The Credit Abuse Resistance Education (CARE) Program is a good place for both students and parents (and unsophisticated consumers) to start. The CARE program is designed to motivate young people to understand and appreciate the techniques necessary to avoid the severe consequences of credit abuse.

There are links to helpful and plain-spoken information about credit, debt and personal finance.

If you need help sorting out your financial matters, you may want to consult with a qualified bankruptcy attorney, even if (perhaps especially if) your goal is preventing bankruptcy. 

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Place a note on your credit report

The article says “Because prospective employers may pull a copy of your credit report, consider adding the equivalent of a doctor’s note to each of your reports explaining your hardship, like a job loss. All three major credit bureaus allow you to add a brief statement through their Web sites. FICO doesn’t consider these statements when formulating scores, however, so don’t expect it to sway lenders.”

Consider a secured credit card

According to the NYT these cards require you to put a set amount of money in a bank account as collateral and the “credit” equivalent to the amount on deposit. The article warns against unscrupulous card issuers that charged the security deposit to the card. Before getting a secured card, be sure the issuer will report your experience to all three credit bureaus. Otherwise, what’s the use?

Consider a credit union

While their offerings vary, the Times says “they may be more likely to consider alternative credit scores, offer free credit counseling or have products tailored for people with poor credit histories.”

“Certainly, many credit unions have credit builder or rebuilder loans, often structured as a loan with a built-in savings component so that a person gradually builds up funds that can act as partial collateral,” said Clifford Rosenthal, the president of the National Federation of Community Development Credit Unions, a trade association representing credit unions in low- and moderate-income areas.

One question we’re often asked is how bankruptcy will affect your credit score. We went into some detail on that in this post.

If you would like a credit card debt counseling session to evaluate your options, call a qualified bankruptcy attorney.

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This chart proves that small businesses here in Charlotte are not alone in complaining about tight cash flow.  With bank financing so difficult to obtain, it’s no wonder owners turn to the only source of cash flow they can obtain: credit cards.

The reason for going into business is to MAKE MONEY. A business exists to pay its owners, not the other way around. Too often we see business owners who’ve subsidized operations with credit card financing in hopes that they can wait out the downturn. This strategy is fraught with difficulties.

The trouble with credit card financing

Because small business owners generally have few financing options, they often mortgage their homes and personally guarantee the credit card debts of the company. Our clients often assume that the “business credit card” is a debt of the company, because the business name is embossed on the card. Not necessarily. The entity is liable only if it signed the credit agreement as the corporate entity. More often than not, the business name is on the card, but the credit agreement was signed and guaranteed by the owner (personally).

When the debt is the responsibility of the owners, we will look at filing personal bankruptcy case for the owners and let the entity continue to operate,  now freed from servicing the credit card debt of the owners. The upshot in this scenario is that these small businesses can survive, while the owners get a fresh start.

We wrote about small business owners going without pay earlier this month.  If your business is unable to support YOU, it’s time to make changes.  We’ve seen a few small business owners in our offices who called us with enough time to avoid bankruptcy, but too often business owners delay to the point that they have no alternatives.

Contact us if you need assistance with this or any other area of debtor/creditor relations.

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Below the chart, watch a video on preventing employment fraud schemes (from the Better Business Bureau).

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Presented by the Better Business Bureau Consumer Foundation, Senior Scene will be held on Tuesday, October 5 from 8:30 a.m. until 12:30 p.m. at St. Stephen Methodist Church, located at 6800 Sardis Road, Charlotte, N.C. 28270.

Senior Scene 2010 is Charlotte’s premier event for information on Medicare fraud, prescription drug fraud, telemarketing fraud and much more. All adults ages 55 and older, senior adult groups, caregivers, and senior adult industry professionals, are invited to attend this informative and fun event.

Admission is free, parking is plentiful, refreshments will be served, and entertainment will be provided by The Melody Makers.

Attendees at Senior Scene 2010 will also have the opportunity to visit with exhibitors to learn about businesses that offer products and services to older adults.

Senior Scene 2010 will include:

• FREE flu shots for Medicare recipients – $30 for non-Medicare recipients.
• Free blood pressure screenings
• Free hearing tests
• Medicare Part D insurance information

Be wary of debt settlement and foreclosure scams

While Mitchell & Culp will not attend this event, if we did attend, we would advise Seniors to be wary of credit card debt counseling and debt settlement companies, and attempts to foreclose on their houses.

If you are at risk of going into foreclosure, these resources might help you prevent doing so.

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Small Business Issues with Credit Card Accountability and Responsibility Act

For reasons outlined below (excerpted from this MSNBC article), our credit card debt counseling load is likely to increase in the wake of the new Credit Card Accountability Responsibility and Disclosure Act.

So-called “professional” cards are not covered by new consumer protections. That means they can come with all the old booby traps — late fees of $35 or more, less than 20 days to pay the bill before being hit with those late fees, random interest rate charges without warning, retroactive interest rate charges, and so on. Perhaps you think that won’t impact you — “professional” credit cards might sound like plastic that CEOs use to expense private jet trips.

You’re wrong. Professional cards include what are sometimes called “corporate cards” — the plastic that most companies insist employees use for work expenses. Millions of such cards are in circulation. Citigroup, Bank of America, U.S. Bank, and JP Morgan Chase together have issued 4 million corporate cards, for example, according to the Nilson Report. American Express, which would not reveal the number of corporate card accounts it holds, is the largest issuer, according to Nilson. Amex’s corporate cards are not subject to CARD Act rules, according to the company.

In one case (of credit card solicitation), the business card application was simplified to include a single check box with the question, “I am a business professional with business expenses.”

If you own a business that uses credit (or debit) cards for financing and are troubled about your financial strength, consult a qualified attorney for a Credit Card Debt Counseling session.

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The short answer is “no.”

Handling calls from creditors

When the National Do Not Call Registry was established it didn’t include any of the following:

• Calls from businesses that you already have a relationship with
• Calls for which you’ve already given written permission
• Calls that aren’t commercial and don’t include unsolicited advertisements
• Calls made by or on behalf of non-profit organizations

I know of no lenders or credit card companies that extend credit without the debtor granting permission for the creditor to use a third-party collector to collect any delinquent debt . So, ultimately, you gave permission for the collectors to call you when you got your loan or credit card. This means signing up for the national do not call list won’t stop calls from debt collectors.

Cease and desist

If you wish to stop debt collector calls, you should send a written cease and desist letter to the collector stating that you no longer wish to be contacted. Aside from paying the debt, or hiring an attorney to assist you, that’s the only way to try to get a debt collector to stop calling you.

Under both the federal and North Carolina versions of the Fair Debt Collections Practices Act (FDCPA), once a debtor has informed a creditor/collector that they do not wish to be contacted about a debt (by sending what’s commonly known as “cease and desist letter”), the creditor/collector may not continue to contact the debtor unless it’s to tell the debtor that some specific action is going to be taken.

Sometimes these work, sometimes they don’t.  Violations of FDCPA do not constitute a defense to a valid debt owed, but they can be brought by way of counterclaim for separate damages, which are minimal (often just $1000.00 plus attorney’s fees).

If you are struggling to pay your debts, call a qualified bankruptcy attorney for a credit card counseling session or bankruptcy evaluation. Cease and desist letters are often band-aids for financial circumstances that require expertise.

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The article tells an all-too-familiar tale of spending money with a debt settlement company and then having to do the work yourself that you paid them to do on your behalf.

We always warn clients that companies and individuals offering debt settlement are often running afoul of the law — they are interested in making money off you, not actually giving you relief.

We always disclose to clients that  debt settlements often give rise to debt forgiveness income, and that income can be taxable. Credit card settlements almost always give rise to debt forgiveness income; the credit card company will inform the IRS of the amount of the debt forgiven. Factor in the tax consequences of settling when considering debt settlement. If you cannot pay the taxes you will incur with the settlement, we do not recommend you enter into an agreement.

Credit card companies typically require a lump sum settlement paid in no more than four monthly installments, so debtors hoping to settle need to have a pile of cash at the ready. We NEVER advise clients to take money from retirement plans to settle their debts, a point which is also reinforced by the Star-Telegram article.

If you are unsure which direction is best for your given financial circumstances, call a qualified bankruptcy attorney for a credit card debt counseling  or a bankruptcy counseling session.

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If you wish to dispute an entry to your credit report, we suggest you use this letter guide, provided courtesy of the Consumer Credit Counseling Service of Orange County.

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We advise sending the letter to all three bureaus (Equifax, TransUnion, and Experian), by certified mail, return receipt requested, and including their SSN and full legal name in the re: line.

Sample Credit Report Dispute Letter

Today’s Date

Name of Credit Bureau
Mailing Address of Credit Bureau
City, State, Zip

Attention: Consumer Relations

I recently obtained a copy of my credit report from your service and have found the
following items to be in error.

EXAMPLES

Item #1: I dispute ABC National Bank account #12345. I have never been late on
this account.

Item #2: I dispute ABC Financial Services account #4545. This account was not a
charge-off, please delete.

According to Section 611 of the Fair Credit Reporting Act, I am requesting that you
re-investigate those items indicated, and promptly delete any unverifiable, inaccurate,
or outdated information from my credit report.

In addition, I am requesting a description of how the investigation was conducted
along with the name, address, and telephone number of anyone contacted for
information. Furthermore, if there is a change in my credit history resulting
from your investigation, I am requesting that an updated report be sent to those
who received my report, within the last two years for employment purposes, or
within the last one year for any other purpose.

My full name is:_______________________________________________________

My Social Security # is:_________________________________________________

My date of birth is:_____________________________________________________

My home phone number is:______________________________________________

My address is:__________________________ (Ave., St., etc.) APT:____________

City: ______________________________ State:_______ Zip Code:_____________

Please send me an updated copy of my report, and notification that items have been
deleted. I will consider 30 days a reasonable time for your re-verification of
these items.

Thank you for your prompt attention in this matter.

Sincerely,
Signature: ______________________________

This information is general and thus incomplete, and the reader should seek legal counsel for specific legal problems or questions.

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