Author: Philip Tirone

David Vladeck director of the FTC’s Bureau of Consumer Protection and DOJ Assistant Attorney Tony West today conducted a conference call I attended to provide additional information regarding an announced settlement with collection company Asset Acceptance. In the settlement Asset Acceptance agreed to pay the second largest fine ever against a collection company for alleged violations.
Asset Acceptance is one of the larger debt buyers. They purchase and collect old debt that had been previously placed with other entities but problems with accuracy and data create a situation where the data is less reliable, yet it was being used. As a debt is passed from one entity to another the quality of records deteriorates when people with similar names and address are involved. Erroneously people may be contacted about debts that never belonged to them at all. And that’s a problem.
In some states the applicable statute of limitations will prevent suits on this old debt but in others a partial payment or an agreement to repay will restart the clock on the ability for a debt collector or debt owner to sue. Debt buyers and debt collectors sometimes are not clear about this and can trick the consumer into reviving an old debt by agreeing the debt is theirs or making a partial payment.
The FTC and DOJ alleged Asset Acceptance had little or no evidence to support validation of some debts they were attempting to collect on and that Asset Acceptance did not take reasonable steps to validate. They stated Asset Acceptance continued collection efforts anyway. And reported to credit reporting agencies.
The action against Asset Acceptance creates a framework of what is acceptable.

1. Time Barred Debt / Statute of Limitation Debt: If a collector calls demanding payment Asset has agreed to disclose to consumers that it is time barred and cannot be collected via a lawsuit.
2. Partial Payments Reviving Debts: Many debt buyers accept partial payments to reset clock without informing consumers this will happen. Asset has waived it’s right to partial payment revival of stale debt.
3. Collection agencies park debt on credit reports to force consumers to pay off the debt to get rid of it even if it is not accurate. The thought was that a consumer applying for a loan or new credit and who discovered an old collection debt might just pay it off. Asset Acceptance has agreed to give consumers notice when it reports to credit reporting agencies.
4. Reliability of Information. If a collector or knows or should know the information is not accurate and the consumer has provided reliable information proving the information is not accurate, the collector must take reasonable steps to confirm the accuracy of the information before collection efforts. What those reasonable steps are was not made clear.

Department of Justice Assistant Attorney General Tony West said, “Going forward we have a framework for the entire debt collection industry to follow.” This should be a message to debt collection industry that they will be held accountable, “if they don’t act fairly and responsibly.”
The FTC complaint against Asset Acceptance alleged Asset was:

1. misrepresenting that consumers owed a debt when it could not substantiate its representations;
2. failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
3. providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
4. failing to notify consumers in writing that it provided negative information to a credit reporting agency;
5. failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
6. repeatedly calling third parties who do not owe a debt;
7. informing third parties about a debt;
8. sing illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
9. failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.

@GetOutOfDebtGuy
Author: This article was contributed by GetOutOfDebt.org, a site that provides free debt consolidation help and debt relief advice for people looking for answers.
Source: FTC and DOJ Announce Asset Acceptance Settlement Which They Want to Be Framework for Debt Collection Industry

I had something interesting happen to me this week …
I was listening to my sister talking about how anxious she feels. I was nodding, sympathetic, and at one point, I said, “Yes, I know that feeling.”
She looked surprised and said, “You feel anxious sometimes?” She assumed that I don’t feel anxious simply because I’m in a different place financially.
We started talking, and she asked me a series of questions:
“Do you feel stressed sometimes?”
“Of course,” I told her.
“Do you feel pressure?”
“Of course,” I said again.
Our conversation went on for a while. The point I wanted to make is simple …
Negative feelings and anxiety are normal. The secret lies in how you react to these situations. Here is the formula I use …
3 Questions to Ask When Having Negative Feelings

1) Why do I feel this way?
Instead of reacting immediately, identify why you are having negative emotions.
2) Do these feelings make logical sense?
I’ve found that oftentimes, my emotions are saying one thing, but my intellectual mind is saying another thing. When I think about the situation, I’m able to pinpoint the “hot buttons” that were triggered, but they don’t make logical sense. Many times, simply making this identification helps me move past these feelings. If not, I ask question #3.
3) Can I “be” with these feelings for the next few hours?
The answer, of course, is yes. I can live with negative feelings for a few hours, even a few days. By not trying to suppress the feelings, I can get over them much faster. And by allowing myself to “be” with them for a while, I resist the temptation to take immediate action, which might be inappropriate and reactionary.
What do you think?  Comment below to tell me how you deal with negative emotions.
– Philip Tirone

As part of my commitment to providing free credit education, I regularly answer frequently asked questions and offer credit repair tips.
Here’s a question that recently came across my desk:
I have an open, old credit card account.  Don’t want to close it because it helps my credit score but I have no balance on it.  I have a limit of 6,000 on it.  Should I close it or at least lower the credit limit on it.?  I have another credit card I like better with a large balance 6,000 that I’m paying down this year.  I’d like to keep that one to use and should I lower that limit too once I get it paid off.
If you want to know how to raise your credit score, know that you should never close an account, nor should you ask for the limit to be lowered.
Here are a few credit repair tips that I can offer as explanation:
1) A big part of your score is the age of your accounts. Closing an old account can lower the average age of your accounts and, in turn, lower your credit score.
2) It sounds like you have only two credit cards. The credit-scoring formula will respond best to people with at least three and no more than five credit cards. Why at least three? They need enough information to judge you, and one or two credit cards simply is not enough information.
Ultimately, you should have a 720 credit score if you want the best interest rates. I’ve rarely seen people with 720 credit scores who have fewer than three active credit cards on their credit reports. But I have seen my fair share of people with more than five credit cards who still have a 720 credit score (or higher).
The moral?
If you already have more than five credit cards, you best course of action is to pay off your extra cards and let them go inactive. Do not close them. Do not reduce the limit.
3) Your three-to-five credit cards should be kept active. If you do not use them, the credit-scoring bureaus will not know whether you can juggle multiple debt obligations, and they will assign you a low score. Better safe than sorry, they will think.
You can keep the cards active by setting up an auto-pay on a small monthly bill, like your gym membership or a magazine subscription. This way, you keep the card active while still maintaining the low balance.
4) Part of your score is based on your balance-to-limit ratio. The credit-scoring bureaus look at both your individual accounts and your collective debt as a percentage of your collective limit. This is called a “utilization rate,” and in both cases, the closer you are to a 30 percent utilization rate, the better.
Let’s say you have two credit cards. One of them has a $6,000 limit and a $6,000 balance. In other words, you are maxed out. On that credit card, your utilization rate would be 100 percent, which would not earn you any points with the credit-scoring bureaus.
Assume now that you have a second credit card. This one has a $6,000 limit and no balance. On that credit card, you have a 0 percent utilization rate, which is great for your credit score.
And your overall utilization rate (assuming those are the only credit cards you carry) would be 50 percent, which isn’t great.
5) Since I don’t know the limit on your card with a $6,000 balance, it’s hard for me to tell whether that card is hurting or helping your credit score. If the limit is not at least $20,000, it is likely hurting your score.
You see, the credit-scoring bureaus will respond best to people with no more than a 30 percent utilization rate. So in your case, if the card with a $6,000 balance does not have a limit of at least $20,000, you have exceeded the 30 percent rule.
If this is the case, you should transfer $1,800 to the card with a $6,000 limit. This way, you maintain a low utilization rate on the card with a $6,000 limit, and you lower the utilization rate on the card with the $6,000 balance.
Keep in mind that my answers are always based on a credit-scoring perspective. You might have valid reasons for wanting to close your credit cards. For instance, if you have a long-term habit of abusing credit, your finances will probably be much better off if you live a credit-free life while adjusting your spending behaviors. But from a credit-scoring perspective, the answer to “Should I close my credit card accounts?” is “No!”

To make it through tough times more Americans have borrowed, stolen or raided their small retirement funds to make ends meet.
Loans from retirement funds jumped 20 percent last year. This really can’t be a big surprise to many. Faced with difficult financial decisions people will tend to gravitate towards the oath that seems easiest and less painful immediately.
It’s actually a classic example of hyperbolic discounting where a situation at hand today feels more urgent than one in the future.
The alarm over not being able to afford things leads people to make decisions in order to avoid more painfully imagined solutions like bankruptcy.
But what is actually more painful, a bankruptcy now that will take a couple years to overcome or retiring with little to no money left?
Logically an immediate bankruptcy makes the most sense. It allows people to discharge their debt, not have to raid the retirement accounts and actually leaves them better able to save for the future.
Along with setting themselves up to have to eat dog food to feed themselves in a future broke society, their poor debt relief decisions have left them unable to contribute as much to their retirement funds.
According to the Employee Benefit Research Institute survey, 27 percent of respondents said they are “not at all confident” they will have enough to retire comfortably. The reality is the actually number is much higher since acknowledgement would require people to overcome denial.
If you retire without sufficient income your choices are to continue to work, and most likely at menial jobs, or find a way to live for less.
The standard of life we expect in retirement may fall significantly short of what we will actually face.
At risk also are college savings for aspiring students. Parents already struggling to just make it month-to-month are having to cut back on their savings and are not able to put aside as much for college for their children.
The lack of college savings will require more student to either not attend college or go further in debt with dangerous student loans.
According to the College Board, students are already borrowing about twice as much as they did only a decade ago.
The more logical outcome to making these issues work is going to be to maintain a smaller or lower lifestyle than expected. That’s going to be tough for many people.

@GetOutOfDebtGuy
Author: This article was contributed by GetOutOfDebt.org, a site that provides free debt help and debt advice for people looking for answers.
Source: More People Preparing to Eat Dog Food in Retirement

If you have any concerns about your finances at all, sit back and listen to this 3-minute audio. After you do… read the rest of the post below.

—————————–
What did you think?
I remember speaking to Travis when he was considering filing bankruptcy; he was so stressed!
You probably know what I told him, but I’m going to say it again. I said, “Travis, you need to make a decision about your bankruptcy based on what is best for your family; however, don’t worry about your credit. Your credit is the easy thing to fix.”
Well, he took my advice, followed about ¾ of it…
Two years and two days later, he bought a home for 5% down, with an interest rate of 3.5%.
Think about that…
So many people worry about late payments, or a foreclosure, or a short sale… why?
If you know how to rebuild your credit, you don’t have to worry about past mistakes on your credit report.
The first step is simple: Sign up for my FREE webinar right here. Don’t delay. After all, if you attend the webinar right now, by summer or fall, your credit will be all taken care of!
If you want to change your life, click this link and sign up for this webinar right now.
Here’s to the best year of your life!
Px
P.S. Don’t put this off!  Click here to sign up for the FREE webinar.

If you want to know how to raise your credit score by paying off debt, you should know two things:

1. The lower your balance-to-limit ratio, the better your score.
2. You must keep credit cards active.

Let me start with your balance-to-limit ratio. Credit-scoring bureaus award higher scores to people who have credit card balances that are no more than 30 percent of their overall limit. If your limit is $10,000, for instance, your balance should never exceed $3,000.
One of my first strategies for helping a person build a 720 credit score is to lower each credit card balance to no more than 30 percent of the credit card’s limit.
That 30 percent target is the minimum you should aim for. If you can pay your credit cards entirely, great! Your score will be higher.
Important: Many people think that if they pay their credit card balances in full each month, they don’t have to worry about having a high balance the rest of the month. This is a common misconception.

From a credit-scoring perspective, bureaus look at your credit-card balances as a snap shot in time, which means that if you have a credit card with a $2,500 limit and a $2,000 balance on the day your credit report is pulled, your score will be lower… even if you just sent in a check for $2,000 that simply has not cleared the bank.
That is why in my Free Credit Score Webinar, I teach people to never charge more than 30 percent of their credit card balance. And the closer they can keep their balance to $0, the better!
This brings me to my second point.
You must keep your credit cards active. When I give my Free Credit Score Webinar,  I explain to people learning how to build credit that they must use their credit cards. Otherwise, the credit-scoring bureaus have no way of telling whether you are a responsible borrower.
Consider it like this: Let’s say you own an airplane. Owning an airplane isn’t enough to be granted a pilot’s license. You must first demonstrate your ability to take off and land, you must have hours of flight practice under your belt, and you must hold the proper certification.
Likewise, owning credit cards is not enough to demonstrate that you know how to use them. And because credit-scoring bureaus consider the most recent activity to be the most important, you must use them regularly.
So how do you keep a low balance on your credit cards while still keeping them active?
Simple. Let’s say you have four major credit cards that you want to pay off but keep active. (Ideally, you should have between three and five major revolving credit cards.) Here is a plan that shows you how to raise your credit score by paying off your debt.
1. Identify four bills that have a set monthly payment. For instance, your gym membership, magazine subscription dues, car insurance, and health insurance bills are probably the same amount each month.
2. For each of your four credit cards, schedule an auto pay of one of these bills.
3. Then, create an auto payment from your checking account to each credit card company. This auto payment should occur two days after your credit cards are charged for the bills. Let’s say, for instance, that you create auto payments for your Visa, MasterCard, American Express, and Discover cards to pay your gym membership, magazine dues, car insurance, and health insurance bills (respectively), on the 5^th of the month. You would then create another level of auto payments so that your checking account pays your credit card balances two days later.
This way, you will never pay interest, keep your credit cards active, and keep your credit cards paid off.
So what about other debt? Here’s a tip on how to build credit by getting small loans:
Let’s pretend you are going to buy some new furniture. Assume that you have enough money to buy the furniture outright; however, you would like to build your credit.
If the bank will report the loan as an “Installment Loan” to all three credit bureaus, it’s a great idea to finance part of the purchase. Then, pay the bills for three months before paying the remaining balance in full.
Let’s assume you finance $5,000 and pay 10 percent as an interest rate. Your monthly payments are $41.66, and you pay these for three months before paying the balance in full. During these three months, you pay only a little bit in interest, but you have a new item on your credit report that appears as “Paid in Full” and “In Good Standing.”
In summary, if you want to know how to raise your credit score by paying off debt, remember two things: keep your balance low and keep your debt active.

Philip X. Tirone is the creator of The Free Credit Score Webinar and the 14-Day Credit Challenge, both of which teach consumers how to raise your credit score and achieve a 720 credit score. You can visit his blog on how to raise your credit score at 720CreditScore.com

Why make it more complicated than it needs to be?
If your financial or credit situation is chaotic, you probably think turning over a new leaf will be too hard. But there are three easy ways you can improve your financial situation in 2013.
Tip #1: Write Your Goals Down!
What would you like to see change on your credit report within the next four to six months?
For instance, perhaps you want to:

• Pay off a credit card
• Lower your utilization rate
• Try to negotiate for a letter of deletion
• Create a plan so that you pay your bills on time every time
• Eliminate or reduce expenses
• Increase your income

Whatever your goal, write it down every single day this year.
Too often, life gets in the way of our long-term goals.
Jobs, personal lives, and hobbies seem to take precedence over organizing bills, establishing financial goals, and getting a grasp on the credit-scoring rules.
As a result, we forget about where we want to go. So there’s an easy fix …
If you start each day (or end each day) by re-writing your financial / credit goal, you will be much more likely to make decisions that support that goal.
Tip #2: Sit Down to Organize Your Bills
This might seem silly, but there are a host of byproducts that can come from simply making a list of your bills, the date the bills are due, and the approximate amount.
1. You will be less likely to pay them on time.
Forgetting to pay bills is an ever-increasing problem. Some bills are sent via e-mail. Others come in the postal mail.
Some bills are paid using auto-payment features, others are paid by credit card, still others require a check.
Without a centralized method of paying these bills, today’s modern conveniences actually make it less convenient to pay bills on time. It’s just too confusing!
2. You will see opportunities to cut your finances. When was the last time you reviewed your phone bill? And HOLY SMOKES! Do you really pay that much for your cable?
3. You will see how much money you are spending on discretionary items. If your bills add up to $2,500 a month, and you bring home $5,000 a month, but you only save $500 a month, you are spending $2,000 in discretionary spending. By listing your bills, you might be more inclined to set a budget.
Tip #3: Read a Book
Do you think that if you read one financial self-improvement book that you would be better off at the end of the year? Of course you would!
Remember: A person who does not read learns the same amount as the person who cannot read.
Each year, a bevy of books about taking control of your financial life hit the bookstores. Though some are better than others, each and every one of them will expand your knowledge simply by forcing you to focus on your financial situation.
Simply by making the choice to read a book, you will dramatically increase your likelihood of reaching your financial goals because you will spend more time thinking about and planning your future.
Pick a book you want to read.
Now, order the book today! Even if you read just one page a day, the power you gain by focusing on your finances will change your life forever!
That’s it: Pick and write down a goal, list your bills, and read a book.
It’s that simple.
What book will you read? And what is your goal for 2013? Let me know by leaving a comment below.
Here’s to a great 2013!
Philip Tirone
P.S. If you have already read great books about financial management, share your recommendation below!