4 Ways to Cut the Cost of Life Insurance

Thinking about your own death is not fun; paying for something that will be useful only when you die can be even less so. But protecting your assets and dependents in case something happens to you is important. Once you calculate how much life insurance you need, you can start to look for the right policy and coverage for you. If you already have insurance or are worried about those pesky monthly costs, check out the tips below for reducing your life insurance premiums.

1. Shop Around

It’s a good idea to get life insurance quotes from different companies. Find a policy that matches your wallet and your circumstances, giving you the right amount of coverage for an amount you can afford. Keep in mind, cheapest is not always best. Also, term life insurance is usually more affordable than whole. It’s important to run the numbers for both types to see what makes the most sense for your situation.

2. Get Healthy

Life insurance premiums are based on risk, so the greater the risk you will die before the policy term ends, the more you will have to pay each month. Factors that go into assessing risk include your family’s medical history, your weight and lifestyle factors (like whether you smoke). If you undergo a big change like quitting tobacco products or getting a chronic medical condition under control, you may want to get a new quote or negotiate a better price with your current carrier. Basically anything that helps increase your life expectancy will also reduce your life insurance premiums.

3. Plan Ahead

The earlier you buy life insurance, the healthier you will likely be and the more likely you are to save on premiums. You can lock in a lower rate by getting in early. You can also plan ahead on a smaller scale by being prepared for your health exams. Your insurance policy may require a medical exam, so it’s a good idea to find out which tests you will be taking and prepare. You may want to fast for a few hours, drink more water than usual and avoid fatty foods.

4. Ask for a Better Deal

Sometimes you just need to ask in order to find price breaks. Talk to your provider about making annual payments rather than monthly ones, meaning more money upfront but significant savings over time. Don’t be shy when it comes to negotiating with insurance providers. It is a competitive market and they know premiums can be the difference between getting your business and losing it.

Purchasing the right life insurance is important, but you don’t want the stress of affording your premiums to shorten your life! Having financial protection for your loved ones doesn’t have to be a headache. Follow our tips and keep looking for new ways to keep your premiums down without sacrificing the coverage you need.

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This article originally appeared on Credit.com.

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

3 Dangers of Borrowing Against Your Pension

For consumers who are entitled to a steady stream of future payments, like a pension or structured settlement after a lawsuit, they may find themselves eligible for a lender offer on an “advance” lump-sum, upfront payment on that money. It’s kind of like taking out a loan on money you’ve already been promised. Since the “loan” payment is guaranteed by a strong entity like a pension fund, you’d think these products have low interest rates. However, when Congress’ General Accountability Office went undercover and got information about dozens of pension advance offers last year, it found interest rates ranged from 27% to 46%.

The problem with the upfront payments is this: The lump sum is far less than the total of the payments. On rare occasions, the upfront payment can make sense for someone in a bind, but generally, consumers need to be aware of the high costs. That’s why the Consumer Financial Protection Bureau has issued an advisory about “pension advance” traps, joining a chorus of other voices warning consumers about these kinds of expensive financial arrangements.

“Many retirees depend on a pension to cover day-to-day as well as occasional unexpected expenses, such as health emergencies or home repairs,” the CFPB said in its advisory. “We’ve heard that some retirees with pensions who are facing financial challenges have responded to ads for cash advances on their pensions. Although pension advances may seem like a ‘quick fix’ to your financial problems, they can eat into your retirement income when you start paying back the advance plus interest and fees.”

The arrangements are complex. Not only do pension recipients sign over five or 10 years of their benefits, they are often required to take out life insurance policies, to prevent payments from stopping in case of death.

Military veterans have also been targeted by pension advance offers, even though it’s generally illegal to assign federal benefits like pensions to a third party. That doesn’t stop companies from trying, however. California’s Department of Business Oversight issued a warning about pension advance loans to veterans in November.

“There are unscrupulous operators out there misleading investors and preying on vulnerable veterans who need cash,” said agency Commissioner Jan Lynn Owen. “We want veterans to know they cannot sign away their right to their pension or disability benefits.”

The alleged scams can also hurt investors, who supply the upfront cash and are often unaware the arrangements can be illegal, the California agency said.

The CFPB urges consumers who might consider such a loan to visit a credit counselor instead and search for other ways to handle whatever financial emergency is leading them to consider a pension advance.

It also advises consumers with pensions to:

1. Avoid loans with high fees and interest. Pension advance companies may not always advertise their fees and interest rates, but you will certainly feel them in your bottom line. Before you sign anything, learn what you are getting and how much you are giving up.

2. Don’t sign over control of your benefits. Companies sometimes arrange for monthly payments to be automatically deposited in a newly created bank account so the company can withdraw payments, fees and interest charges from the account. This leaves you with little control.

3. Don’t buy life insurance that you don’t want or need. Pension advance companies sometimes require consumers to sign up for life insurance with the company as the consumer’s beneficiary. If you sign up for life insurance with the pension advance company as your beneficiary, you could end up footing the bill, whether you know it or not.

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This article originally appeared on Credit.com.

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

How Much Is Too Much to Spend on a Car?

Everyone overspends from time to time, but when it comes to big purchases, like a home or vehicle, something that seems like an exciting splurge could end up devastating your finances.

The question of, “How much is too much?” is quite personal. To say that you should only spend a certain percentage of your income on a car doesn’t take into account where vehicle ownership sits on your list of priorities, how often you drive or what the purpose of the vehicle will be. Knowing it’s a personal choice, Elizabeth Grahsl, a certified financial planner in Dallas, tells her clients to use 15% of their income as a guideline for how much to put toward auto expenses. Generally, you’re spending too much on a car if the total cost of ownership prevents you from reaching other financial goals.

“I see a lot of clients [whose] car payment is close to what they pay on housing,” Grahsl said. She clarified that “car payment” included all expenses related to a vehicle, like insurance, maintenance, parking and so on. “Then they can’t afford to save or travel or do fun stuff.”

Accurately determining how much you should spend on a car requires a lot of research, both of your own finances and of the auto market.

“I think an hour’s worth of work could save you thousands of dollars over the five years you own the car,” said Hank Mulvihill, a certified financial planner in Richardson, Texas. Consider a vehicle’s fuel economy and how fluctuations in fuel prices could impact your budget (for example, if you have a long daily commute, a 20% increase in gas prices could really hurt). Call your insurance agent to find what your premium will be for a specific vehicle. Spend time consulting car reviews and get an idea of what maintenance could cost you.

“Anybody should do some basic research,” Mulvihill said. “Total cost of ownership may not be something you budget for unless you think about it.”

Even if you’ve done your due diligence and go to a dealership knowing exactly what you want, you may still overpay for a car if you’re not prepared to stand your ground against a salesman or ignore features you want but don’t need.

“The unfortunate thing about cars is they’re not just a financial purchase, they’re an emotional purchase,” said Rick Kagawa, a certified financial planner in Huntington Beach, Calif. He’s a self-described car nerd and will buy cars for his clients to remove their emotions from the equation: They go over everything the clients want in vehicles, decide on exactly what the clients are going to get, and he goes to complete the purchase. That prevents his clients from gravitating toward a common, costly loan — one with a long term.

“The price for the car is so big people cannot relate to a $40,000 or $50,000 purchase, but what they do relate to is a monthly payment,” Kagawa said. Prioritizing a certain monthly payment may leave you with a loan spread out over six or seven years, which may be longer than the consumer plans on owning the car in the first place.

“The finance person says, ‘I can get you to whatever the number is,’ but you’ll be on a six-year note, and people don’t care,” Mulvihill said. Extended warranties, maintenance plans and other add-ons may be included in a monthly payment quote, which you may or may not need, so it’s crucial to pay attention to the details. “If you don’t understand all that, you’re going to end up with way more obligations than you should.”

Taking on an auto loan, whether the vehicle is used or new, can be a huge financial burden and shouldn’t be done without careful research. Do your best to get your credit in good shape before applying for a car loan (you can get two of your credit scores for free on Credit.com to see where you stand), and shop around for the best deal before you commit.

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This article originally appeared on Credit.com.

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

Will Your Next Debt Collector Be a Robot?

Are the days of debt collectors sitting in cubicles “dialing for dollars” numbered? Debt collection, like many sectors of the economy, is starting to go digital. So if the idea of talking with a debt collector automatically puts your stomach in knots, you may be in for a pleasant surprise: In the not-too-distant future, your debt collector may be a computer.

William Lowe, director of operations for Gluu.org, a firm that writes and supports open source security software, has experienced this firsthand. A billing glitch with a vendor resulted in a rather large and unexpected balance that couldn’t be paid off immediately. The debt was turned over to TrueAccord, which calls itself an “automated debt recovery platform.” His first interaction with them was by phone, he says, but after that, he said it was “very automated — more a 2.0 experience.” Instead of cold calls, he says, he got emails.  “Rather than that back and forth haggle between a debt collector,” an online dashboard let him customize a plan, he notes.

Debt collection firms use technology today, including automated dialing systems (aka “robocalls”), skip tracing to find consumers, and predictive scoring to help them identify which consumers are most likely to pay. But in most debt collection operations there is still largely a human component, with collectors trying to talk consumers into paying as much as possible. Sometimes that works well; when collectors can establish a rapport with a consumer, they may even persuade them to pay their firm before others. But at other times, it can backfire, and result in angry consumers who are unwilling to pay, or even lead to violations of federal law designed to prevent harassment.

By contrast, the TrueAccord system is centered around an online dashboard that allows both the creditor and the debtor to view account balances, set up and manage a payment plan and track progress toward paying the debt 24/7. The approach appears to be working: In a March 2015 press release, the company said that in the past six months, it increased the amount of debt under management to $45M and is working with over 60 major companies to collect from more than 40,000 debtors.

Steven Mathis is one of those using the platform to pay off a debt. When Mathis left his corporate job to start his marketing company, Mathis Marketing, he dealt with the growing pains many new firms encounter and accumulated some business debt. He had every intention of paying back what he owed, and was turned off by the collection process in general, which he found “threatening, harassing, combative.”

‘I Felt More Motivated’

But when one of his debts was turned over to TrueAccord, he says the interaction was much more positive. Working with them via email and online, he was offered a range of payments, and was able to customize them to fit his financial situation. It was a “completely different experience,” he says. And because it was more positive, “I felt more motivated to take care of it,” he notes.

New regulations around debt collection are expected to be announced by the Consumer Financial Protection Bureau and may open the door to approaches such as this by clarifying, for example, when and how consumers can be contacted by email. Some consumer advocates hope new regulations will require debt collectors to provide consumers with more information about balances and payment activity, and if that happens, this kind of technology could be poised to fill the gap. Of course, there are drawbacks: some consumers don’t have reliable Internet access, for example. Others may be trying to avoid dealing with their debt and no amount of technology will change that. And still others may prefer to talk with someone by phone. Yet that still leaves plenty of consumers would would welcome the opportunity manage a collection account the way they do other bills — online and automatically.

“The preference for digital is stronger with younger and tech-oriented crowds, and they grow in numbers and overall population,” says Ohad Samet, co-founder and CEO of TrueAccord. “However, the advantage of an automated and data-driven platform is that it can identify and use the consumer’s preferred channel — be it email, SMS or a phone call with a live representative — all channels that our system utilizes when appropriate.”

This isn’t the only company trying to change the industry though technology, of course. Another, Global Debt Registry, is working on creating a central repository of consumer collection accounts, and making that information available to consumers through a free consumer site, DebtLookUp.com. It currently allows consumers to research collection agencies and verify debts they owe to help them avoid scammers. It can track their debts even when they are sold to multiple collection agencies. (Consumers can also see how collection accounts are affecting their credit by getting their free credit report summary on Credit.com.)

How fast and far-reaching these changes will be remains to be seen. But for at least some debtors, it’s already night and day. Lowe, for example, says he’s never had a debt collector send him chocolates for Christmas. TrueAccord did.

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This article originally appeared on Credit.com.

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

8 Luxury Cars You Can Buy for Under $20K

Fancy cars generally come with hefty price tags, but that doesn’t necessarily mean luxury is beyond your reach. With a little bit of patience and strategy, you might be able to buy a luxury vehicle for thousands of dollars off the sticker price.

The National Automobile Dealers Association compiled a list of eight luxury vehicles that could be bought for roughly $20,000  or less — in some cases, that’s more than $10,000 off the manufacturer’s suggested retail price (MSRP). NADA recently published the list, which is made up of used vehicles with mileages between 45,001 and 50,000.

2012 Infiniti G25 Sedan
Used Price: $20,500
MSRP: $32,400

2012 MINI Cooper S Convertible
Used Price: $19,600
MSRP: $27,950

2012 Lincoln MKZ AWD 3.5L V6
Used Price: $19,575
MSRP: $36,535

2012 Volvo C30 2.5L I5 Turbo
Used Price: $19,500
MSRP: $24,700

2012 Acura TSX 2.4L I4 Automatic
Used Price: $19,450
MSRP: $29,810

2012 Volvo S60 2.5L I5 Turbo
Used Price: $19,250
MSRP: $31,450

2012 Audi A3 2.0T Premium Automatic
Used Price: $18,825
MSRP: $27,270

2012 MINI Cooper Clubman S
Used Price: $18,425
MSRP: $24,900

The auto dealers association also published lists of luxury vehicles available for less than $25,000 and less than $30,000 — the vehicles on those lists were also mostly used cars with about 45,001 to 50,000 miles on them.

Sticker price is only part of figuring out what kind of car you can afford to buy. If you’re financing the purchase, your credit score and down payment will heavily influence the interest rate you qualify for, and the higher it is, the more you’ll end up paying over time. (You can get your credit scores for free on Credit.com to see where you stand.) You also need to consider how long you plan to own the car and, as a result, what length loan term makes sense for you. A six-year loan will lower your monthly payment, but you’ll end up paying more on a depreciating asset in the long run, and you may find yourself in a complicated situation if you want to replace the vehicle before you’ve repaid the loan. On top of that, you’ll have to consider insurance costs, because that may drive your monthly automobile costs higher than your budget allows.

If driving a luxury car is a high priority for you, there are certainly deals to be had, but if minimizing your car costs overall is more important, going for a used luxury vehicle may not be a ticket to saving money.

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This article originally appeared on Credit.com.

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

Are My Retirement Funds Safe From Creditors?

Q. I understand that in certain circumstances IRA and 401(k) money may be protected from a lawsuit. However, if a person is retired and has rolled over their ERISA plan to an account with a financial institution, are those funds still protected?

A. Generally speaking, yes.

The laws can vary by state.

“Under federal law, pension plans such as a 401(k) fall under the Employee Retirement Income Security Act (ERISA) and are protected from creditors,” says Anthony J. Vignier, a certified financial planner and attorney with Vignier Investment Group in Kearny, N.J. “This includes protection if filing for Chapter 7 bankruptcy protection,” he said. (In New Jersey, the funds are protected from most creditors.)

Vignier said federal law exempts $1 million in an IRA for Chapter 7 filers.

A few exceptions from creditor protection are domestic relations orders for spousal or child support, and an IRS tax garnishment or lien.

He said New Jersey provides retirement accounts with 100% protection from creditors under N.J.S.A. § 25:2-1(b).

“This protection applies not only to IRAs, but also Roth IRAs, SEP-IRAs and other similar qualified retirement vehicles,” he said. “In a Chapter 7 bankruptcy, New Jersey exempts all of your IRA. You can choose the federal or New Jersey exemption when filing for Chapter 7 bankruptcy protection.”

You do not want to co-mingle IRA and 401(k) funds unless you are well below that $1 million level, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton, N.J.

“If you are rolling money out of a 401(k) plan, you need to put that money in a separate ‘Rollover IRA’ and not mix funds from a traditional IRA,” Lynch said. “As long as you do that, your funds are protected.”

Vignier said some of the best protection you can have against potential creditors is to have adequate insurance coverage. You should do a yearly checkup of your policy coverages for home, auto and medical to verify that you have sufficient coverage.

If you’re a professional such as a doctor, lawyer, etc., you should also make sure to have adequate professional malpractice insurance.

“Another often overlooked insurance protection strategy is getting an umbrella liability policy,” Vignier said. “It’s cheap and can offer great protection when other insurance falls short.”

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This article originally appeared on Credit.com.

This article by Karin Price Mueller was distributed by the Personal Finance Syndication Network.

Financial Issues for Alzheimer’s Families

What financial issues do Alzheimer’s families face? According to the National Institute on Aging, "as many as 5 million Americans age 65 and older may have Alzheimer’s disease." Alzheimer’s is a chronic disease that requires care for the patient.

We wanted to know what financial issues families that included an Alzheimer’s patient needed to address. To help us answer them, we contacted Roger Wohlner. Roger is an experienced financial adviser based in Arlington Heights, IL. In addition, Roger contributes to his own popular finance blog, The Chicago Financial Planner.

Q: What should a family do financially while the patient is still capable of making decisions?

Mr. Wohlner: If you haven’t done this, I suggest a family meeting between the patient and adult children (or other relatives) to gain an understanding of their wishes in terms of the care they will receive, their financial resources available for that care, and other related issues. This is a good time to make arrangements such as appointing someone to be legally responsible for their financial affairs once they are not able to manage them on their own. Estate planning and other related issues should be updated and any changes made at this time. Meeting with an attorney well-versed in elder care and related issues is a good move as well.

Q: If the patient is already incapable of making decisions, what can the family do to handle financial affairs?

Mr. Wohlner: If things have gotten to this point, it is best to consult with an attorney versed in this area. The rules can get complex and vary by state.

Q: Is there a way to estimate the lifetime cost of caring for an Alzheimer’s patient?

Mr. Wohlner: This is tough and will depend upon a number of factors including where you live. A study that I saw quoted on the AARP site a few years ago indicated that the average annual cost to care for an Alzheimer’s patient was about $56,000 per year. This can run much higher if the patient is in a care facility and will vary based upon the type of facility. The study also indicated that a substantial portion of the cost of care is often born by the caregivers.

Q. What’s the most important thing financially for a family with an Alzheimer’s patient?

Mr. Wohlner: If time and circumstances permit, planning for the cost in the early stages of the disease is important.

Q: What about retirement accounts and pensions owned by the patient? What happens to them?

Mr. Wohlner: They can generally be tapped to care for the patient. If this is Early Onset Alzheimer’s, the penalties for early withdrawal may be waived. A spouse or family member will generally need to have a power of attorney or similar designation to make these decisions. Again it is wise to consult an attorney who specializes in this area.

Q: Is it permissible to move assets from the patient to make them eligible for aid?

Mr. Wohlner: I’m not an attorney, but it is my understanding there are look-back rules that preclude the movement of assets from the patient’s account in order to make them financially eligible for aid. As I understand them, these rules are strict and the penalties can be pretty severe. If this is an issue that you are considering, you would be well-advised to consult with an elder-law attorney in your area (or the patients if they are different) to gain an understanding of this complex area. I also have very mixed feelings in this issue. If the patient has substantial assets, is it right to move those assets to relatives and relegate the patient to care that can be paid for via Medicaid that might be inferior to what their assets could support?

Q: Where can a family go to find help in paying those costs?

Mr. Wohlner: There are a number of sources that include Medicare, retirement benefits, employee benefits and health insurance (generally for younger patients) and government assistance are all potential resources as well as other personal financial resources of the patient. Check out Alzheimer’s Organization site alz.org.

The Dollar Stretcher.com is dedicated to “living better…for less” and includes a variety of time and money-saving articles on all aspects of life.

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

How to Take the Misery Out of Saving for Retirement

While we have all been told how important saving for retirement is, it can be hard to cut back on personal spending to watch your hard-earned money sit in an account you won’t have access to for years or even decades. Retirement can sound far away and even boring when you are in the prime of life with plenty of costly desires, but changing your attitude can help you save more and reach a better retirement, faster. Don’t think of saving as hindering your current quality of life; build enthusiasm for what is yet to come. First, calculate how much you need to save for retirement, then check out the following reasons to get excited about it.


If you’ve been living paycheck to paycheck or are just starting out on your own, your personal finances can be intimidating. Having and regularly contributing to a retirement account can help you become and feel financially secure. Saving over so many years will help ensure you will have enough money in your old age. Giving that to yourself can be empowering.

Financial Freedom

A change of perspective may be just what you need to get excited about retirement. Try thinking about the concept of “financial freedom.” Consider it the stage where you can choose when and if you work and how to use your money.

Your Rules

Does your boss get to you? Are there days you just want to throw the alarm clock and your employment responsibilities out the window? By saving now, you will help give yourself the opportunity to make your own rules in retirement. You will have control over your time and can walk away from your desk forever.

Specific Goals

A great way to get pumped up about retirement is to make specific plans, even if they will change in the future. Visualizing where you want to be in retirement can help get you through the day and put a smile on your face while you make contributions to your retirement fund. Whether it is playing sports and lounging in the sun, traveling the world or just getting more time with your friends and family, picture what your hard work now will help you enjoy in retirement. You can even use a savings tracker to help you feel better about where you are now and know exactly how much time and money you need to reach your goals.

Your Money Makes Money

When all else fails, focus on the numbers. Do not think of your retirement funds as IRAs or 401(k)s, but as compounding wealth. By saving even a small amount each year, you will watch your money accrue interest and then that interest will accrue more interest. And don’t forget about those tax-deferred benefits.

No matter what it takes to get you motivated to save for retirement, it’s important to make sure you are socking away for post-work life and preparing for your future.

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This article originally appeared on Credit.com.

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

The 5 Most Common Refinancing Questions, Answered

Lower mortgage payments? Shorter loan term? Lower interest rates? You may have thought you were done thinking and talking about home loans when you first bought your house, but as with most big financial decisions, it may be a good idea to revisit and re-evaluate. Refinancing offers some great potential benefits, but it’s important to consider your personal circumstances to see if it is truly the right decision for you. It’s also a good idea to be sure you understand what getting a new mortgage loan with new terms really involves. Check out some of the top refinance questions (and their answers) below to help you be sure you are acting in your best interest.

Should I Refinance?

The biggest question is, of course, whether this option applies to you. A refinance may be a good option for you if you cannot afford your monthly payments, if you can obtain a big drop in your interest rate, if you want to change the terms of your mortgage from adjustable rate to fixed rate, or if your financial situation or credit score has improved drastically since you got your mortgage (you can get your credit scores for free on Credit.com to see where you stand now).

How Much Will Refinancing Cost Me?

If it seems like a refinance is the right move for you, you are probably wondering how much you will save and what exactly it will cost. Though you may save money in the long run, refinancing requires some cash upfront. Your interest rate difference, lender, credit score, title and home value will all affect your refinancing closing costs. If you don’t have the money upfront you may lose out on some of the benefits by spreading out the cost over the length of the loan.

How Do I Take Cash Out?

Besides changing the terms of your loan, you may want to refinance to take equity out of your house (if you have enough). By increasing your mortgage balance and paying more monthly, you can take cash out to use elsewhere. This is not always advisable, as it takes away from the equity you have built up.

What Are Points?

Points are a form of prepaid interest. In exchange for increasing your upfront payment, a lender will reduce your loan’s interest rate and thus, the monthly payment you make for the term of the loan.

Why Do I Have to Pay Mortgage Taxes?

Mortgage tax is charged on all new mortgages by local or state governments. Since a refinance is basically obtaining a new mortgage, you will likely have to pay the tax just as you did when you first acquired your home loan. If you are using the original lender, you may be able to avoid paying the tax if they treat your refinance as a modification of your existing mortgage — but that could mean you will have to pay a modification fee.

Refinancing can be confusing, but by getting educated and crunching some numbers, you could clear up all your concerns and save some serious cash along the way.

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This article originally appeared on Credit.com.

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

9 Plead Guilty to $20M Scheme to Defraud Soldiers

Eight Alabama residents and one Georgia resident pleaded guilty to participating in a scheme in which they stole thousands of identities to file more than 7,000 false tax returns, according to the U.S. Attorney’s Office of the Middle District of Alabama. Over the course of nearly three years, the group defrauded the government of approximately $20 million. A 10th accused conspirator is scheduled to appear in court April 6.

The group collected identifying information from a variety of sources, including a military hospital. Defendant Tracy Mitchell of Phenix City, Ala., worked at a military hospital in Fort Benning, Ga., where she had access to service members’ identifying data, including information about soldiers deployed to Afghanistan, according to a news release about the case. Court documents cited in the release say Mitchell used the information she accessed at the hospital to file fraudulent tax returns.

Other defendants took data from the Alabama Department of Corrections, a call center in Georgia where two of the defendants worked and two unnamed Alabama state agencies. This went on between January 2011 and December 2013.

Identity thieves favor the tax-return tactic as a way to cash in on sensitive data, which they can get by breaking into databases containing the information (aka a data breach) or following people’s paper or electronic footprints.

The success of a tax-related identity theft scheme depends upon thieves filing fake tax returns early in the season before victims do. This leads to a delay in refunds for those who are entitled to them, not to mention the hassle of straightening out identity theft and dealing with the consequences of someone using your personal information. Losing control of your Social Security number may mean years of identity theft problems, which can take time to fix.

Additionally, identity theft can lead to damaging information on your credit report, potentially hurting your credit standing and everything it’s used for, like getting loans or applying for an apartment. To look for potential signs of fraud, you can get your free annual credit reports from AnnualCreditReport.com, and you can get a free credit report summary, updated monthly, on Credit.com.

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This article originally appeared on Credit.com.

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