4 Balance Transfer Credit Card Mistakes

Opening a credit card with a 0% financing offer or low fees when you transfer the balance from a different card can help you save money when working to pay down credit card debt, particularly if you have a lot of it. Getting a balance transfer card and using it wisely requires careful thought, and if you don’t exercise discipline, you may end up hurting your finances instead of helping them.

Here are some common mistakes you want to avoid when using a balance transfer credit card:

1. Mixing Balances

You may have received offers from your credit card issuer about transferring a balance from another card to the one you have with them. If you use the card that’s offering the balance transfer, keep in mind that the promotional financing will only apply to the transferred balance — the interest rate on your existing balance still applies.

“Now you have balances at two different interest rates, which can get confusing fast,” said Gerri Detweiler, Credit.com’s director of consumer education, in an email.

If you pay more than the minimum payment, credit card issuers are required to apply the excess payment to the balance with the higher interest rate, meaning you may not be paying off that transferred balance. There’s an exception: If you made a purchase under promotional financing, you can ask the issuer to apply payment to that balance before applying money to a balance with a higher interest rate. Keep in mind that if you don’t pay off the balance with promotional financing — whether it was a transferred balance or a new purchase — within the timeframe of the promotion, you’ll end up paying interest on it.

Like Detweiler said, it can be very confusing.

“It’s best to use a card exclusively for a balance transfer if possible,” she said.

2. Overlooking the Cost

Transferring a balance from one card to another usually carries a 2% to 4% transfer fee, Detweiler said, so you have to do some math before committing to the transfer.

“It may still be a better deal than the interest you were paying, but you have to take it into account,” she said.

Jason Steele, an expert on credit cards and frequent contributor to Credit.com on the topic, said a common mistake people make is transferring a balance they could pay off in the next billing cycle. Part of the problem there is that people aren’t paying close enough attention to the terms of the card, but these cards aren’t always easy to understand.

“There’s not much information that the card issuers give on these subjects,” he said. “They’re just marketed as a 0% balance transfer.” You have to understand exactly what that means and how much it might cost you.

3. Failing to Plan

Steele said another common mistake he sees is people failing to use the card as an instrument for repaying debt. That’s the point of a balance transfer in the first place: Put the balance on a card with a lower interest rate so you can save money while paying it down. Because the interest rate will expire, you have incentive to pay the balance off faster. If you’re not doing that, what was the point of paying a fee to transfer that balance to the card in the first place?

Additionally, Steele said a lot of people think they can just get another balance transfer card if they don’t pay off the first one in time, but that’s not necessarily a reliable (or affordable) strategy. Getting a new credit card requires a credit check, and if you’ve opened a lot of credit cards recently or carry high balances, your credit may not be in good enough shape for another card approval.

Perhaps you’re sensing a theme: It’s really important to pay attention to the details with these products. You also need to watch the transition very closely, because it can get confusing to have been paying one issuer and now have to pay another, and you definitely don’t want to miss a payment during the switch. Late payments can knock a lot of points off your credit score and can hurt your credit for years. (You can see how your credit history affects your credit scores by checking them regularly — which you can do for free through numerous sources, including Credit.com.)

4. Procrastinating

Both Detweiler and Steele stressed the importance of the financing timeline.

“Either [they] don’t keep track of when the transfer period ends or they are overly optimistic that they can pay it back before it does. Then they can’t, and the real interest rate — which is much higher — kicks in,” Detweiler said.

Getting a balance transfer is just the first step of a months-long process of paying down debt and, ultimately, improving your credit. (This calculator can show you how long it will take to pay off your credit card debt.) As long as you don’t continue to rack up charges, are realistic about what you can accomplish and commit to your plan, you could see a drastic improvement in your debt and credit situation after using a balance transfer.

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This article originally appeared on Credit.com.

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

How to Challenge a Debt Collector … & Win

A reader, Anthony, wrote to me to share the success he had in dealing with the debt collection issues he faced earlier this year. He started off with the goal of settling an old unpaid credit card, and ended up winning in court and getting his costs covered. He wrote:

“Hi Michael, I contacted you several months ago as I was being sued by a debt collection law firm for a [credit card] account that I had in 2008. I tried to negotiate the charge, which they calculated at $900, but original balance was only $600. I ended up hiring an attorney after they failed to negotiate. To make a long story short, they dismissed the case because they had no witness at which time my attorney objected and asked the court to pass on court fees and attorney fees to the collection agency. The judge ruled in my favor on the spot for the court fees, and instructed my attorney to file a separate complaint for attorney fees. By objecting, he stated that the collection law firm couldn’t come after me again. Thanks for your help and motivation to fight their efforts to sue!”

The majority of debt collection lawsuits are ignored, never contested, or not challenged effectively (some reports suggest more than 90% of lawsuits end in default or summary judgment).

From what I have seen in my many years of helping people resolve their debts — debt collectors are more likely to not challenge smaller balance lawsuits like Anthony’s, even if they’d previously refused to negotiate a fair settlement. Meanwhile, it is cost-prohibitive for a consumer to challenge the debt collector’s claims with one’s own attorney, when the cost of hiring an experienced debt defense attorney may end up costing more than paying the debt in full. And there are no guarantees that you will win. Having the judge pass the court and attorney fees along to the debt collector, like in Anthony’s case, then, is ideal for the consumer.

Dealing With Collections in the Courts

It’s important to be prepared when dealing with debt collection lawsuits and judgments. This resource checklist can also help you when you’re dealing with late-stage debt collection, or if you believe a debt collector has violated your consumer rights:

  • If your goal is simply to negotiate an affordable lump sum settlement, there are resources you can consult to help you through that process.
  • If you are looking for an attorney to help you defend against a collection lawsuit, you need to know that the vast majority of attorneys are likely unable to effectively assist you with your defense. Most attorneys just do not practice in this area, and over the years I have found that talking to the wrong attorney about your issues can do more harm than good. But there are some attorneys who focus on collection defense.
  • Look for an experienced debt defense attorney with the National Association of Consumer Advocates (NACA). Distance is not always an issue with these cases. Some debt collection defense attorney offices cover multiple states.
  • Contact a low-income legal aid office nearest you. Some of these offices do offer debt collection defense to people who qualify for low- to no-cost legal assistance.

It’s also a good idea to also make sure your debt hasn’t surpassed the statute of limitation. This chart lists the statutes of limitation by state. You may also want to check your credit reports to ensure the debt is being reported accurately, and to correct any errors. You can get your free credit reports every year from AnnualCreditReport.com, and you can get a free credit report summary, updated every month, on Credit.com.

There are additional things you can do to resolve debts with collectors, including picking up the phone to talk to collection attorneys and their staff. Anthony may not have had success with his efforts, but he did try that first. And countless others are able to get a result they can live with by simply opening up the lines of communication.

Everyone is welcome to post in the comments below for feedback. Please consider sharing your successes, failures, and other outcomes. It is important for people to hear about how others make out with late-stage collections when they are trying to decide what to do in their own situation.

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This article originally appeared on Credit.com.

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

8 Secrets to Getting College Scholarships

With the cost of college steadily increasing, paying for school can be seriously daunting to prospective students. Student loans may seem like the only option, but there are ways to get money for school that don’t have to be paid back … ever. Check out the following tips to help secure scholarships that can help pay for college.

Get Involved & Maintain Your GPA

One of the best ways to get help paying for college is by trying your best academically in high school and maintaining a high GPA. Joining a sports team, club or participating in community service will also help increase your chances. When you are involved or doing well in school, you are likely to get better letters of recommendation, which almost every scholarship requires. It’s important to select people who can provide specific details about your skills and positive traits. Be sure to give your references plenty of notice and time to complete these letters.

File a FAFSA

The Free Application for Federal Student Aid can go a long way when it comes to scholarships. The application opens each January and can help both you and review committees figure out which need-based scholarships you qualify for.

Start Early & Search Often

These are not just for high school seniors, you can start racking up scholarships as early as kindergarten and can even qualify once already enrolled in college. Plus, new scholarships are created regularly, so it’s a good idea to start researching scholarships early and revisit it often.

Check Everywhere

It’s a good idea to apply to every scholarship that you qualify for. In addition to searching online, check with your school librarian, guidance counselor and teachers. Plus it can be worth it to ask the leadership of any organization that you or a family member are involved with to see if they know of any scholarships. There are all sorts of unique opportunities out there and don’t be dissuaded to pursue less-known scholarships because these can be easier to win. And every penny counts when it comes to funding your college tuition.

Read Instructions & Qualifications Carefully

While you want to apply to as many scholarships as possible, it’s important to review the eligibility requirements of each one before you begin. This will help ensure you aren’t wasting your time on an opportunity you don’t qualify for. Once you are sure it could be a good fit, follow the directions carefully and avoid missing a necessary document.

Create a Calendar

Staying organized is really important when you are applying to multiple scholarships. Keep track of application deadlines with a calendar that marks important dates so you don’t miss any. Don’t forget that you will need letters of recommendation, transcripts and financial documents ready as well. Once you put the deadlines on your calendar, you can work backward so that you are asking for recommendations and documents early enough.

Personalize With Passion

When it comes to answering questions or crafting an essay, it’s important to tailor your application to the sponsor’s goals while personalizing your answers and showing your passion. Give examples and be specific. This is your chance to stand out from the crowd and really prove why you should be selected. Proofread and share with another person to eliminate spelling and grammar issues.

Make Copies of Everything

You want to be prepared in case anything goes wrong. It’s a good idea to keep a folder with photocopies of every scholarship application. This way you have a back-up copy that is easily accessible. Also, send the application by certified mail and request delivery confirmation so you know when the application is received.

There are many scholarships out there for students, from the broad to the very specific and the large to the small. The competition for these awards can sometimes be fierce but the benefits are often worth the time and effort of applying. The more you can reduce your need for student loans now, the better off you’ll be in the long run. (If you have student loans, or any kind of debt, you can see how it affects your credit by getting your free credit report summary from Credit.com, which includes an explanation of all the factors behind your score.)

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This article originally appeared on Credit.com.

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

Will the New Consumer Privacy Bill Protect You?

Legislation that would establish new nationwide privacy protections for American consumers was introduced by a group of high-profile Democratic senators on Thursday, including Pat Leahy (Vermont) and Elizabeth Warren (Massachusetts). The Consumer Privacy Protection Act would establish federal standards for notification of consumers when their data is lost or stolen, greatly expand the definition of private information beyond financial data, and allow existing state privacy laws to remain in force. Geolocation data and images would be covered by its data leak disclosure rules, for example.

“Today, data security is not just about protecting our identities and our bank accounts, it is about protecting our privacy. Americans want to know not just that their bank account and credit cards are safe and secure, they want to know that their emails and their private pictures are protected as well,” Sen. Leahy said. “Companies who benefit financially from our personal information should be obligated to take steps to keep it safe, and to notify us when those protections have failed.”

Consumer groups cheered the proposal, saying it offered a fresh approach to consumer privacy.

“This is a step forward. This is the first time you get something new in federal legislation. Usually it scales back (protections) in state law,” said Justin Brookman, director of consumer privacy at the Center for Democracy and Technology. “It’s good to see some new thinking on the issue, something that actually adds new protections for a lot of people.”

“Everyone from the NSA to the local grocer has become a consumer of our data. So many pieces of our data are being collected, stored, shared and sold, either without our knowledge or ability to understand the process,” said Adam Levin, privacy expert and chairman and founder of Credit.com. “It is long overdue that we expand the definition of ‘personally identifying information’ as well as the protections necessary to safeguard our privacy and data security and require quick notification when our PII is exposed.”

The legislation would require social media firms or cloud email providers to notify consumers if their accounts are compromised, Brookman said. Currently, most disclosure rules apply only to financial information such as credit card numbers.

The legislation comes on the heels of a similar White House proposal called “The Consumer Privacy Bill of Rights Act of 2015,” but goes several steps further than the administration’s proposal, said Susan Grant of the Consumer Federation of America. The White House proposal would allow federal law to supersede state laws, potentially diminishing consumer rights. It also requires demonstration of actual harm before requiring notice.

“(We believe) that federal legislation will only be helpful to consumers if it provides them with greater privacy and security protection than they have today. Most of the bills that we have seen in Congress would actually weaken existing consumer rights and the ability of state and federal agencies to enforce them,” Grant said. “(This bill) takes the right approach, requiring reasonable security measures, providing strong consumer protection and enforcement, and only pre-empting state laws to the extent that they provide less stringent protection.”

Most significant: The legislation creates entire new classes of protected information. Private information is divided into seven categories. Compromise of any one of them would require companies to notify consumers. They are:

  1. Social Security numbers and other government-issued identification numbers;
  2. Financial account information, including credit card numbers and bank accounts;
  3. Online usernames and passwords, including email addresses and passwords;
  4. Unique biometric data, including fingerprints;
  5. Information about a person’s physical and mental health;
  6. Information about a person’s geolocation;
  7. Access to private digital photographs and videos.

Leahy has repeatedly proposed legislation since 2005 that would establish a nationwide notification standard called the Personal Data Privacy and Security Act; it has not passed. While co-sponsors of this new bill include Al Franken (Minn.), Richard Blumenthal (Conn.), Ron Wyden (Ore.) and Edward J. Markey (Mass.), there are, notably, no Republican co-sponsors. That probably dooms the bill, says Brookman.

“They didn’t get a GOP co-sponsor, and that’s not a great sign. Still, having the bill out there is good for dialog on the issue,” he said.

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This article originally appeared on Credit.com.

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

NC Senator Michael Lee Article Rattled Some Debt Collection Feathers

Yesterday I published this article about proposed changes to pursing debtors in North Carolina over purchased debt.

That would have been the story, done and dusted. But today I awoke to find InsideARM, an accounts receivable trade publication, leveled some objections at my opinion piece.

InsideARM said, “Rhode calls Lee’s bill, “idiotic,” and “ill-advised, ill-conceived and unwarranted.” Other than potentially calling a state Senator an idiot in his headline, he also characterizes Lee as “ill informed” in the piece.” – Source

They also said, “Rhode also calls another Senator who defended the bill “clueless.” The article’s main contention, that Lee is a “debt collection idiot” is based partly on selective editing.”

InsideARM also stated, “Proponents of the measure argue that North Carolina’s infamous 2009 law targeting debt buyer collection lawsuits went too far, making the collection of legitimate debt onerous in the state. Most in the ARM industry consider the rules to be among the most restrictive in the country.”

But where the objections to the article missed the target was the fact the proposed changes to the law appear to be driven to ease the burden on bad debt documentation and not fairness to both consumers and debt buyers.

Even the North Carolina Attorney General’s office feel S.B. 511 is unnecessary. The Raleigh, NC based newspaper, News & Observer, said, “But Kevin Anderson, who is in charge of the consumer protection division in the state Attorney General’s office, said the 2009 law has been effective in stemming collection abuses. Those abuses included lawsuits against consumers who actually had paid their bills in full or who couldn’t even determine, based on the scanty evidence presented in the complaint, whether they had paid or successfully disputed the bill. The debt at issue can be years old by the time the debt buyers acquire them.” “The rest of the country that hasn’t passed laws like this are still struggling with the problem,” he said. “We would caution against rolling back some of these protections.” – Source

Similar opinions were offered up by the Durham, NC located Center for Responsible Lending, as well. The same N&O article says, “Ellen Harnick, senior policy counsel for the Center for Responsible Lending, complained the debt buyers simply aren’t willing to pay “a little more” for the underlying documentation required by the 2009 law.

That law, she said, was “passed by a unanimous vote in the Senate because, on a bipartisan basis, people were troubled on behalf of taxpayers about what was happening in the courts.”

Harnick also argued that the bill shifts the burden of proof from the debt buyer that brings a lawsuit to the consumer.”

Histrionics aside, I continue to miss the benefit to consumers by removing the current legal requirements bad debt buyers face in North Carolina before going after consumers. The current law requires the debt owner must know the “amount of the original debt” and also have a copy of the “contract, charge-off statement, or other writing evidencing the original debt, which must contain a signature of the defendant. If a claim is based on credit card debt and no such signed writing evidencing the original debt ever existed, then copies of documents generated when the credit card was actually used must be attached debt.”

In North Carolina it would be silly to buy a home or car without documentation and evidence the purchase is legitimate or know the identity of the property and have it well documented. So why does it not make logical sense to make sure purchased bad debt can be authoritatively documented as well?

Apparently the current law in place in North Carolina makes bad debt buyers feel the law “went too far, making the collection of legitimate debt onerous in the state,” as InsideARM says. But it is unclear how the law prevents bad debt buyers from charging ahead to sue and win lawsuits over debt owed as long as they have the basic documentation to prove the validity of the debt. And being able to validate the debt is an issue close to the Consumer Financial Protection Bureau as well.

InsideARM said, “Rhode contends that Lee may be a debt buyer himself, because his law firm’s website states, “The firm focuses on…debt acquisition.” What Rhode omits is the fact that Lee’s practice focuses almost entirely on commercial real estate, and the unedited passage from Lee’s site reads, “The firm focuses on complex commercial real estate finance, debt acquisition and development matters as well as complicated entitlement and zoning cases.”

For the record, I make no such argument that Lee or his law firm is a bad debt buyer. They simply felt it was an important enough skill to mention it in their firm description. If it is not something they assist with then why mention it? – Source

In my mind the only reason Lee’s experience as an attorney with purchased debt should be a factor is a hopeful awareness about the lack of proper documentation currently owned by bad debt buyers and the reality most consumers don’t defend themselves against unsupported collection lawsuits.

The debt collection industry might be up-in-arms about my opinion S.B. 511 is ill-advised, ill-conceived, and unwarranted but surely making sure all of the documentation validating the debt is on hand makes for a slam dunk lawsuit by the current debt owner to recover money owed them. NC Senator Harry Brown was quoted as saying, “I think the key point of this is, this is debt that someone has gone out and decided not to pay.”

To which I must humbly disagree. I think the key point to the desired change in the law is to relax a requirement for bad debt buyers to have sufficient documentation and data on hand to prove the debt is valid as the CFPB advises consumers to do when approached over uncertain debt.

Here is what the CFPB advises consumers to ask for from bad debt buyers attempting to collect:

“The name and address of the creditor to whom the debt is currently owed, the account number used by that creditor, and the amount owed.

  • If this debt started with a different creditor, provide the name and address of the original creditor, the account number used by that creditor, and the amount owed to that creditor at the time it was transferred. When you identify the original creditor, please provide any other name by which I might know them, if that is different from the official name. In addition, tell me when the current creditor obtained the debt and who the current creditor obtained it from.
  • Provide verification and documentation that there is a valid basis for claiming that I am required to pay the debt to the current creditor. For example, can you provide a copy of the written agreement that created my original requirement to pay?
  • If you are asking that I pay a debt that somebody else is or was required to pay, identify that person. Provide verification and documentation about why this is a debt that I am required to pay.

The amount and age of the debt, including:

  • A copy of the last billing statement sent to me by the original creditor.
  • State the amount of the debt when you obtained it, and when that was.
  • If there have been any additional interest, fees or charges added since the last billing statement from the original creditor, provide an itemization showing the dates and amount of each added amount. In addition, explain how the added interest, fees or other charges are expressly authorized by the agreement creating the debt or are permitted by law.
  • If there have been any payments or other reductions since the last billing statement from the original creditor, provide an itemization showing the dates and amount of each of them.
  • If there have been any other changes or adjustments since the last billing statement from the original creditor, please provide full verification and documentation of the amount you are trying to collect. Explain how that amount was calculated. In addition, explain how the other changes or adjustments are expressly authorized by the agreement creating the debt or permitted by law.
  • Tell me when the creditor claims this debt became due and when it became delinquent.
  • Identify the date of the last payment made on this account.
  • Have you made a determination that this debt is within the statute of limitations applicable to it? Tell me when you think the statute of limitations expires for this debt, and how you determined that.” – Source

And it does not stop here with the CFPB. They’ve also said, “The CFPB is concerned that debt collectors do not always have adequate or accurate paperwork or data to support their claims about a consumer’s indebtedness. This lack of information can make it harder for the debt collector to provide the consumer with information to identify the debt or resolve disputes.” – Source

It seems the CFPB feels consumers are entitled to a lot more information than even the current North Carolina law requires. By rolling back the law using S.B. 511 it seems to me it puts bad debt buyers in a worse position moving forward in the face of tougher debt data requirements to almost certainly come. And for me, that’s idiotic for an industry based on data and documentation.

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

Court Halts Mortgage Relief Operation that Targeted Homeowners Facing Foreclosure

Some People Lost Their Homes: Paid Defendants Instead of Making Mortgage Payments

At the Federal Trade Commission’s request, a federal court halted a sham operation that allegedly told financially distressed homeowners it would help get their mortgages modified, but instead effectively stole their mortgage payments, leading some to foreclosure and bankruptcy. The FTC seeks to permanently stop the scheme and its participants’ illegal practices. It also filed a contempt action against one of the scheme’s principals, Brian Pacios, who is under a previous court order that prohibited him from mortgage relief activities.

“These defendants stole mortgage payments from struggling homeowners, and they pretended to be a nonprofit working with the government,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’ll continue to shut down shameful mortgage frauds like this one.”

According to the FTC’s complaint, the defendants, sometimes doing business as HOPE Services, and more recently as HAMP Services, targeted consumers facing foreclosure, and especially those who had failed to get any relief from their lenders. Pretending to be “nonprofit” with government ties, they sent mail bearing what looked like an official government seal, and indicated that the recipients might be eligible for a “New 2014 Home Affordable Modification Program” (HAMP 2).

The defendants called the program “an aggressive update to Obama’s original modification program,” and stated that “[y]our bank is now incentivized by the government to lower your interest rate . . .”

The defendants falsely claimed they had a high success rate, special contacts who would help get loan terms modified, and an ability to succeed even when consumers had failed. After obtaining consumers’ financial information, they told them they were “preliminarily approved” and falsely claimed they would submit consumers’ loan modification applications to the U.S. Department of Housing and Urban Development, the Neighborhood Assistance Corporation of America, and the “Making Home Affordable” (MHA) program. The MHA application form they sent consumers excluded the page that warns, “BEWARE OF FORECLOSURE RESCUE SCAMS,” and “never make your mortgage payments to anyone other than your mortgage company without their approval.”

Later, the defendants falsely told consumers they were approved for a low interest rate and monthly payments significantly lower than their current payment, and that after making three monthly trial payments, and often a fee to reinstate a defaulted loan, they would get a loan modification and be safe from foreclosure. They also told consumers not to speak with their lender or an attorney.

In reality, homeowners who made the payments did not have their mortgages modified, and their lenders never received their trial payments, the FTC alleged. Instead, they were contacted by an “Advocacy Department” run by one of the defendants, Denny Lake, and told that the department would get them an even better loan modification than the one purportedly obtained through MHA, according to the FTC’s complaint. 

But the “Advocacy Department” was just another trick designed to make sure consumers continued to make all of the monthly trial payments. When consumers raised concerns about continuing foreclosure warnings, sale date notices, and even court dates, they were told their loan modification was being processed or nearly completed.

By keeping consumers on the hook for months, the defendants doubled, tripled, or quadrupled consumers’ trial payments, the FTC alleged.  They told consumers they would put these payments in escrow accounts and eventually pay off consumers’ lenders. In fact, the defendants simply took the money for themselves. As a result, some consumers lost their homes, and most consumers incurred additional penalties and interest as they fell further behind on their mortgages.

The defendants include Chad Caldaronello, also known as Chad Carlson and Chad Johnson; C.C. Enterprises Inc., doing business as HOPE Services, Retention Divisions, and Trust Payment Center; Justin Moreira, a/k/a Justin Mason, Justin King and Justin Smith; Derek Nelson, a/k/a Dereck Wilson; D.N. Marketing Inc., d/b/a HAMP Services and Trial Payment Processing; and Brian Pacios, a/k/a Brian Berry and Brian Kelly. They are charged with violating the FTC Act, the FTC’s Mortgage Assistance Relief Services Rule (MARS), and its Telemarketing Sales Rule (TSR).

Denny Lake, d/b/a JD United, Advocacy Department, Advocacy Division, and Advocacy Agency, is charged with knowing or consciously avoiding knowing the other defendants were violating the MARS and the TSR. A relief defendant, Cortney Gonsalves, is charged with holding money and assets she received from the scam.

To learn how to avoid mortgage and foreclosure rescue scams, see Home Loans.

The Commission vote approving the complaint was 5-0. The U.S. District Court for the Central District of California entered a temporary restraining order against the defendants on April 15, 2015.

This article by the Federal Trade Commission was distributed by the Personal Finance Syndication Network.

My Mother is on Medicaid and Bank of America is Owed Money


Dear Steve,

Hi – I have a question – my mother is in a nursing home, Medicaid pays for the home – she must turn over her social security and small pension to them each month. She has no money – she has a credit card from Bank of America with $3500-$4000 on it – she is the only user of the card, I am not listed as an authorized user – I have been making the minimum payments – I can no longer afford to do this – what should I do?

Thank you.



Dear Beth,

If you stop paying then Bank of America may try to collect from her but if she has no assets then there is nothing to go after. Even if they decided to sue her and they won, it sounds as if your mother is what people call judgment proof. This just means there are no assets to go after to try and collect the judgment. Typically, public benefits and Social Security are exempt from being garnished.

Alternatively, your mother could file bankruptcy to legally terminate the debt in about 90 days. In this case she would not face any possible tax liability from the charge-off of the debt and it would stop any future collection attempts.

The cost of filing bankruptcy might be around $1,900 when all is said and done but the rapid elimination of the debt and the ensuing quiet might have some value as well for you and your mother. That is a question you will have to consider.

If bankruptcy sounds like the better way to make your mother’s future days better without the threat of the debt hanging over her, then I would suggest you talk to a local bankruptcy attorney and discuss her specific situation. Most bankruptcy attorneys will gladly talk to you for free.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.


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

After the SendGrid Hack, Beware of Phishing Scams

Email has become a critical tool for transactions — from the sending of Uber receipts to delivery of hotel coupons. Naturally, companies that send mission-critical consumer emails often turn to third-party firms like SendGrid to manage the delivery of millions of messages. Of course, as third parties that maintain trusted relationships with both consumers and corporations, such email providers are an obvious target for hackers. Imagine the damage a criminal could do if he could believably pose as a giant tech firm and send out emails to all consumers? Such emails could ask millions of users to reset their passwords, for example, or update their credit card information, or even send bitcoins.

Such attacks are now under way. SendGrid, which has 180,000 customers and sends emails for giants like Uber and Spotify, said this week that a hacker who broke into company systems earlier this month did more damage than initially believed.

On April 9, the firm confirmed to The New York Times that a Bitcoin-related client account had been compromised and used to send phishing emails to its customers. But on Monday, SendGrid said additional investigation revealed that one of its own employees’ accounts had been compromised and used to access several SendGrid systems in February and March.

“These systems contained usernames, email addresses, and . . . passwords for SendGrid customer and employee accounts,” the firm said on its blog. “In addition, evidence suggests that the cyber criminal accessed servers that contained some of our customers’ recipient email lists/addresses and customer contact information.”

SendGrid says it has not found evidence that customer lists were stolen, but it “cannot rule out the possibility.”

The firm is urging its clients to change passwords and enable two-factor authentication.

It takes only a little creativity to imagine all the damage a hacker who managed to steal customer email lists and credentials could do. But a harrowing tale told by cloud provider Chunkhost.com on its website offers a cautionary tale. Co-owner Nate Daiger wrote last year that a hacker talked SendGrid into changing its point of contact email from support@chunkhost.com to support@chunkhost.info, then used that change to retrieve a password reset email on two bitcoin-using clients. Fortunately, both clients used two-factor authentication, Daiger wrote.

“Our customers’ accounts were protected and the attackers were stymied. But it was really close,” he wrote.

Corporate clients who use third-party email services should be on notice: hackers are actively targeting such accounts. Meanwhile, here’s an important notice to consumers: You can’t believe everything you read, even an email that appears to come from a company you trust. Hackers can sent out very believable-looking phishing emails with requests for password changes or payment information. You should always be skeptical of such emails, but now, you have new reasons to be so. When feasible, avoid clicking on links in emails and instead visit websites directly by typing the site address into your web browser’s address bar.

If you have given up sensitive information to a phisher, it’s important to take steps to control the damage. If it’s an account number, report your account info as stolen so the bank or card issuer can close the account, or take similar steps to stop or undo any instances of fraud. Keep a close eye on your account statements, and check your credit reports and credit scores for signs that someone has opened an account in your name, or is using an existing one. You can get your credit reports for free every year from AnnualCreditReport.com, and you can get your credit scores for free from several sources, including Credit.com.

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This article originally appeared on Credit.com.

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

Retirement Account Balances Reach a Record High

It’s no secret Americans aren’t great at saving for retirement. Actually, the research on that is pretty startling, but it seems people who are saving might be getting better at it. Retirement account balances have hit record highs and contributions have increased, according to an analysis from Fidelity Investments, one of the largest mutual fund companies in the country.

At the end of quarter one 2015, the average Fidelity 401(k) balance was $91,800, up 3.6% from last year, and the average individual retirement account balance was a record high of $94,100. Among 401(k) account holders, a record 23% increased their contribution from 2014.

While it’s great to have a snapshot of how some workers are increasing their commitment to saving for retirement, national savings figures fall incredibly short of the Fidelity numbers. Among working-age households, 45.3% do not have retirement accounts, according to a January 2015 report from the National Institute on Retirement Security. The figures are based on 2013 data. That’s 39.6 million households. Americans have an average of $2,500 in their retirement accounts, an average brought down significantly by the large portion of people without any savings.

There are lots of reasons this is concerning, but on an individual basis, reaching retirement age without adequate savings can have dire financial consequences. A lack of savings may lead you into debt or prevent you from paying bills, both of which can damage your credit. You never know when you might need something that requires a credit check, which is part of why it’s so important to plan for long-term financial and credit stability.

The credit implications are important — you can keep an eye on your standing by getting a free credit report summary each month from Credit.com — but saving so you can live comfortably and avoid debt can have a major impact on your overall well-being. You may not be anywhere near that average 401(k) balance of $91,800, but every little bit of savings can mean a lot for your future.

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This article originally appeared on Credit.com.

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

Despite Legal Uncertainties, Some Pot Dispensaries Accept Credit Cards

It’s been more than a year since legal recreational pot sales started in Colorado, and as much as dispensary owners enjoy the booming business, they’re sick of swimming in cash. Though the Department of Justice released regulations last year allowing banks to accept money from legal dispensaries, it’s still a federal crime — the announcement that the DOJ won’t pursue institutions that process legal pot money hasn’t been enough to make everyone comfortable.

It seems some Colorado business owners have run out of patience waiting for the banking industry to get on board with legal cannabis sales. According to a poll of 78 state-licensed dispensaries in the Denver area conducted by FOX31, 27 (or 47%) of them would be “willing to accept Visa or MasterCard as payment.”

Some of them may be working with financial institutions that have decided to accept money from legal cannabis sales, despite federal laws, but they’re probably trying to downplay or conceal the nature of the business, FOX31’s investigation suggests. Credit card transactions conducted at legal dispensaries produced receipts with company names like “AJS Holdings LLC” and “Indoor Garden Products.” Even though the federal government has said it will stand by and let legal dispensaries use the banking system and the credit card transactions it enables, that hasn’t erased the concerns over Drug Enforcement Agency audits for money laundering.

Given that credit card processing at marijuana dispensaries remains risky, it’s interesting that nearly half of the companies polled by FOX31 said they’d accept credit cards. (It was unclear from the story if the dispensaries polled actually have the ability to process such payments or if they’d merely like to.)

If it’s becoming more common for dispensaries to accept credit card payments, that’s both good and bad for consumers. The good thing is the ability to pay as you prefer and allow you to walk into a dispensary without a bunch of cash in your wallet. On the other hand, using a credit card may lead consumers to spend more than they can afford, potentially accumulating credit card debt. Then again, all consumer goods pose that threat — the important thing is to spend within your means, whether you’re buying indoor gardening products or “Indoor Gardening Products.” What you put on your credit card doesn’t matter to your financial and credit stability, but how much you charge and how you manage that balance does.

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This article originally appeared on Credit.com.

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