How a Typo Can Derail Your Mortgage

The information you submit on your mortgage loan application should be accurate. This might seem like a no-brainer, but you may not realize the impact even a minor mistake could have on your application.

When you apply for a home mortgage loan, your lender inputs the information you provide them for the purposes of getting a loan. If this information is submitted incorrectly, it can have consequences later on down the road in your ability to obtain credit. It’s all about specifics. If any of the following inconsistencies appear anywhere on your mortgage loan application, make sure to get them corrected swiftly…

Name Misspellings

Surprisingly, the misspelling of names is a common mistake. Let’s say your name is hyphenated – Mary-Ellen Jones, for example. Though for whatever reason, only the first and last name are used on the application when pulling credit – Mary Jones. This information is sent to all three credit reporting agencies during the credit inquiry. The inquiry carries over the inaccurate or incomplete data the loan professional submitted on the original loan application. The reason this can create issues for the mortgage loan is because incorrect or incomplete data can cause a disparity in the calculation of the credit score, anywhere from 10 points to as much as 20 points, which is one of the biggest drivers of loan costs and interest rate.

Traditionally, lenders pull your credit from each of the three major credit reporting agencies, getting three scores — a high score, middle score and a low score — and the middle score is the one is used for the mortgage loan application. Name misspellings can create an inaccurate or incomplete credit history, prompting more questions from the underwriter when the loan ultimately comes due for credit disposition. Other times, name misspellings on loan applications could result in fewer than three credit scores. You only need one credit score to get a mortgage, but three scores tends to be the optimal number for the lender to help you get approved for lower rates and fees on your mortgage.

You can help prevent this from happening by providing your name to the mortgage professional as clearly and as accurately as possible, consistent with the rest of your financial documentation. If you have a nickname, for example, or different name you go by that is not your legal name, be sure to use your legal name that is on your financial documents.

Address Inaccuracies

Having inconsistencies in your address can create the same types of problems. You need to submit every address where you physically resided for the most recent last two years. However, silly as this may sound, if the mortgage company cannot accurately identify a previous address – even if it’s only off by a digit or a letter – it will add conditions to your application to obtain clarification.

Additionally, if the address is spelled wrong, the ZIP code is wrong, or if there is any error or inconsistency in a previous address, there will be concerns about your occupancy, which is another red flag to lenders who may then consider you a higher credit/default risk.

So the same advice goes here: Make sure your previous addresses are clearly and accurately spelled on your mortgage loan application.

AKA Name Statement

You can only make sure the information you are supplying is as accurate as possible on your current application. You cannot fix mistakes on prior applications. When you’re signing mortgage loan papers at closing, you’re going to be asked to sign an AKA statement. An AKA statement is a blanket correction to help create name consistency within your loan application. It’s meant to correct any inconsistencies other creditors have submitted on credit inquiries when you’ve applied for credit in the past.

As long as you are making sure your loan application is consistent with your legal name – the name on your tax returns and W-2s, for example — you should be in the clear. It’s all about making sure the information is 100% correct before your credit is pulled. Taking the extra step to ensure the i’s are dotted and t’s are crossed can help pave the path for your best possible mortgage outcome.

It’s important to check your credit reports periodically for accuracy and to make any necessary corrections. It’s especially important to do this before you set out to get a mortgage. You can get your free annual credit reports from the credit reporting agencies on, and you can get a free credit report summary on, which is updated monthly so you can watch for important changes.

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

Help! I’m Marrying Someone Who Has a Ton of Debt

You finally found the right person! You both love to do the same things, have the same dreams and have lots in common. You want to get married and share everything with each other…. Well maybe not everything. You just found out that your sweetie comes with something not so sweet: debt. Ugh. Combining living room furniture is one thing. Combining debts is a completely different matter. Now what do you do?

1. Know Who Holds Responsibility

First, it’s important to know that you are not liable for your spouse’s debt that was created prior to the marriage. This means that just because you marry into debt doesn’t mean that you are now somehow automatically responsible for the other person’s debt.

2. Fight the Urge to Merge That Debt

If you want to remain off the hook, do not, under any circumstances, take steps to combine that debt into joint debt. How would that happen? Say your spouse had pre-marital credit card debt and so did you. You then find out that if you transfer both balances to a new card, you can get a lower interest rate. So you apply jointly for the new card and transfer both of your previous card balances to the new card. Now you are both liable for the full amount, not just your portion.

3. Don’t Get in Over Your Head

Be very careful and deliberate with purchases during the marriage. For example, only co-sign on a loan for your spouse if you are completely certain that either a) the spouse will be able to make the payments, or b) you are OK with making the payments if your spouse can’t. Furthermore, you need to decide how joint loans will be taken out. If you buy a home together, consider whether or not you want to take out a mortgage in joint names. If you are the spouse with the better credit score, be careful about taking on more debt for the benefit of the other party. Only do so if you are comfortable with being on the hook for that debt even when the other spouse is driving the car or the boat or whatever the debt paid for.

4. Know Your State’s Laws

Be aware of how your state handles debt incurred during the marriage by just one spouse. Most states will consider that debt to be marital regardless of whose name it is in. However, if the debt is incurred without the spouse knowing about it, and/or consenting to it, then a claim can be made by that spouse that the other spouse “wasted or dissipated” assets and thus that spouse should be made whole in some way. You will also want to decide if you want to add your spouse as a joint accountholder on a credit card or just simply an authorized user. The difference is that a joint accountholder is liable for what he or she charges. An authorized user leaves the original account holder fully responsible for the liabilities incurred.

5. Be Officially in Agreement

Consider executing a prenuptial or postnuptial agreement that specifically address debts and liabilities incurred before the marriage and those incurred during the marriage. Make sure the agreement also provides for who will be responsible for each type of debt if a dissolution of marriage occurs.

6. Plan to Pay Off That Debt

Be sure to come up with a plan for paying off your spouse’s debt either prior to the marriage (ideally) or after the marriage (less ideal). Learning to plan together financially will be an essential skill for the marriage anyway.

As you’re planning to join lives and finances, you may find difficult to sit down, go through statements and deal with the specifics, but you’ll be glad you did in the long run. It’s also good to go over both of your respective credit reports before you get married so you can identify any problem areas, and to help you include that in a plan for credit-building and getting out of debt. You can each pull your credit reports for free on, and you can get monthly updates of your free credit report summary on to watch for any changes.

The bottom line is that just because your spouse-to-be has debt doesn’t mean you shouldn’t get married. Careful planning and thoughtful decision-making can ensure that you, your new spouse and the debt can all live happily ever after.

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

How We Paid Off Our Mortgage in 7 Years

The idea behind paying off a loan faster than scheduled is pretty simple: It saves you money. That’s a huge part of the reason Andrea Stewart and Jerimiah Honer decided to repay their 30-year mortgage in just seven years — by doing so, they saved more than $130,000 in interest. Now the couple has an opportunity to achieve other goals, like invest beyond their property and existing retirement funds, travel and maybe do a little shopping. The frugal pair hasn’t done a lot of that in the last several years.

Stewart, 32, and Honer, 36, worked hard to save money as they tried to accelerate their loan repayment, but they acknowledge they also had a lot of luck. Paying off debt is a different journey for everyone, but here’s how they quickly achieved their dream of owning their own home.

The Details

How I Paid Off My Mortgage in 7 YearsStewart and Honer bought their house on a 0.10-acre lot in Sacramento for nearly $300,000 in 2008. Their combined annual income from their full-time jobs amounts to roughly $150,000, but they received supplemental income from a variety of sources along the way to repaying the mortgage. They made a 10% down payment and received a 30-year mortgage with a 6.75% interest rate, but they refinanced twice, to 5.25% and then to 3.875%. Honer calculated their estimated savings of $130,000 using the lowest rate. The couple had some student loan debt when they took out the mortgage, but by paying an additional $200 a month toward their education debt, those loans were paid off by the end of their first year in the house.

That’s when they switched their attention to the mortgage.

How They Paid Off a 30-Year Mortgage in 7 Years

The property itself had a huge impact on the couple’s ability to put a lot of money toward their home loan. The house is close to downtown Sacramento, allowing them to easily commute by bicycle and sell their second car. Honer and Stewart also grow most of their own food.

“It’s actually easier to go into your backyard and pick things than go to the grocery store,” Honer said. “We like the organic element as well as it’s a huge bill cut.”

Not only did they save a lot on gas, vehicle expenses and grocery bills, they also budgeted as if they made less money in the first place. Honer crunched the numbers, and even though both he and Stewart have full-time jobs, they figured out they could manage under one income. The second income went toward the mortgage, and Honer made his own amortization schedule to determine how much they could afford to pay (and eventually save).

Much of their success stems from their mindset toward money.

“I think we were always frugal to begin with — we’re both savers,” Stewart said. “One of the things we asked ourselves when we made a purchase was, ‘Is this really going to make us happy?’ … We try to have experiences like traveling and things like that, yeah, but I don’t think [we like] a lot of stuff.”

Or, as Honer puts it: “We don’t know how to spend money anymore. We kind of forgot.” He also said that they’re not “big credit people,” and even though a mortgage is a helpful credit instrument, it was important to them to be out of debt as soon as possible. (You can see how your debts and your payment history are affecting your credit by getting your free credit report summary on

Tips for Paying Off Debt Fast

For anyone interested in trying to replicate their success, there are a few things to know. First, they paid off their other debt obligations (student loans). In addition to cutting out expenses and keeping to a strict budget, Honer and Stewart received some money besides their regular income, which they put toward the loan. The two are aspiring writers and made some money from side gigs, but they also received personal-injury settlements from two separate times a car hit one of them while riding a bicycle. Getting hit by a car isn’t exactly good fortune, but the settlements amounted to $37,000, which helped cut down the debt. Inspired by a friend’s successful pregnancy through egg donation, Stewart twice donated eggs and received about $6,000 each time.

Their story is a combination of hard work, a solid financial situation and luck, but a lot of their success comes down to decision-making: They could have done a lot with their regular income and the additional money they came into, but they chose to put it toward a specific goal. That means their home cost them thousands of dollars less than it could have if they paid for it on schedule.

There’s not much they would have done differently, though they admit they could have saved more, rather than just pay off the home loan and contribute to their retirement accounts. Honer and Stewart don’t see themselves changing their spending habits now that this huge loan is behind them, and they plan to stay in the home for a long time. Now they’re interested in exploring other investments and maybe even retiring early some day.

“I hope it helps some people,” Stewart said of her decision to share their story. She posted about it on Reddit, where it generated a lot of conversation. Her advice? “I would say just think about what makes you happy.” That’s what drove their decisions, and it kept them on track for years.

Image courtesy of Andrea Stewart

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

I Want to Remodel My House. Can I Get a Loan?

Maybe you’re hoping to sell your home sometime soon and it needs sprucing up. Maybe you just can’t stand the look of your kitchen cabinets anymore.

Whatever the reason, you may want to remodel your home without depleting your bank account — or you may be short on cash. That’s where a home remodeling loan comes in. You may have more options than you realize for financing home renovations. 

Low-Rate Credit Card 

If you have a credit card with a low interest rate (or perhaps even a 0% balance transfer option), charging your remodeling purchases allows you to pay them off over time at an attractive interest rate. (Lower rates require good credit.) But you’ll need some discipline to avoid charging more than you can afford to pay back in a reasonable period of time. 

Pros: Credit cards are widely accepted, though it is possible some contractors may accept only cash or checks. Using a credit card gives you the right to dispute certain charges if goods or services aren’t delivered as agreed. 

Cons: Low minimum monthly payments can stretch the debt out for decades, resulting in high interest charges over time. If the balance on a card with a low introductory rate isn’t paid in full by the time that period expires, the interest rate will often jump dramatically. Interest is not typically tax-deductible. 

Home Improvement Store Financing 

Similarly, many home improvement stores offer special financing for major purchases. Interest-free financing for 12 to 24 months is not uncommon. Good credit will be required to qualify, especially for large credit lines.

Pros: 0% is a hard rate to beat. These offers also typically carry no annual fee and low monthly payments. 

Cons: The interest rate after the introductory purchase can be high, and with some no-interest financing plans, the rate may apply to the entire balance if not paid in full by end of intro period. Interest is not usually tax-deductible. 

Personal Loan 

A personal loan is another alternative. (If you’re unfamiliar with personal loans, here’s a quick explainer.) You may be able to borrow the amount you need and get a loan with a fixed repayment schedule and interest rate. These loans are typically considered “installment loans,” and as a result, a balance on one of these loans is less likely to hurt your credit scores, when compared to using a significant percentage of the balance available on a credit card or line of credit. 

Pros: A personal loan’s fixed monthly payment can be helpful for budgeting, and prevents debt from being stretched out if only minimum payments are made. 

Cons: The interest rate on a personal loan may be higher than promotional financing (though may be lower in the long run if repayment takes several years). Interest will not likely be tax-deductible. 

Home Equity Loan 

If you have sufficient equity in your home, a home equity loan or line of credit allows you to borrow against that equity. Loans are usually available for up to 80% of the home’s value (including the balance owed on the first mortgage). “To get anything decent (interest-rate wise) you need a 700 credit score,” says Scott Sheldon, senior loan officer with Sonoma County Mortgages and contributor. And there’s always the danger of getting in over your head. A HELOC is “like a giant credit card tied to your house,” he warns. If you default on that “credit card” you could face foreclosure.

Pros: No closing cost options are available. Interest rates are often low, and interest may be tax deductible if loan funds are used to improve the home. Low monthly payments can make this an affordable option. 

Cons: Interest rates are variable, which means they will likely rise before the loan is paid off. Your lender may offer interest-only payments for 10 years, after which payments can rise dramatically when the loan goes into repayment. 

Cash-Out Refinance 

Another option, if you have equity in your home, is to refinance your current mortgage and take “cash out” to pay for home improvements. Conventional lenders often allow loans up to 80% of the home’s appraised value.  But veterans and active servicemembers may be able to borrow up to 100% of their home’s appraised value using a VA cash-out refinance, says Chris Birk, director of education with Veterans United Home Loans and contributor. And “you don’t need to currently have a VA loan,” he says. 

Pros: Low fixed interest rates available, depending on credit scores. Because the new loan and old loan are rolled into one loan, your overall payment may not increase significantly (depending on the amount borrowed and for how long, as well as the interest rate). 

Cons: You may “start over” with a new 30-year loan, and over time, additional interest costs may be significant. Tapping most or all of equity may leave you with no leeway if you need to sell your home. 

Reverse Mortgage 

If you are 62 or older, a reverse mortgage allows you to tap equity in your home for any number of purposes, including home improvements. These loans are often popular with older individuals who may not have significant income but have equity in their homes. They may allow the homeowner to make needed improvements and remain in their home even if they can’t qualify for a traditional loan. Free housing counseling is available and required before getting one of these loans. 

Pros: It’s generally easy to qualify for a reverse mortgage, and there are no monthly payments. (Taxes, insurance other expenses must still be paid, however.) 

Cons: These are complex financial products and can be confusing and expensive. Interest continues to accrue until the loan is paid off, so if the borrower dies or must sell their home, little to no equity may be left. 

Success Tips 

With all of these options (with the exception of of a reverse mortgage) the interest rate will be based in large part on the borrower’s credit scores. So check your credit reports to see where you stand before you start shopping. You can get your free annual credit reports at and you can check your credit scores for free every month on

And having a plan — both for the project and to repay the debt — is important. Build in an extra 20% to your budget “just in case,” and if you don’t spend it, you’ll be able to pay off your debt that much faster.

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

Will I Be Stopped at the Border for My Old Student Loans?


Dear Steve,

I live in France. I have lived in France for over 20 years. Last year I did my first income tax return for the United States using the amnesty program. This year I had a tax refund of $1000.94 well I have a student loan debt I knew I would not get the thousand dollars and I did not. I was able to learn that a collection agency is in charge of my debt.

My question is being a permanent resident in France having no work or residence in the United States and having no intention of ever living again in the United States can the collection agency come after me here in France.? The information regarding my wife’s employment salary has not been given and will not be given to the collection agency. However I declare myself married filing separately and I declare my own children as my dependents I have 3. Can a collection agency go after my children who are in fact French citizens? Last and final question… Could I be arrested when I enter the United States to visit my family?


Well you can rest assured you will not be arrested when coming back to the U.S. to visit friends and family. It’s just not in the purview of U.S. Customs and Border Protection to screen people for bad debts. If they did, imagine the lines.

I applaud you for getting back to filing your foreign tax returns. The answer to avoiding having tax refunds intercepted is to just avoid getting a refund. However, the intercept is probably a small price to pay for dealing with the absent tax filing issue.

Since the refund was intercepted your student loan debt must be federal student loans and there are programs to deal with delinquent student loans.

While we live in a modern world, there is really very little international collection activity. One hurdle for collectors would be to perfect the authority to collect a debt subject to the legal agreement of one country, in another.

There are two distinct audiences who will read this answer. One will say you should do whatever you can to honor your past agreements or you will go to hell. I’m not judging, just repeating what some people say.

The other camp are people who understand the reality of the situation and know you have nothing to worry about. Again, I’m not judging or advocating the do nothing position, just telling you what the truth is.

And the truth is your children are safe, it is very highly unlikely you will ever be the subject of any collection activity in France over this old debt, and you can enter the U.S. without any fear about the student loans.

Thank you for reaching out to me for help.


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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.

The IRS Is Beefing Up Security. Will Your Taxes Be Affected?

In the past several years, millions of U.S. taxpayers have experienced the frustration of attempting to file their taxes, only to find that someone beat them to it: Tax-related identity theft is a common crime, in which people use stolen information (mostly Social Security numbers) to fraudulently obtain tax refunds. Then, when the rightful owner of that Social Security number attempts to file taxes, the IRS flags the return as a duplicate, and consumers end up waiting months, sometimes years, to receive their refunds.

During tax year 2013 (the most recent data available), the Internal Revenue Service lost $5.2 billion to identity theft, despite preventing $50 billion in tax-refund fraud. The problem isn’t going away, so the IRS recently announced new plans to curb such fraud, including more complex taxpayer-authentication processes.

Given how far away tax season is, it’s unclear how these changes might affect consumers’ tax-filing experiences, but the changes seem to be geared toward the tax-preparation industry, rather than taxpayers.

“It looks to me that this is all going to be happening behind the scenes,” said Stephen W. DeFilippis, an Enrolled Agent in Wheaton, Ill. Enrolled Agents are tax practitioners federally licensed to represent taxpayers before the IRS. “If it does delay anything I’m sure we’re not going to hear about it until right before filing season.”

That’s where things are at right now: The IRS and others in the tax space are working to improve fraud prevention, but consumers may not yet notice the changes. You should keep doing what you’re (hopefully) doing by filing your taxes as early as possible, while keeping an eye on your credit scores and credit reports for signs of identity theft. Meanwhile, here’s what will be unfolding in the background when you file your taxes in 2016, according to the IRS news release on the initiative.

Information Sharing

The IRS announced it would collaborate with other groups in the thick of tax preparation in order to better detect fraud. This includes tax preparation and software firms; state tax administrators; and payroll and tax financial product processors. The idea of sharing information is to better track down fraud leads and identify patterns of fraud schemes.

“Anything that can be done to increase information sharing that doesn’t violate the privacy of consumers is a good thing,” said Adam Levin, chairman and co-founder of Identity Theft 911 and “It’s important for institutions to share as much knowledge of what they’re seeing out there. …The biggest problem that they’re facing is the astronomical amount of data that’s accessible by bad guys.”

Taxpayer Authentication

The collaborating institutions will analyze data like repetitive filing from a certain IP address and how much time it takes to file a return. Tax preparation software will submit this data with the return to the state and federal tax authorities to aid in fraud-detection efforts.

There aren’t many more details out there on the changes or how they’ll impact consumers.

“They’re being somewhat secretive, which I understand,” DeFilippis said of the information thus far provided by the IRS. “I would think that hopefully by fall we would get some clarity and if there are certain things that taxpayers can be doing to safeguard their information and minimize the danger of having a fraudulent return filed under their Social Security number.”

New fraud-prevention measures aside, the best thing consumers can do is file their taxes as soon as possible, but DeFilippis noted that’s often beyond individuals’ control, because tax paperwork is sent out over several weeks. Levin said it’s good to see the IRS working to increase consumer protection, but that doesn’t lessen the importance of self-protection.

“The IRS is stepping up its game, and the entire government is stepping up its game, but this is where there is no alternative: We have to step up our game,” Levin said. “We have to make absolutely sure we know who we’re communicating with, we have to monitor frequently through any number of mechanisms — credit reporting, credit scores — and we need to have a damage control program.”

As soon as you see signs of identity theft, like unexpected changes in your credit reports or scores, waste no time in investigating. You can check your credit scores for free every month on

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

Can a Debt Collector Come After Me If I Never Got a Bill?

It’s bad enough to get a call from a debt collector or find a collection account on your credit reports. But it’s even worse when you didn’t even know you owed a bill in the first place. Here are just a few comments we have received on the blog: 

  • I was never sent a bill because of the hospital was sending the bill to an address in which I never lived at. I happened to check my credit report and I had (2) two $2,500 bills sitting in collections for my daughter(s) bill 
  • So what if a collection agency reported a debt to Credit Bureau without even sending me a notice. How can I proceed then ? 
  • I received a bill from a collection agency that is over 5 years old and I was never sent a regular bill. What’s going on with this?
  • More than 3 years after getting rid of my cellphone, I all of a sudden got a call from a collections agency stating that I owe money to the cellphone company – no idea why they’d wait 3 years if I was truly delinquent. The cellphone company hasn’t been in touch with me in more than 3 years, and never sent any notices of outstanding debt.

They are all asking essentially the same question: “Can I be sent to collections if I never got a bill or a notice?” 

Some creditors “aren’t required by law to send you a statement before they send you to collections,” says consumer protection attorney Jeremy S. Golden. He’s received similar complaints, especially when medical bills are involved. 

In fact, there’s a name for this practice. It’s called “parking” the debt. Here’s how it is described in a report by the National Consumer Law Center about medical debt collection:

Many times a debt collector will furnish information about a medical debt on a credit report without actually engaging in any proactive steps to collect it, such as telephone calls or written communications. Instead, the collector will wait to collect the debt until the point in time when the consumer needs to get a mortgage or other credit. This practice is sometimes referred to as “parking” a debt. “Parking” benefits the debt collector because the collector never needs to expend the effort, time, and resources to dun the consumer, especially if the debt is a small one

The problem is that even if you pay one of these accounts as soon as you learn of it, the damage is probably already done. Paying a collection account that has already appeared on your credit reports as in collections typically doesn’t result in its removal, and under most credit-scoring models used today, and resolving it doesn’t often help boost your credit scores either.

Isn’t There a Law Against That? 

The answer often is, unfortunately, no. The Fair Credit Reporting Act requires certain lenders to send a notice before reporting negative information to credit reporting agencies. Specifically, it says: 

In general, if any financial institution that extends credit and regularly and in the ordinary course of business furnishes information to a consumer reporting agency…furnishes negative information to such an agency regarding credit extended to a customer, the financial institution shall provide a notice of such furnishing of negative information, in writing, to the customer.

However, the FCRA goes on to say that this notice “may be included on or with any notice of default, any billing statement, or any other materials provided to the customer,” though it “must be clear and conspicuous.”

Note that this requirement only applies to financial institutions that regularly extend credit, so presumably in the case of a delinquent cellphone or hospital bill that winds up in collection, it wouldn’t even apply. When it is required, a notice on a prior billing statement may suffice.

And there’s one more thing. The FCRA says this notice “shall be provided to the customer prior to, or no later than 30 days after, furnishing the negative information to a consumer reporting agency.” So it’s possible the notice could come after the damage has been done. 

It’s Not Your Fault 

But not so fast, says attorney Richard Alderman, director of the Center for Consumer Law, University of Houston Law Center. The credit report reflects your payment history, and “If you never received a bill, you haven’t defaulted or paid late.” A creditor isn’t generally required to send you a bill right away, though, he explains. They can delay billing, as long as doing so doesn’t violate any law or your agreement.

His view is this: “If they delay sending you a bill and you get the bill and you pay it immediately,” you are not in default and did not pay late. Nothing negative should appear on your credit report. He adds, however, that if you don’t receive a bill in a timely manner you always should contact the creditor to prevent any problems in the future. Avoiding negative information on your report is always easier than correcting it. 

What Can You Do?

NCLC has recommended that the CFPB “prevent parking by requiring that debt collectors provide consumers with notice before a negative item is placed on a credit report.” In the meantime, here are steps you can take if you find yourself in this position. 

The first, of course, is to review your credit reports on a regular basis. (In addition, you can keep an eye on your credit scores for free at If you find a collection account that you don’t recognize listed, you can dispute it with the credit bureau(s) reporting it, preferably in writing. If the credit reporting agency cannot confirm it with the source (the company reporting it), within 30 days, in most cases, it must be removed. 

“Disputing a debt directly with the debt collector does not trigger a consumer’s rights under the FCRA — only a direct dispute to the credit bureaus will do that,” says Southern California consumer law attorney Robert Brennan.

If it’s not removed, you can dispute it directly with the collection company that is reporting it. They too, have 30 days to respond. You can also request verification of the debt and if you determine the debt is valid, you can try to negotiate with them to remove it if you pay it. It is not an unreasonable request if you were never notified of the debt in the first place. (If they agree, get it in writing before you pay.) If they refuse, you may need to talk with a consumer law attorney with experience in credit reporting cases. Either way, it may be a good idea to share your experience with the Consumer Financial Protection Bureau, which discussed parked debts in a December 2014 report on debt collection, noting that it “could also harm the consumer if the tradeline is reported without his/her knowledge, and/or if the consumer did not have prior knowledge of the debt.”

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

I’m Worried Social Security Will Run Out Before I Retire. What Can I Do?

“Social Security is broken; it’s bankrupt; I’ll never see a dime of what I put into it.”

Chances are if you’re a millennial, a Gen-Xer, and dare I say, even a Baby Boomer, you’ve likely uttered these words, or at the very least you’ve thought about it in passing. These days it’s pretty easy to be a little skeptical about the idea of getting any type of benefit from the Social Security system. What makes it even worse is that if you look at your pay stub, you’ll notice that 6.2% of your income (up to the $118k wage base for 2015) is getting gobbled up by Social Security taxes… and if you’re really observant you’ll notice the 1.45% Medicare tax that you pay on EVERY dollar you make (there currently isn’t a cap for this tax). Talk about pouring salt on a wound.

Unfortunately, it gets worse. If you happen to be one of those entrepreneurial types and run your own business, then you’ll need to pony up the employer half of the taxes, as well. This brings the combined payment to both Social Security and Medicare to 15.3% of your income. YIKES. With current forecasts estimating that the Social Security Trust Fund will be bone dry by 2033, it’s no wonder most people roll their eyes when we bring up the idea of Social Security planning. I mean — who cares, right? We’ll never see a dime of that money.

Despite all of the doom and gloom, I’m here to tell you to take heart, my friends. The death of Social Security has been greatly exaggerated. Though don’t start planning how you are going to spend your money just yet. There are a few things that you Boomers, Gen-Xers and even… gasp… millennials need to know about Social Security.

If the Well Runs Dry

If and/or when the Trust Fund is “exhausted,” it really just means that every dollar that gets put into the Social Security system via payroll taxes will be paid out to claimants. What that means is that there aren’t excess dollars for growth, so it’s basically $1 in and $1 out. Crossing this threshold will trigger a reduction in benefits for those already drawing on the system. The reduction in benefits means that a Social Security participant will likely only receive 77% of their expected payments at that time, but here’s the interesting part. Just by triggering the benefit reduction the Social Security Administration estimates that they would be able to pay out around 70% of promised benefits to future retirees through the rest of the 21st century.

While I’m certain that current retirees aren’t exactly thrilled about the idea of taking a 23% pay cut just so future generations get to participate in Social Security, I’m hopeful getting a heads-up 18 years in advance will give those consumers enough time to plan to make up for the shortfall. For those of you who are still working and saving, the good news is that even though your benefits may be a little bit less than estimated today, it appears the system will still be around for some time to come, so you should probably learn a little about it.

Getting the Most Out of Your Payout

First, and this one is an absolute must, be sure to maximize your Social Security payout. For every year beyond the full retirement age that you delay drawing on your own work history, you can earn 8% in delayed retirement credits. This means that just by delaying your benefit from age 66 to age 70, you get an increase of 32%. This alone can help make up for the haircut you’ll take when the fund is exhausted.

While getting a guaranteed 8% a year seems like a no-brainer, it’s important to realize that maximizing your benefits isn’t always about waiting as long as you can to take them. It is almost always about how you and your spouse coordinate your filings so as to get the biggest bang for your buck. Unfortunately, the odds of the average retiree getting this right aren’t very good. MassMutual recently conducted a survey where it asked 1,500 adults 10 simple true/false questions about Social Security benefits. Only 28% received a passing grade and only one person answered all questions correctly – not very encouraging.

Now I know what you’re thinking: “Who cares? How much of a difference can the way I file really make?” Here is a quick real-world example:

A few months ago, I was working with a client who had spent the prior three months talking to representatives at the local Social Security administration office in addition to doing some Internet research. (This first point usually makes us financial planning types laugh a little since we know that Social Security reps are told not to provide guidance on claiming strategies, but I digress.) Because of this, he felt that he had figured out the best way for him and his wife to file, so we put it to the test. We compared his claiming strategy with an approach that our firm felt would be just a little more optimal. The result surprised even me. Using our approach, we were able to get them an estimated $187K in additional income over the course of their lifetimes. I think we can all agree that $187K isn’t exactly chump change, so the way you file truly does matter.

Delay Your Benefits Responsibly

Second, and this is a pretty big one, Mind the Gap. Many of the retirees who want to postpone drawing benefits to earn delayed retirement credits just can’t afford to. They fail to plan for the income gap that results from the delay of benefits. Because of this, they may be forced to go ahead and draw Social Security early, thus permanently forgoing a much larger benefit amount (remember the $187K). Some go ahead and try to fill the gap by distributing assets from other accounts in a less than ideal way. Both of these scenarios could easily set you up for failure in retirement.

Fortunately, like so many personal financial decisions, a little planning and some minor attention to detail can go a long way. One simple way to do this is to open a separate bank account or brokerage account into which you put a little extra money every month. Someone who puts an extra $100 a month into a brokerage account that grows at a 3% rate for 40 years would have around $90K. (Did you hear that, millennials?) This would give you $22,500 a year, or $1,875/month, for the four-year period (age 66-70) that you are able to earn delayed retirement credits. That’s likely pretty close to what your Social Security benefit would be, so it fills the gap nicely. Also, if you can add a little bit more money as you get older, achieve a little higher rate of return, or leverage some type of income vehicle that maximizes the distributions for you, then you could end up with a much larger balance resulting in larger monthly distributions.

Social Security claiming is definitely a tricky subject, but since we know that the system will likely survive for decades to come, it’s important to try and learn what you can. For those who want to absolutely make sure that they get it right, consider working with a Certified Financial Planner with expertise in Social Security optimization. After all, it’s pretty much a one-shot deal. With few exceptions, once you file you are locked in forever and that’s a mighty long time. So make sure that you do it right.

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

What Happens to My Debt If I Get a Divorce?

While you might have known that marital assets are separated during divorce, did you know that debts are as well? Yes, debt, just like any other possession, has to be divvied up and re-distributed during divorce. Unfortunately, this can make an already difficult process even more stressful. However, understanding how your debts might be split before entering your proceedings could help you better plan for your new life and give you peace of mind. Here is an easy-to-understand breakdown of what happens to your debt during a divorce.

Credit Card Debt

The responsibility of credit card debt during divorce tends to be decided by whether or not the credit card was under a joint or single account. While the rules on joint accounts vary from state to state, most cases consider marital debt to be any debt accumulated during the partnership, regardless of whose name appears on the account. This means you’ll most likely be considered partially responsible for debt on the account, whether or not you were the one to make the payment. Separate accounts, however, are just that — separate. Whomever’s name appears on the account will, more often than not, be awarded full responsibility.


Here’s where things get a little complicated. The division of a mortgage isn’t as straightforward as credit card debt during divorce. Because a mortgage is typically such a monumental expense, most states offer a variety of options for dealing with the situation. Ownership of the mortgage will typically be awarded to someone who makes significantly more than their former spouse or has been awarded full custody of the former couple’s children. In either of these situations, one party will be required to buy out the other’s equity in the house. Of course, the couple can decide to bypass all of these decisions and simply sell the home if they so choose.

Medical Expenses

Depending upon where you live, your state might have a different view on whether or not you and your former spouse share medical debts. “Community Property” states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) all debt will typically be divided amongst all parties. While this might greatly simplify the process, it leaves you open to taking on debt that you had no part in acquiring. In “equal division property” states however, the court will take a variety of factors into consideration when determining the responsibility of medical debt. This will usually include whether or not you and your spouse were living together at the time the debt was acquired, whether or not you were legally separated at the time, whether or not the debt falls under the umbrella of “necessary care,” and what impact that debt might have on any children you and your former spouse might have had.

While divorce is far from an easy process, knowing how it might affect your financial situation can really help you reduce the stress and handle other expenses it brings. Take the time to sit down and look through all your financial documents: bills, credit statements, loan papers, etc. Pull your free annual credit reports to see what accounts are reported in your name, and periodically revisit them to watch for important changes. (You can also get your free credit report summary updated every month on Creating a financial snapshot can help your and your attorneys determine the best course of action for you and your family.

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

Help! My Car’s on the Fritz & My Warranty Expired

The on-board computer on Shannon Stout’s Ford Escape went on the blink. It’s out of warranty. Is she out of luck?

Q: My 2005 Escape is having on-board computer problems after seizing up while my fiance was driving it last fall.

Our local mechanic and a Ford dealership diagnosed the engine light problem and says we need a new on-board computer. The car has 57,646 miles.

I am seeing in online forums that there’s a Technical Service Bulletin (TSB) for this problem on the Escape. It is my understanding that TSBs are a precursor to recalls. Most, if not almost all, have had this problem while the car was still under warranty. But since this car has been driven so minimally, it didn’t have this problem until now.

I followed Ford’s website instructions by having the problem diagnosed at a dealership. I emailed Ford through their website today and received an email basically saying “no.” Can you help?

Shannon Stout, Haddon Township, NJ

A: If your car’s out of warranty, your car’s out of warranty. But I reviewed the form response Ford sent you and took a look at the TSB and wondered if they were missing the forest for the trees.

I mean, here’s a car that’s hardly been driven, with a known problem with its on-board computer. If you’d driven this Escape the way most normal people do, and discovered the problem sooner, then this wouldn’t be an issue.

Point is, there’s a time to stick to the warranty and a time to consider making an exception and repairing the vehicle. I agree with you, this might be one of those times.

But, to be clear, Ford was under no obligation to fix its faulty computer. It should have manufactured a car with a working on-board computer, not one that fails after 50,000 miles.

You can appeal this to an executive at Ford. I publish the names, email addresses and phone numbers of their top customer service executives on my site. But I decided to take this case.

Things didn’t work out so well for me. Ford ignored my message for a month. I contacted the company again and this time I received a somewhat defensive email from a spokeswoman.

“Ford is absolutely committed to top quality and customer satisfaction,” she wrote. “Coverage of any vehicle is determined by eligibility under the provisions of the New Vehicle Limited Warranty, a customer satisfaction program or a recall. We recommend that customers with any questions on our products either contact their dealer directly or visit Owner Support at or call 1-800-392-3673.”

You didn’t take “no” for an answer. You contacted Ford again and appealed. The company agreed to contact your dealership to see if it would offer you a warranty price for the repair. Ford agreed to cover half of that price.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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