Bankruptcy Court Appeal Rules in Favor of Discharging Some Federal Student Loan Debt

Back at the end of 2016 a Kansas bankruptcy judge ruled on this bankruptcy case that included federal student loan debt Educational Credit Management Corporation was responsible for.

This truth is starkly illustrated in the case of Murray v. Educational Credit Management Corporation, which was decided in December 2016 by a Kansas bankruptcy judge. At the time they filed for bankruptcy, Alan and Catherine Murray owed $311,000 in student-loan debt, even though they had only borrowed about $77,000. Thus 75 percent of their total debt represented interest on their loans, which had accrued over almost 20 years at an annual rate of 9 percent.

Judge Somers ruled “the Murrays had sufficient income to pay off the principle of their loan and still maintain a minimal standard of living. Thus, he crafted a remarkably sensible ruling whereby the interest on the Murrays’ debt was discharged but not the principle. The Murrays are still obligated to pay the $77,000 they borrowed back in the 1990s plus future interest on this amount, which would begin accruing at the rate of 9 percent commencing on the date of the court’s judgment.”

ECMC didn’t agree and appealed the case.

The case highlighted the absurdity of the income driven repayment programs to pay off debt when the income based payment is going to be utterly insufficient to repay the debt. In this case the Judge found the accruing interest alone of nearly $2,000 a month was never going to be touched with a qualifying income based payment.

The appeal was finalized on September 22, 2017 by Judge Murguia who upheld the bankruptcy Judge Somers in his determination approving discharge of the accrued interest.

What I find fascinating about this case is the logical hopelessness of requiring a debtor to enroll in an income driven repayment program for federal student loan debt and not give them a fresh start as bankruptcy intended. Why let a debtor continue to linger with a clearly unmanageable debt only to face a future tax liability or heavy yoke for the rest of their lives? The reality is there is no good reason and it seems to fly in the face of the legal intention of bankruptcy for consumers.

On appeal, Judge Murguia stated, “The court also finds that Judge Somers correctly decided that debtors cannot maintain a minimal standard of living if forced to repay their loans in full, but that they could maintain a minimal standard of living if required to repay the principal balance on the loans.” He also noted even at those levels the available monthly income and expense allowed by the court, “does not include funds for emergencies, savings, retirement, or vacations; it only allocates $50 for entertainment apart from home television, and would provide debtors a minimal standard of living.”

Even though ECMC wanted the debtors to enter an income based repayment plan they would never be able to satisfy Judge Murguia agreed with the findings of the original bankruptcy judge, “Judge Somers also noted that although the IBR programs provide for loan forgiveness after 25 years, there is the potential that that forgiveness would come with a large tax liability, thwarting the purpose of providing a fresh start and potentially saddling defendants with a new tax debt in their early seventies.”

The Appeal Judge also made a very logical statement that should be the standard in future cases, “The court declines to make any decision regarding the appropriateness of considering IBRs in other cases. But the court does finds that the IBR plans would thwart these debtors’ chance at a fresh start, under the facts of this case.” And that’s a good standard to shoot for at this time, individual case consideration instead of a blanket denial of discharge.

Finally, Judge Murguia found, “ECMC’s brief argues that none of debtors’ loan, principal or interest, should be discharged, primarily arguing that even though debtors may not be able to reduce interest, they should be required to participate in an IBR plan of some type and pay on their loan. The court disagrees. Under the circumstances of this case, debtors’ payments under an IBR plan are insufficient even to stop the accrual of additional interest, and such payments directly contravene the purpose of bankruptcy. Judge Somers did not discharge all of debtors’ student loans. He discharged that portion—the interest—that had become an undue hardship on debtors, denying them a fresh start. Debtors will still have to repay the principal balance on their student loans.”

This case is a good example of what is needed in modern bankruptcy involving student loans – logic.

You can read the full ruling here.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Out of Reach Financial Goals

According to John Greenleaf Whittier, “For all sad words of tongue and pen, the saddest are these, ‘It might have been.'”

I disagree. The saddest words are “I can’t.” How often do we hear that phrase employed, either by ourselves or others, when it comes to money. I can’t afford to repay my debts. I’ll never get out of this apartment and into a house. I’ll never be able to go to college/pay off my existing college loans.

This is a defeatist attitude, but it is so easy for us to fall into, consciously or unconsciously. The good news is that once we catch ourselves stuck in this mindset, we can free ourselves from this psychological cage. Here are steps to get you started.

Get clarity by flipping the narrative.

Let’s say you see a car commercial or hear a co-worker talking about how they just bought a newer, used car. Your reaction might be, “Must be nice! I’d never be able to afford anything like that.” Instead of focusing on what you can’t have, concentrate on what it is you want with as much specificity as possible, as in, “I want to purchase a safer car” or “I want to buy a more gas efficient vehicle.”

Doing this allows you to reflect on whether the item in question is an actual desire as opposed to something that just sounds nice in theory. Do you want a new car because you genuinely pine for a roomier ride or is it because you wish for the financial freedom that would accommodate such purchases? Maybe it isn’t even that you truly desire a new car. Instead, maybe it’s that you really want a fresher paint job or less ratty interior. This is a distinction with a difference!

Jealousy is often referred to as the “green monster” and is considered a vice, but even vices can be instructive! Think of the last time you were jealous of someone or something. What was it you wished you had but didn’t?

Calculate the costs.

Let’s continue using a new (or at least new to you) car as our dream goal (even if that isn’t your particular dream). Before you dismiss buying a newer vehicle for being too expensive, do you know how much your dream vehicle would actually cost? Or are you dismissing it because of how much you think it will cost?

Do some research, so you can put a realistic price tag on your dream. Break down all expenses to know the exact number of dollars and cents you need. What’s the total amount needed for the purchase price, registration, maintenance, and insurance?

Consider all your options.

Now do away with conventional thinking and brainstorm all possible options. Can you buy a previously owned car? What’s the threshold for the number of miles on the car that you’re okay with? Instead of going to a dealership or car lot, are you comfortable buying for sale by owner? Can you save up enough cash to make the purchase outright, both allowing you to ask for a cash discount and do away with the pricy financing? What about other discounts? Some places offer a military discount or rebate. Your credit union or employer may offer similar discounts or lower insurance rates.

It never hurts to ask. Sometimes the discount you’re asking about may not be available, but that prompts the sales person to tell you about discounts that are available or can lead to other cost-savings tips.

Ask if you’re willing to accept the trade-offs.

Now that you have hard figures, ask yourself if what you’ll be giving up is worth what you’re going to gain. Are you prepared to cut back, think radically, work harder, and make do longer? If the answer to any of those questions is “no,” chances are you don’t truly want your dream. You may just like the idea of it.

We are often our own biggest stumbling block, but that’s hard to admit, even to ourselves. If you aren’t willing to do whatever it takes to realize your dream, question why not.

Develop a plan.

It can be helpful to break your goal down into actionable, bite-sized pieces instead of just a lump sum. Instead of thinking I need to save a lump sum of $8000 for a car, think of it in more manageable terms like saving $7500 for a car, $175 for registration, and $375 for insurance.

The word “budget” has negative connotations for many people, as it makes them bristle and feel constrained. I know it does for me! If that’s true of you too, call your money plan a different name, such as “Sitting Pretty” or the “Never Say Die Plan.”

Change your mind set.

It may be true that you can’t have your dream right now, but just because you can’t currently afford your dream, it doesn’t mean you won’t ever be able to afford it. It’s not that you can’t ever realize your dream. Instead, it’s just that you can’t realize it right now.

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

CFPB Takes Action Against Top Notch Funding for Lying in Loan Offers to NFL Players, Deepwater Horizon Victims, and 9/11 First Responders

The Consumer Financial Protection Bureau (CFPB) took action against Top Notch Funding and two individuals associated with the company for lying in loan offerings to consumers who were awaiting payment from settlements in legal cases or from victim-compensation funds. These consumers included former National Football League (NFL) players suffering from neurological disorders, victims of the Deepwater Horizon oil-rig disaster, and 9/11 first responders. In a complaint and proposed consent order filed in federal court, the CFPB is seeking to prevent Top Notch, its owner Rory Donadio, and his business associate John “Gene” Cavalli from offering or providing such products in the future, and to require them to pay $70,000 in civil money penalties to the CFPB’s Civil Penalty Fund. The proposed penalties take into account the defendants’ inability to pay more.

“It is reprehensible that Top Notch and its owner sought to scam NFL concussion victims, 9/11 heroes, and others to turn a quick profit,” said CFPB Director Richard Cordray. “We allege that this company, its owner, and its associate misled vulnerable consumers by lying about the terms of the deals they offered.  Our proposed order seeks to knock these parties out of this business altogether, and impose penalties on them.”

Top Notch, owned and operated by Donadio, is a company headquartered in Verona, New Jersey that marketed loans to consumers. Cavalli is Donadio’s business associate, and is based in New York. Top Notch marketed to consumers who were entitled to payments from legal settlements or victim-compensation funds. These consumers included former NFL players who are entitled to receive money from a settlement with the National Football League for injuries suffered while playing professional football, individuals who were harmed by the Deepwater Horizon oil-rig accident and are entitled to payouts from settlements related to that incident, and first responders injured as a result of  the Sept. 11, 2001 World Trade Center attack who were entitled to payments from the Zadroga Fund established by Congress.

The CFPB alleges that the company, through Donadio and Cavalli, offered loans to these settlement-fund and victim-compensation-fund recipients while lying about the cost of the loans in the long run, among other important facts. The CFPB’s complaint, filed in federal court in the Southern District of New York, alleges that in marketing the loans, Top Notch, Donadio, and Cavalli engaged in deceptive acts and practices, in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the CFPB alleges that Top Notch, Donadio, and Cavalli:

  • Deceived consumers into thinking that Top Notch was a lender: Top Notch represented to consumers that it was a lender that could provide loans. In fact, Top Notch merely served as a broker for others, taking a commission when a consumer’s transaction was completed.
  • Lied about the cost of loans: Top Notch told consumers that they could obtain loans with a low “2% Annual Percentage Rate” or “1% interest rate.” But every loan that Top Notch brokered was significantly more expensive for consumers. A typical loan that Top Notch brokered carried a rate greater than 20 percent.
  •  Lied about how quickly they could receive funds: Top Notch told consumers they could receive funds almost immediately—in many cases in as little as an hour. But when Top Notch did successfully broker a loan, it always took longer—typically weeks—for consumers to receive their funds.
  •  Lied about the size and resources of the company: Top Notch represented to consumers that the company had attorneys and accountants on staff and offices in all 50 states. In fact, the company had no offices and no attorneys or accountants on its staff.

Enforcement action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions and individuals violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB’s order, if approved by the court, would require:

  •  Top Notch, Donadio, and Cavalli to stop offering these types of loans: If approved by the court, the consent order would prohibit Top Notch, Donadio, and Cavalli from offering or providing loans or advances to consumers awaiting payments from settlements or victim-compensation funds in the future.
  •  Top Notch, Donadio, and Cavalli to pay $70,000: The consent order would require Top Notch and its owner Rory Donadio to jointly pay a $60,000 civil penalty to the CFPB’s Civil Penalty Fund, and Cavalli to pay $10,000 to the CFPB’s Civil Penalty Fund. These penalties take into account defendants’ inability to pay more.

A copy of the proposed consent order filed in federal district court is available at:

A copy of the complaint filed in federal district court is available at:


The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit

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

Court Finds Defendants Lied to Consumers When Selling Legal Services for Mortgage Relief

Falsely claimed ‘mass joinder’ lawsuits would void mortgage or get consumers $75,000 cash

A federal court has found that Jeremy Foti and Charles Marshall, acting through Brookstone Law and Advantis Law, “made numerous false and/or misleading material statements to consumers” when selling legal services for purported mortgage relief.

The court found that Foti and Marshall controlled or participated in the scheme, knew they were deceiving consumers, and illegally took more than $18 million from them. The FTC has asked the court to impose monetary judgments on them and ban them from any debt relief activities in the future.

The court found that the defendants falsely told homeowners they could get “at least $75,000” or their homes “free and clear” through so-called mass joinder lawsuits against their mortgagors. These suits combined hundreds of consumers in the same matter; however, unlike class-action lawsuits, in the event of trial each plaintiff in a mass joinder suit would have to prove his or her case separately. The defendants had never prevailed in such a suit.

As a result of the court’s decision, litigation against all of the defendants in this matter has now been resolved. Earlier this year, Vito Torchia and R. Geoffrey Broderick stipulated to orders banning them from debt relief work in the future, including a judgment of almost $2 million against Broderick. Damian Kutzner and Jonathan Tarkowski also stipulated to orders, with Kutzner agreeing to a judgment of more than $18 million.

The Commission votes approving the stipulated final orders against Kutzner, Tarkowski, Torchia and Broderick were unanimous. The U.S. District Court for the Central District of California entered orders against Kutzner on January 9, 2017, Tarkowski on January 9, 2017, Torchia on February 15, 2016, Broderick on April 14, 2017, Brookstone and Advantis on August 28, 2017, and Foti and Marshall on September 5, 2017.

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

Understand your Options: Tips for student loan borrowers with disabilities

Student loan borrowers with disabilities face unique challenges when repaying student loan debt. Borrowers with disabilities complain to the Bureau about servicing breakdowns and debt collection obstacles. These breakdowns can increase borrowers’ financial distress. Servicing breakdowns that lead to delinquency and default can be particularly devastating for borrowers with disabilities. This is because certain of these borrowers may be eligible to have their loans discharged. However, these borrowers report difficulties navigating the discharge process or getting help from their student loan servicer.

People with disabilities have an increased likelihood of experiencing financial insecurity. Student loan obligations may contribute to this financial distress. However, federal student loans have a range of protections under federal law. These protections are designed to prevent borrowers from struggling with unaffordable monthly payments. For example, nearly every federal student loan borrower has the right to make income-driven payments. Income-driven payments are usually not more than 10 or 15 percent of a borrower’s discretionary income. This protection is crucial for borrowers with disabilities, as they are more than twice as likely to be unemployed than those without disabilities. 

Additionally, borrowers with total and permanent disabilities have the right to have their entire federal student loan balance forgiven. This loan forgiveness occurs through a process called Total and Permanent Disability Discharge (TPD discharge). Borrowers eligible for TPD discharge may not be aware of their eligibility. Last year, the Department of Education identified approximately 387,000 borrowers with severe disabilities that were eligible for TPD discharge. The Department of Education identified these borrowers through a data match with the Social Security Administration (SSA). 179,000 of the identified borrowers were in default. Borrowers in default on federal student loans are at risk of having their Social Security benefits offset. Borrowers with total and permanent disabilities who are struggling with federal student loan debt can avoid default by seeking a TPD discharge. Due to the tax implications of loan forgiveness, the discharge process cannot be applied automatically. 

To receive TPD discharge, a borrower must first prove his or her disability. Most borrowers can prove their disability by either providing (1) a doctor’s certification of total and permanent disability, or (2) specific documentation from SSA that indicates a current disability. Veterans with a service-connected disability can provide documentation from the Department of Veterans Affairs (VA) demonstrating their disability determination. After borrowers are approved for TPD discharge, they remain in a “review period” for three years. Discharged loan balances can be reinstated if the borrower’s income increases or disability determination changes during the review period.  

Borrowers with disabilities who are eligible for loan discharge may still struggle to get relief from the burden of their student loans. Borrowers complain to the Bureau about problems related to every stage of the TPD discharge process. People with severe disabilities may receive treatment from multiple medical professionals. These medical professional may have different specialties. Borrowers trying to prove their disability through a doctor’s certification complain that a single doctor may not be able to adequately certify the severity of a borrower’s disability status. Other borrowers complain that their discharge application may be denied because the doctor’s explanation of the disability doesn’t include the appropriate description of the disability. 

Older borrowers may rely on their status as Social Security disability beneficiaries to prove their eligibility for discharge. These borrowers also complain about discharge hurdles. When these borrowers reach their full retirement age according to SSA, their benefits are automatically converted into “retirement” benefits. As a result, they will no longer receive documentation from SSA that states their current disability status. This transition of benefits can occur while a borrower’s TPD discharge is in a review period. When this happens, borrowers complain that it is unclear how to continually prove their current disability status. Borrowers also complain that their servicer may provide little guidance on additional options for proving their disability status. Borrowers report having their loan balances reinstated because they did not understand how to adequately prove their continued disability. 

Borrowers seeking to prove their disability status without using their Social Security disability benefits can request a Benefits Planning Query (BPQY) from SSA. A BPQY includes a documented history of benefits received from SSA. However, borrowers complain that obtaining their BPQY can be costly or burdensome. For example, one borrower complained that she cannot afford the fee SSA charges to provide a copy of her BPQY. This borrower states that, as a result, she cannot apply for TPD discharge. 

Federal student loan borrowers with total and permanent disabilities aren’t the only ones facing problems. Unlike federal student loans, there is no right under federal law to an affordable private student loan payment. Private student loan borrowers with disabilities tell us that they cannot afford their student loan payments because of limited or inability to work. These borrowers complain that there are limited options for modified repayment of their student loans. 

Some private lenders will forgive a student loan if the primary borrower becomes totally and permanently disabled. Borrowers with student loans from these lenders complain that the forgiveness process can be lengthy and confusing. Borrowers also report that the requirements around providing proof of their disability may be unclear. Other borrowers with disabilities complain that their lenders may not offer any options for loan forgiveness.

If you are disabled and struggling to repay your student loans, here are some tips that can help you as you navigate your repayment options.

1. Have current proof of your disability. Whether you have private or federal student loans, you will need complete and up-to-date proof of your total and permanent disability. If you have federal student loans, you have three options for proof:

  • Physician certification. Ask your doctor for a certification documenting your disability. The certification must show that your disability is total and permanent, meaning that your disability prevents you from working for income, and either has (1) lasted continuously for the last five years, (2) can be expected to last continually for at least five years, or (3) is terminal. You need to submit your discharge application within 90 days of the certification being signed and dated. If you have federal student loans, your doctor can certify your disability using Section 4 of this form
  • Social Security award letter. If you receive Social Security disability insurance (SSDI), you can prove your disability using your SSA award letter. The SSA letter must indicate that your next scheduled disability review will be within five to seven years of your most recent disability determination. If you previously received Social Security disability benefits but now receive retirement benefits, or your benefits notice does not indicate when your next disability review will occur, you can prove your disability by submitting a copy of your BPQY. You can request a copy of your BPQY from your local Social Security Administration office. You can also  call 1-800-772-1213 and request to be mailed a copy of your BPQY. 
  • Veteran disability determination. If you are a veteran with a service-connected disability, you can provide a letter from the Department of Veterans Affairs documenting your disability rating and stating you are unable to work as a result of that disability. 

If you have private student loans, contact your student loan servicer to ask how to prove your disability. Many private student lenders have their own forms to document a disability. 

2. Apply as soon as you can. If you think you may be eligible for disability discharge, contact your servicer as soon as you can. If you have federal student loans, your servicer should automatically place your loans in deferment. This deferment means that will not have to make payments while your application is under review. If your loan is in default and your Social Security benefits are being offset, the offset can be suspended while your discharge application is reviewed. Some private student lenders may also suspend monthly payments while your application is reviewed. Keep in mind that interest will still accrue on private student loans. The interest may be capitalized if your discharge application is denied.

3. Ask about other repayment options. If you are not eligible for a loan discharge due to a total and permanent disability, you might be eligible for a modified repayment plan depending on what type of loan you have. Nearly every federal student loan borrower can enroll in an income-driven repayment plan. An income-driven repayment plan sets monthly payments based on borrowers’ income, even if they have no income. If you have private student loans but do not have the option of disability discharge, reach out to your servicer and ask about alternative repayment options. Here is some more information that can help you as you work with your servicer

4. Keep checking in with your servicer until your review period is complete. After your TPD discharge application for federal student loans is approved, you should stay in contact with your servicer for at least the next three years. If at any point during this three-year review period you start receiving an income or your disability determination changes, you may be required to repay the balance of the discharged loan. Your servicer may ask you for annual updates on your income, so be sure to provide your servicer with your latest address and phone number. There is no review period for veterans who receive loan forgiveness due to a service-connected disability. Remember that there may be tax implications related to the discharge of a student loan. Discharged federal student loans will be reported to the Internal Revenue Service (IRS) as income. If you have private student loans, ask your servicer for more information on how your debt will be handled after discharge.   

Check out our tips to help student loan borrowers navigate problems with their student loans. If you are having problems with your student loans, visit our Repay Student Debt tool. This interactive resource offers a step-by-step guide to show borrowers their repayment options, especially when facing default. Student loan borrowers experiencing problems related to student loans or debt collection can also submit a complaint to the CFPB.

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

What’s Affiliate Marketing? Should I Care?

Many of the ads you see online are created by marketers who are paid each time you click on their ad. And if that click takes you to a website where you sign up to try a product or you make a purchase, the marketer may get paid even more. These are affiliate marketers. They are hired by the owner of the product to promote it on social media, on websites, and through email. Sometimes networks of affiliate marketers negotiate the rate marketers will get paid per click, per sign-up to try the product, and per purchase. Everyone from the merchant to the affiliate marketers gets a cut. And all these people may be tracking you, too, just from that one first click.

Affiliate marketing is a good way to promote a product or service as long as the ad is truthful. The problem is that some dishonest affiliate marketers put out ads with exaggerated claims or misleading information to get people to click. They may say anything to get you to click on their ad because they have an incentive – getting paid. Check out the infographic we created to explain this.

Sometimes deceptive ads could be bait for a scam. Take, for example, a low-cost trial scam that the FTC stopped recently. People who clicked on ads placed by affiliate marketers for a “free” trial ended up on a website that offered the product trial for $1.03. That amount is not much, but it’s not free. In fact, people who bought the trial for $1.03 ended up being charged almost $200 monthly for a second product they didn’t even want. We explained what happened in this infographic.

So, the next time you see an online ad, pause before clicking. Ask yourself:

  • How do I know who’s truly behind the ad?
  • Do I know if they’re being truthful? Is someone being paid to get me to click?
  • Who is tracking me when I click on the ad? And who is getting that information about me?

And if the ad says one price, but when you click on it you land on a website that says something else, you may have landed on a scam. No matter what, check your bills to be sure you’re not being scammed.

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

You Can Better Understand Affiliate Marketing in Online Advertising

A “free” trial offer may be tempting, but it could be a scam out to get your money.

The Federal Trade Commission wants consumers to be aware of affiliate marketing in online advertising. Affiliate marketing is a good way to promote a product or service, but only if the ad is truthful. Some marketers may use misleading information to get people to click on their ads.

An FTC blog post, What’s affiliate marketing? Should I care? describes how affiliate marketing works and how to avoid scams, which is summarized in an infographic, How Affiliate Marketing Works

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

Where Can I Find a Knowledgeable Attorney to Help Me With My Student Loan Debt?


Dear Steve,

I attended a for-profit college from 2005-2008. I graduated in 2008, but since then the school has been shut down. Now my private and federal loans are in excess of $400K total and my minimum monthly payments are over 3k. I was using an in-school deferment to keep current in hopes that I could one day afford the payments, but that has never happened and looks as though it never will. Now my deferment has run out and I am behind on payments and they are threatening litigation.

I make “some” money, but still not enough to afford these payments as the cost of living in Los Angeles is extraordinarily high. And I do not have any assets whatsoever and I rent a studio apartment.

I am having trouble finding a knowledgable lawyer in California that can assist me in attempting to file bankruptcy or any advice and options that I may have as to what I can do for relief. Thank you.



Dear Mike,

You might want to take a look at this list of attorneys.

I completely agree it is almost impossible to find a knowledgeable attorney who has experience in dealing with student loans. There are so much incorrect information and assumptions out there which are not supported by facts.

All I can advise is to contact one of the attorneys on the list and/or keep up your search for a knowledgeable lawyer.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Security Smarts for Smartwatches

Smartwatches have quickly gone from sci-fi to commonplace, and it’s easy to see why. Users can conveniently manage messages, music, fitness, and more right from their wrists as they go about the day.

 But enjoying the convenience of a smartwatch means trusting it to keep your data safe. Smartwatches offer a variety of security features, so keep security in mind when you shop for one. Not all security features come set up right out of the box. Be sure to check your settings and turn on the ones you want. For example, many smartwatches offer screen lock features, which you should use to help ensure your data is private. You may be able to:

  • set a PIN: Set up a short PIN that you can type to unlock the watch.
  • create a pattern lock: Create a pattern that you can draw on your screen to unlock it.
  • use your phone: Have your watch lock if it’s too far from your phone to “pair.”
  • detect your wrist: Set your watch to lock when you take it off your wrist.

Experts are looking for ways to make smartwatch security stronger and more convenient—including locking in particular—so keep an eye out for new and easier ways to protect yourself from others getting access to the data on your smartwatch. In the meantime, be sure to check out tips from the FTC for securing your data on smartphones, tablets and other electronic devices.

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

Justice Department Will Not Challenge Proposed Real Time Payment System

The Justice Department announced that at this time it will not challenge a proposal by The Clearing House Payments Company LLC (“TCH”), a joint venture of 24 U.S. banks, to create and operate a new payment system that will enable the real-time transfer of funds between depository institutions, at any time of the day, on any day of the week.  The department’s position was stated in a business review letter to counsel for TCH from Acting Assistant Attorney General for the Antitrust Division Andrew C. Finch.

According to representations made by TCH, it will create and operate the Real Time Payment system (“RTP”)—a new payment rail that, for the first time in the U.S., will provide for real-time funds transfers between depository institutions—and in turn, RTP will allow depository institutions to enable faster fund transfers for their end-user customers.  According to TCH, RTP will not interfere with the continued use and operation of existing payment rails, including automated clearing house, wire, and check clearing houses.  RTP will also incorporate additional features that existing payment rails do not offer, such as enhanced messaging capabilities.

The department has reviewed TCH’s currently-proposed rules and conduct for RTP.  Based on the information submitted and representations made by TCH, the department has no present intention to challenge the operation of TCH’s proposed new payment rail in light of the possibility that introducing a new, faster payment rail would benefit consumers and competition.  

Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided.  The Department reserves the right to challenge the proposed action under the antitrust laws if the actual operation of the proposed conduct proves to be anticompetitive in purpose or effect.

Copies of the business review request and the department’s response are available on the Antitrust Division’s website at, as well as in a file maintained by the Antitrust Documents Group of the Antitrust Division.  After a 30-day waiting period, any documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.  Supporting documents in the file will be maintained for a period of one year, and copies will be available upon request to the FOIA/Privacy Act Unit, Antitrust Documents Group at

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