever picking up the phone.

Get Estimate

First off, you can call Credit one and talk to them about things getting tight and see if you qualify for a temporary or long term hardship repayment plan. Most banks will listen to your financial hardship and see if they can get you qualified for lower monthly payments for a few months, and all the way through paying the balance off over a 5 year period.

If Credit One cannot qualify you for any internal hardship plan while you are current with payments, they may offer one to you after you have missed a payment or two.

You can also get monthly payment reductions from Credit One by working with a nonprofit credit counseling agency.

Settling with Credit One Bank.

If you have passed the point of no return with Credit One it may be time to look at your options to settle for less than what you owe. You can target your settlements with Credit One for less than 50% of the balance once you are more than 5 months late.

Credit One tends to offer lower credit limits. This can make it an easier path to raising the money you need to settle with them. If you are thinking of negotiating with Credit One on your own, be sure to check out my 10 part series about how to negotiate with your banks. If you would like to have a professional negotiate for you, I can help you learn more about that when you submit for debt help.

You may end up dealing with an outside debt collection agency that purchased the legal rights to your debt from Credit One. Currently, Midland Funding is purchasing unpaid credit cards from Credit One. Check out that page for options when dealing with Midland. They are one of the easier debt buyers to deal with, and they have a credit reporting policy like no other collection agency at this time (in a beneficial to you way).

If you have more than just Credit One to contend with, it may be better to submit for help and see how we prioritize your creditors. It is free to get a debt settlement summary, and it can be important to prioritize the money you have in order to settle for the best savings, or to eliminate collection risks. And that can mean Credit One, while being a smaller balance, and a quicker win, should be 3rd, or even later down the line for money.

Get a Settlement Estimate

If you’ve fallen behind on your payments, then we can help you settle your debts with your creditor directly through our platform.

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Get a Free Consultation

Getting out of debt is confusing. Signup today to get a free debt consultation and we’ll show you your best path out of debt and help you get there.

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This article by Consumer Recovery Network first appeared here and was distributed by the Personal Finance Syndication Network.


The FTC Will Never Ask You to Send Money

If someone claiming to be with the Federal Trade Commission (FTC) contacts you and asks you to send money, it’s a scam. Do not pay. Report it. Spread the word to your family and friends.

We’ve received reports that imposters are calling, emailing, even texting or faxing, and pretending to be with the FTC, in an attempt to gain your trust and to steal your hard-earned money. They’re contacting people about fake prize winnings, grants, or refunds, or saying you’re in trouble and need to pay delinquent accounts or fees. Their goal is to either excite or scare you into sending money. The truth is, the FTC does not call, email, text, or fax consumers to ask for payment. Those are scams. In fact, the Department of Justicejust announcedthat two scammers who impersonated the FTC (and the SEC) were found guilty of scamming people out of $10 million.

The FTC does distribute money to people after suing entities for unlawful practices. In fact, according to our 2017 Annual Report, 6.28 million people received checks from the FTC between July 2016 and June 2017.

However, the FTC will NEVER ask you to send money or provide bank account information to get your money back. If you are entitled to a refund from a FTC lawsuit, you will usually receive a check or claim form with details about the case. The case will be listed in our chart of recent cases resulting in refunds. You can call the number associated with the case on our website if you have any questions.

Imposters won’t stop at just using the FTC’s name. They’ll use the names of any people or organizations you trust. Dealing with imposters in real time can be difficult. But it’s important to take note of not just the story that they tell, but also how they ask you to pay. If they ask you to pay by wiring them money, getting iTunes cards, or putting money on a MoneyPak, Vanilla Reload, or Reloadit card, it’s a scam.

If someone impersonating the FTC has contacted you, do not pay, report it, and spread the word. It may help someone close to you avoid a scam.

This article by the FTC was distributed by the Personal Finance Syndication Network.

Pros and Cons of Chapter 13 Bankruptcy

If you make more than your state’s median income and are looking to clear away high, unsustainable debts through bankruptcy, and you have too much disposable income to qualify for a Chapter 7 bankruptcy, a Chapter 13 bankruptcy may be a good option for you.

With a Chapter 13 bankruptcy, your debts are reorganized and you often pay just portions of your outstanding debts to your creditors and you’re also able to keep your assets. It’s called Chapter 13 because it is contained within Chapter 13 of the U.S. Bankruptcy code.

Here’s a closer look at the pros and cons of Chapter 13 bankruptcy.

Also known as a wage earner’s plan and re-organization bankruptcy, a Chapter 13 bankruptcy allows consumers to repay some of the debts they owe through a repayment plan lasting either 3 or 5 years. Once a repayment plan is complete, all other debts that are eligible for discharge during bankruptcy will be cleared away. A key advantage of filing for Chapter 13 is that you get to hold on to your assets, so if you’re worried about your nonexempt assets and property being at risk, then it may be an option to consider.

Chapter 13

A Chapter 13 bankruptcy is noted on your credit record for up to seven years, three years less than with a Chapter 7 bankruptcy filing. In both instances, a public notice item of the bankruptcy is listed on your credit report. Individual accounts listed in your bankruptcy proceeding will be removed from your credit report within 7 years as well.

From a credit perspective, a Chapter 13 bankruptcy is more favorable than a Chapter 7 bankruptcy. It makes sense because with a Chapter 13 bankruptcy you are agreeing to re-organize and pay back a portion of the debts that you owe, whereas with a Chapter 7 bankruptcy, in many instances, debts may be cancelled without payment to creditors.

From a dollar and cents point of view, one disadvantage of a Chapter 13 bankruptcy is you’ll likely pay back more of the debts that you owe than you would in a Chapter 7 bankruptcy, but you also make good in even a small way on all the debts that you owe. All your creditors are likely to receive at least some payment from you when you file a Chapter 13 bankruptcy.

How Chapter 13 Repayment Plans Work

With a Chapter 13 bankruptcy repayment plan, you do agree to pay some debts in their entirety. These debts include child support, alimony, wages owed to employees and some taxes. Your repayment plan also includes your current secured debts such as auto and home loans and any overdue amounts owed on these loans.

After making these payments, any income that you have left gets applied to your unsecured debts such as credit cards, medical bills, and personal loans. With a Chapter 13, you won’t need to pay your unsecured debts in full, but you will need to show you are applying your remaining disposable income to this debt.

This type of bankruptcy is designed for consumers to re-organize their debts and pay back a portion of what they owe with future income, while maintaining their assets.

If you’re unable to complete your repayment plan in a Chapter 13 bankruptcy due to financial hardship such as being laid off from a job or a medical emergency, your bankruptcy trustee may modify your repayment plan or the court may allow you to discharge your debts due to hardship. Another option if you are unable to complete a repayment plan through a Chapter 13 bankruptcy is to convert to a Chapter 7 bankruptcy.

Lowering Your Repayment Plan

Claiming exemptions on assets and property will help to lower the amount that you’ll pay your creditors through a Chapter 13 bankruptcy proceeding. These exemptions vary from state to state, so it’s important to research the property exemptions you may claim in your state when filing. It will lessen the amount you ultimately owe your creditors and make your repayment plan more manageable.

There are federal exemptions for property and assets to consider, as well. You may wish to consult a local bankruptcy attorney to discuss the best exemption strategies for you as you contemplate bankruptcy.

Exceptions to the Chapter 7 Means Test

The U.S. Congress was concerned that too many higher income consumers were wiping away debts through Chapter 7 bankruptcy instead of paying back parts of their debts through a Chapter 13 bankruptcy proceeding, so in 2005, a law was passed establishing a means test for qualifying for Chapter 7.

Those who make less than the median income in their state may file a Chapter 7 bankruptcy without taking a means test, and those who make more than the median income must pass a means test first, but there are exceptions to this rule.

If 50 percent of your debts are non-consumer debts such as business debts, you won’t need to take a means test to qualify for Chapter 7 bankruptcy even if your income is above the state median. Disabled veterans, members of the National Guard and military reserve also may qualify for exceptions to the means test.

Everyone else earning more than the median income in the states where they live must take a means test to qualify for Chapter 7 bankruptcy. If it’s determined that you have too much disposable income, you won’t qualify, but Chapter 13 may still be a viable option for you.

Before qualifying for a Chapter 13 bankruptcy, you must complete credit counseling with an approved credit counseling agency. To find one near you, visit www.usdoj.gov/ust and scroll down to “Credit Counseling and Debtor Education”, or ask your bankruptcy attorney who they recommend to their clients.

Chapter 13 isn’t for Businesses

Businesses are unable to file a Chapter 13 bankruptcy in order to re-organize debt and should look to a Chapter 11 bankruptcy for that purpose instead. If you happen to own a business, you can still file a Chapter 13 bankruptcy as an individual and you can include business-related debts for which you are personally liable.

There are two exceptions. Stockbrokers and commodity brokers are not allowed to file a Chapter 13 bankruptcy for their personal debts.

This article by Consumer Recovery Network first appeared here and was distributed by the Personal Finance Syndication Network.