Bankruptcy Information Blog

Wall Street Journal: Take a Kodak Picture of a Twinkie

2012-01-20T15:00:00.000-07:00

Not every day that you get to scoop the Wall Street Journal. Kodak filed for bankruptcy (Chapter 11 -- the corporate reorganization type).

Granted, they had the news of Kodak's bankruptcy elsewhere in the WSJ, but on their "Bankruptcy Beat Blog" they left out Kodak in their list of big name bankruptcy news, you can go read it there, but here is my re-cap of the highlights.

Twinkies are being saved by an alleged female celebrity I've never heard of, one Wendy Williams. Anything further on this topic would only get me in trouble.

The founder of the Backstreet Boys and N'Sync (yes, the music was atrocious, but the Ponzi scheme was apparently worse) is in bankruptcy and lots of fun litigation going on as the Trustee tries to get some of the backstreet dealings back (I had young daughters at the time of the Backstreet Boys, thus the pop culture lyric reference.)

A county in Alabama is in bankruptcy and the owner of the Houston Astros was buying sewer bonds with Chase Bank and the transaction apparently smells worse than the sewers.

Finally, as if the New York Mets did not have enough problems, their owners are being sued by Bernie Madoff's bankruptcy Trustee for $386 million, but is better than the $1 billion the Trustee wanted to go after.

Wage Slaves: Are Creditor's Your Paycheck's Master

2012-01-19T12:07:00.000-07:00

Translating lawyer-ly interests into client's interest can be a difficult task. For example, yesterday I learned about a case pending in the Utah Supreme Court (In Re Reinhart) that is addressing the issue of whether back due wages can be exempted in bankruptcy. This was exciting news -- and yes, this is how exciting my life can be.

How do I relate my excitement to what a client would care about?

Easy -- Can your Creditor's take your paycheck?

I think the answer should be "No", but I'm not in charge and I'm not in the legislature. Federal law places limits on how much the state's can allow creditors to take, basically 25% of an above minimum wage full time worker. So of course, here in Utah creditors are allowed to take 25% under the ironically titled, Utah Consumer Code.

There are some exceptions to this limit, the most noticeable being the amount allowed to be taken for child support. I agree with this. Creditors shouldn't have access to your paycheck, but your children certainly should.

If for some reason, Creditors are taking more than 25% of your check -- get thee to an Attorney. I don't care if it is me, but you need some help.

Oh, and don't forget bankruptcy, even if the Utah Supreme Court rules against wage earners in Reinhart, bankruptcy will remain the only certain way to legally stop garnishments.

Can I Keep My Car?

2012-01-18T06:26:00.000-07:00

Depending on the state you lived in prior to filing bankruptcy, your allowed car may vary. For those souls who live in Utah, the question is actually : Can I Keep My Clunker?

The exemption for a car in Utah is $2500. You can have $2500 equity in a vehicle. So yes, you can keep your 1998 Chevy Malibu (pictured).

Now if you owe $15,000 on your 2006 Toyota that is worth $8,000, then you don't have any equity and you should call me to see if we can save your car and your money.

People who live in the West and its wide open spaces have a strong sense that a car isn't a luxury, it is a necessity. (The same can not be said of your elected representatives.) Our public transportation can be lacking and some areas are inaccessible by public transportation. Cabs aren't readily accessible for use and cost prohibitive. At least once a month, someone asks me the question: "They let you keep at least one car, right?" I have to say -- depends.

My main point of this post is two fold:

1. You can thank the Utah Legislature for the stingy car exemption. Here is a list of your representatives and senators, if you want to send them an email and tell them that the car exemptions need to go up.

2. Debtors attorneys in Utah have hired a lobbyist to attempt to get laws passed with the legislature for more favorable treatment of Debtors. Our main opposition? Credit Unions.

PS: If you have a car that is paid for and is worth more than $2500, you can still file a Chapter 13 and keep the car. The basic rule of thumb is Chapter 13 keeps assets.

Chapter 7 Bankruptcy? Get Out Your Crystal Ball

2012-01-17T10:00:00.000-07:00

Should I file Chapter 7 bankruptcy instead of Chapter 13?

If I could see into the future, I could answer this for you. If you are going to lose your job or income, if your car you owe on is going to break down, if you are going to incur unexpected medical expenses you can't pay or get divorced or have domestic problems, then you shouldn't file a Chapter 7. If everything is going to be grand, you are going to be healthy, make more money and your relationships will all be perfect, then you are probably ready for a Chapter 7.

This is my dilemma -- I can't see into the future. The Chapter 13 lets me see into the future, because it lasts into the future. Chapter 7 requires prognostication and a leap into the future.

Go to the magic crystal ball website, pull out your Magic 8 Ball or your Ouija Board and ask it --

Bankruptcies Down For 2011

2012-01-13T06:26:00.002-07:00

According to yesterday's New York Times, bankruptcies have declined by about 12% in 2011 nationwide. Nationwide there were about 1.4 million bankruptcy filings. In Utah (nothing like a chart to allay all those fears of Utah massively contributing to the number of bankruptcy filings nationally), there were 18,176 filings, which was almost the same as 2010 when 18,478 people filed. My guess is that you will see a 10% decline in 2012.

Here is a chart of Utah's filings that shows Utah's trends:

So with bankruptcies going down, that means things are getting better, right? Not necessarily. (20,629 filed in 2004 and I think most of us would rather have 2004's economy.) With the Bankruptcy Reform Act of 2005, we haven't had time to get through even one bankruptcy cycle under the new law. What this means is that people who filed Chapter 7 under the old law in 2005 are still excluded from filing another Chapter 7 bankruptcy. The Bankruptcy Reform Act was designed to keep bankruptcy filings down, but didn't address any of the underlying causes of bankruptcy. If we see a spike of filings in 2013 as the eight year prohibition runs out on all those filers, we will see how the economy and the new law are working for those who might have prematurely embarked on their "fresh start" in 2005.

From the New York Times:

The vast majority of the filings — about 70 percent — are Chapter 7 bankruptcies, which allow individuals to avoid repaying their debts if they pass a means test.

Because of how the bankruptcy law works, this means that 1 million people who filed bankruptcy this year will not show up in the statistics for at least another four to eight years, simply because the law will keep them from getting any relief. This I am afraid is the real story behind the stats.

Adding to the Common Wealth (Why "Robin Hooding" Works)

2012-01-12T15:19:00.000-07:00

When people ask me what I do for a living, I will jokingly tell them, " I 'Robin Hood' for a living, I take from rich, evil creditors and give back to the poor and the destitute, keeping a little for myself." Of course that is a caricature of what really happens and many creditors are decent, hardworking people, but at least the concept of "Robin Hood" is that he tried to make things better for his society.

Meeting with clients everyday who are in financial trouble has maintained my faith in the human race. No one ever really wants to be talking to me about bankruptcy. People don't want to file, they only come here because they feel they have no choice.

The way the financial system is set up, they are usually right. They don't have much choice and need to file. They worry about the impact on their creditors. Obviously, their creditors will be impacted negatively, but what about the impact on the family, on friends, on co-workers, on employers and on society as a whole?

If you take into account the positive benefits, a bankruptcy can actually add to the societal or common wealth, not subtract. While I can measure the loss to creditors in dollars and cents, what is the societal loss, when a parent has to work four jobs and is forced to neglect children and family responsibilities? Those long term consequences can pale in light of the amount of debt removed by bankruptcy.

What is the loss to an employer whose employee is rendered ineffective or inattentive because of financial concerns?

What is the loss to the society as a whole, when a Debtor is removed from participation because of money worries?

The cloud lifts over people as they step out of my office. The debt removed, our Client is free to more fully contribute to society, friends and family. Some creditors may lose a little money, but collectively all of us gain much more than the amount lost -- and that is what I really do for a living.

Twinkies Bankrupt

2012-01-11T05:58:00.001-07:00

No More Twinkies? Hostess Brands Preparing to File for Chapter 11: MyFoxDFW.com

Actually, Hostess, aka Interstate Bakeries, which has a bakery right here in Ogden, Utah has filed its second Chapter 11. (Chapter 22, if you will)

Chapter 11 is the corporate equivalent of the consumer's Chapter 13. The company is trying to restructure its debt so we can continue to kill ourselves with those yellow, cream filled sponge cakes.

In an effort to restructure, I'm sure that Hostess is cheering for Ron Paul for President, with his decriminalization of marijuana platform.

For the Twinkie-phile, don't worry that the company will fail and you'll be without your Twinkies. No worries, even in Chapter 7, someone will buy the recipe and the name from the dead company and continue to crank out the preservatives.

I can't remember the movie, remind me if any one remembers, containing the rant about the Twinkie on the railing looking out over NYC and the fact that everything will disappear, but the Twinkie will remain. Even in bankruptcy, the Twinkie remains.

The Big 3 Reasons People File Bankruptcy

2012-01-11T05:39:00.000-07:00

3 Reasons For Filing Bankruptcy
I'm a psychic. Not really, but seeing the same thing over and over again makes it an easy guess that anyone sitting across from me in the client chair has had at least one of three things happen to them.

1. Lost Job or Income
2. Divorce or Domestic Problems
3. Health or Medical Issues

1. Lost Job or Income

Nothing can be more devastating to your financial future than losing your employment or your business. Why this leads to bankruptcy is easy to see. What isn't easy to see is just how long people suffer after they lose their jobs or businesses -- usually about two years in my experience. I'll see the headlines about the big layoff at Laz-Boy or Rite-Aid or Thiokol or 'Insert Big Company screwing the work force here' and in about two years, the people affected will start to trickle into my office. I hate to see people suffer, so I would have loved it if they had come in earlier when they had more options and could have avoided a lot of unnecessary suffering, but everyone has their own threshold of pain before they seek help.

The unseen killer in the "lost job or income" category is a loss in hours or overtime. Regular overtime is a little bit like heroin -- easy to get addicted to -- and if your monthly budget gets hooked on regular overtime, withdrawal is often a slow and painful process. Again, people tend to suffer too long before they come in and get help.

The current influx of construction workers and real estate agents (and a previous influx of truck drivers) shows that the lost income can be an industry wide phenomenon.

Bottom line. The sooner you see me after you lose your income or job, the more options we have available to avoid bankruptcy or to get the most benefit from bankruptcy.

2. Divorce or Domestic Problems

There is a reason I am not a divorce attorney. Divorce is a miserable time and usually nothing the divorce attorney can do can stop the misery -- divorce misery is a lot like grieving the death of a spouse, except that the spouse is now a zombie and you can't really grieve the loss for fear of being bitten.

From the bankruptcy point of view, divorce proves the cliche "Two can live more cheaply than one." Double your rent/house payment and utilities and throw in divorce attorney fees and no one can come out of divorce unscathed. I mused on this on an old blog post about Tiger Woods needing to file after his divorce, just to show that no matter how much money you make -- divorce can financially kill.

Trying to navigate between Divorce Law and Bankruptcy Law is a little like trying to ride a kayak down Class 6 Whitewater rapids, incredibly dangerous and not something you want to do without a guide. Consulting with a bankruptcy attorney prior to the finalization of a Divorce Decree can have long term financial impact.

Another aspect of the domestic realm is one that is often overlooked is the havoc that can be created by co-signing with relatives or friends. Here is an important rule: DON'T CO-SIGN ON ANY LOAN YOU AREN'T READY TO PAY FOR YOURSELF. If you want to co-sign with your kids or mother-in-law for a car purchase, great, help them out, but be ready to pay when they don't. Because before the ink is dry on the contract, your relative could lose their job, get divorced or become ill and then you will need to pay.

3. Health or Medical Issues

The final reason that people file accounts for over half of all bankruptcy filings: medical and health issues. I actually had clients participate in a 2007 study that was an inquiry into the reasons that people file bankruptcy. The study was conducted by Elizabeth Warren, a professor at Harvard. You can find the entire study here in The American Journal of Medicine.

I'm often asked if our office does a "Medical Bankruptcy", the answer is yes -- 62% of all our cases are medical bankruptcies in one way or another. Filing for medical reasons isn't any different from filing because of job loss or domestic problems.

No one wants to file bankruptcy. No one really wants to come into my office, but life happens -- jobs are lost, marriages end and illness invades. When that happens, the bankruptcy laws are there to give the opportunity to get a fresh start. Don't suffer too long. Come in and we can talk about what options make the most sense for you and your situation.

Zero Down Bankruptcy Explained

2012-01-10T10:21:00.001-07:00

Most of the bankruptcies I file don't require any up-front legal fees. The client only has to pay the Court fees, the credit bureaus for a credit report and for the on-line class. ($326 total for an individual, $346 for a couple) It isn't a scam.

Don't get me wrong, I get paid and paid well, but it is through the bankruptcy process, not directly from my clients and pursuant to a Bankruptcy Court Order. I'm a firm believer in you get what you pay for and you will pay our office well over time.

Here is my philosophy: If our office files you in a Chapter 13 bankruptcy and saves you enormous amounts of money, wipes out all or most of your unsecured debt and gives you a repayment plan that really works, then we get paid. If we don't and you don't succeed, we don't get paid. The payment is tied directly to the client's success. You win, we win.

Here are some other reasons for not taking any money up front:

Not paying attorney fees up front can save you money if you are an above-median income Debtor.
Stopping a garnishment, rather than waiting to file until you have attorney fees will save you money.
Filing quickly can get back repossessed vehicles that would otherwise be lost because you couldn't afford to file.

There are occasions where it makes more sense to pay all or most of the attorney fees up front. Bottom line -- and all money stuff is about the bottom line -- make sure you talk to the attorney and compare the cost to savings and don't worry as much about what the attorney fees are.

P.S. Don't use bankruptcy petition preparing companies. You will still need to pay the $281 filing fee and you will still need to pay the $25-50 for the pre-filing on-line credit counseling class in addition to any upfront fees they charge you. Not only do you pay more up front, you will not get any legal advice or help to navigate the treacherous bankruptcy rapids.

When Turnips Don't Need to File Bankruptcy

2011-12-30T10:23:00.000-07:00

There is the cliche -- "You can't get blood out of a turnip." Yet as with most cliches, there is some truth. Before you file bankruptcy, you need to ask yourself -- Am I a Turnip?

Here is the test:

1. Do I have any non-exempt assets?
2. Do I have anything that can be garnished -- wages or savings?
3. Do you have any secured loans that could be repossessed?

If you answered "No" to these questions, then you are a Super Turnip and probably don't need to file.

Your creditors can shoot at you, beat you with a stick or do any number of awful things -- and they can't hurt you. No blood will flow. No money will be lost. You are invincible. You are Super Turnip. You will not bleed blood or money. You can probably can wait to file.

The only thing that can make you vulnerable to your creditors is that green Kryptonite -- money.

And use this letter if you want creditor's to leave you alone.

Don't Fear The Repo Or Ten Days To Get Your Car Back

2011-12-20T14:28:00.001-07:00

I had someone come into my office this morning whose car had been repossessed. With a Chapter 13, we will get his car back from the lender and his payments will be less than what he was paying before they repossessed the vehicle.

How can I do that?

Two main reasons:

1. The United States Bankruptcy Code, Section 362 (The Automatic Stay)
2. Utah Code 70a-9a-612 (Ten Day Notification Required before Disposition of Collateral) and 70A-9a-623 (right to redeem collateral).

The argument goes like this.

Filing bankruptcy stops ANY attempt to collect a debt, which includes disposing of collateral. The collateral can't be sold within ten days and can be redeemed by the Debtor through the Chapter 13 process.

Simple.

Don't fear the Repo. Just get in and talk to me --- fast.

And you can never have too many cowbells:

More Cowbell! - watch more funny videos

Reasons for Filing Bankruptcy -- The Current Events Edition

2010-06-27T08:11:00.004-06:00

In a recent on-line humor column , Ryan Ballengee makes the argument that Tiger Woods' divorce is going to force him into bankruptcy. The theory being Woods' net worth is $600 million or so and the divorce settlement is $750 million, leaving him $150 million in the hole and without his sponsors and the way he is playing golf right now, Tiger is looking to add a bankruptcy chapter to his life.

Actually, the humor comes from the truth -- even near billionaires can be financially devastated by divorce and a substantial loss in income. Don't believe me? Just look at Mark Brunell, quarterback for the Jacksonville Jaguars, who finds himself on the bankruptcy pages of the Wall Street Journal, rather than the sports page, because his real estate business collapsed.

This is the purpose of the bankruptcy law -- to give people a fresh start after life happens.

Go Directly To Jail

2010-06-19T07:41:00.006-06:00

If you can't pay your bills, it is not a crime and you cannot go to jail.

Creditors have found one way to circumvent this truism, but if you remain vigilant, they won't be able to take your $200.00 for a bench warrant.

So here are the general rules. Creditors have the right to sue you in civil (not criminal) court. In civil court it is about $$$, not jail. They can garnish up to 25% of your wages (in Utah -- some states prohibit wage garnishments) and take non-exempt property. They can also order you to show up in court and testify about your property. This is where warrants and jail comes in. If you are ordered to show up in Court and do not, then you are in contempt of court and a warrant is issued, not for not paying, but for not showing up.

So show up in Court when you are ordered to and avoid that gray bar hotel.

If you get a court document and you are worried about it ask an attorney or call the Court.

Here is a sample of the type of Orders issued to require appearance in civil court after a judgement is issued.

New York Times Headline: Non-Bankruptcy Debt Companies a Ripoff

2010-06-19T07:19:00.006-06:00

The front page of the New York Times today had a great article on the general fraud of debt settlement companies. I particularly liked the following quote describing the Florida convention of the so-called Debt Consolidation companies:

So lucrative, that an industry trade association, the United States Organizations for Bankruptcy Alternatives, recently convened here, in the oceanfront confines of the Four Seasons Resort, to forge deals and plot strategy.

At a well-lubricated evening reception, a steel drum band played Bob Marley songs as hostesses in skimpy dresses draped leis around the necks of arriving entrepreneurs, some with deep tans.

I've been to NACBA (National Association of Consumer Bankruptcy Attorneys) conventions and I can tell you I've never seen a skimpy dressed hostess, heard reggae music and seen anyone with a tan -- and the Marriot isn't exactly a Four Seasons Resort.

Overall I'm pretty fed up with Debt Management Companies and their bastard first cousin, Mortgage Modification Companies. In my state, Utah, in a remarkable feat of consumer protection, the legislature passed a law limiting the activities of Debt Management Companies and requiring them to be licensed and bonded. It is a law honored more in its breach than observance. Most debt management companies seem to be a telephone and fax machine in an empty strip mall in Florida.

And of course the Department in charge of regulating these companies haven't updated their list of approved and bonded companies since May of 2009, probably because our Attorney General is too busy tweeting executions to enforce the consumer protection laws.

Bottom line -- if the Company isn't on your state's approved list don't use them for negotiating your debt and better yet, seek out legal advice from an attorney licensed in your state. Otherwise you are going to send your money so some guy so he can get his tan in Florida and get lei-ed by skimpily dressed hostesses at his crook's convention and you will remain buried in debt and your home will be in foreclosure.

Will Anyone Know I Filed Bankruptcy?

2010-06-15T06:45:00.005-06:00

I like to joke with my clients and tell them that it is OK if they ignore me in public to avoid introducing family and friends to their bankruptcy attorney. My experience representing debtors has taught me that while bankruptcy is rarely something to be ashamed about (almost always caused by job loss, sickness, divorce), there remains a lot of shame surrounding bankruptcy in society as a whole.

Bankruptcy paperwork is filed with the United States Bankruptcy Court. The Court's database is a public database that can be accessed free at the court and anywhere there is internet service if you have a PACER account. The internet service is a pay per page service. Credit bureaus and other informational companies use the data as well. So everyone has access to the fact you filed bankruptcy. This is a very good thing when it comes to your creditors, because you want them to know you filed.

While the information is readily available to everyone, no one is going to publish anything about your bankruptcy unless you are on a reality TV show or you are GM, Delta Airlines or Chrysler. The days of bankruptcy filings being listed in the small local newspaper are over. Unless you tell them, you owe them money or you are co-signed on loans with them, your family and friends need never know that you filed.

Three Causes of Bankruptcy

2010-04-11T09:16:00.003-06:00

1. Lost Job or Income

2. Divorce or Domestic Problems

3. Health and Medical Issues

P.S. There is a fourth category: Parents, friends or relatives, who co-sign or get loans for someone else who then can't pay back the loan because they lose their job or income, get divorced or have medical issues and the guarantor can't pay either.

Bankruptcy and Credit

2010-04-11T09:13:00.003-06:00

Based on the filings in my office, at least 8 out of 10 people who file bankruptcy improve their credit score and ability to obtain credit within one year of filing.

You are more likely to be able to get new credit after bankruptcy than before if your credit is currently bad.

Credit Scores

2010-04-11T09:08:00.003-06:00

How to Raise Your Credit Scores:

Don't write letters.

Don't worry if you have a thirty day late.

Don't pay any one to do it for you.

Don't do anything, except . . .

Get three or four unsecured credit lines with high limits and low balances.

That is it. That is what you need to do to improve your credit score. You do this and the credit score will follow.

Credit Scores

2009-09-17T11:58:00.004-06:00

I had a client come in a couple of weeks ago and he said that he had enjoyed my posts. It surprised me and motivated me to write more. I have lots of speeches I give clients and I figured I can just save a lot of fuss if I get them written down. So here goes one of my favorites -- What does a credit score represent? No, not your score, but a credit score in general. A credit score is nothing more thana numerical representations of the odds on whether you will make all your payments in the next ninety days. This is obviously a little bit simplified, but that is the basic idea. What is a credit score based on? The information contained in your credit report is all that the credit score is based on. A credit score isn't like sitting down with a loan officer at the bank. The creditor feeds your report into the ravenous computer, digital machinations take place and out pops a brand new credit score every time you run the report. It is the ultimate reduction of the human equation down to a number -- cold and lifeless. What do you think would matter most in determining your credit worthiness that is nowhere to be found on your credit report? I don't know about you, but if I want to know if someone I loan money to has an income where they can afford to pay me back. Your income is nowhere to be found on your credit report. All of those calculations about your credit worthiness don't even consider how much money you make. What is the best way to improve your credit score? Show income on your credit report. I know, I just said that income doesn't show up on your credit report, but there is one way to show you have lots of money on your credit report -- have lots of unsecured credit lines that you aren't using. The twisted thinking of the credit scoring folks is that if you have lots of unsecured credit lines (i.e. credit cards) that you aren't using then you must have plenty of money and if worse comes to worse, you can always use that credit to make the payments. The converse is also true. If you max out those credit lines, then it looks like you are strapped for cash and you can kiss your credit score good bye.

Chapter 7 versus Chapter 13

2008-11-05T18:55:00.002-07:00

The Bankruptcy Reform Act of 2005 changed my own personal approach to how I viewed the bankruptcy process and what would be best for my clients. The choice of which bankruptcy to file, whether it be Chapter 13 or Chapter 7 or no Chapter at all is a choice that should only be made after consultation with legal counsel. In case you were wondering, there is nothing mystical about Chapter 13 or Chapter 7, although it is intoned by attorneys with a certain heft of authority. The "Chapter" is simply the chapter in the law book in which the statutes governing that particular form of bankruptcy are found. Chapter 7 is essentially a liquidation bankruptcy. When a Chapter 7 bankruptcy is filed, all of the property owned by the Debtor becomes property of the bankruptcy estate, just like when someone passes away and all of their property becomes part of their estate. The Chapter 7 Trustee becomes essentially the owner of all your property. You get to retain the property that is exempt or has inconsequential value to the bankruptcy estate.

Sample Good Faith Estimate

2008-01-02T17:11:00.000-07:00

Here is a sample of a Good Faith Estimate.

Buying a Home in Bankruptcy

2008-01-02T17:02:00.000-07:00

Filing a Chapter 13 Bankruptcy does not mean that you have to forgo home ownership until after your bankruptcy is completed. In fact a Chapter 13 Bankruptcy can improve your ability to get an affordable home loan quicker than doing nothing or filing Chapter 7 bankruptcy.

Why?

Simple, Chapter 13 puts you in position to qualify for an FHA loan sooner than either of the other two options.

If you’ve had credit dings in the past and aren't in Chapter 13, you can reestablish your credit to qualify for a FHA guaranteed loan if you meet the following criteria: 1. Two years have passed since a bankruptcy has been discharged 2. All judgments have or will be paid 3. Any existing tax liens have or will be satisfied or appropriate arrangements have been made to establish a repayment plan with the IRS or state Department of Revenue and evidence of history of payments being made 4. Three years have passed since a foreclosure or a deed-in-lieu has been resolved

A Chapter 13 speeds this process up compliments of special rules that are in place for Chapter 13.

I quote from the Department of Housing and Urban Development’s website: QUESTION 3 - Can a mortgagor acquire a FHA-insured mortgage while in a Chapter 13 bankruptcy?

ANSWER - HUD underwriting rules state that a person in Chapter 13 bankruptcy can purchase a home subject to a FHA-insured mortgage. Requirements are the applicant: must have completed one year of payments as required while under Chapter 13 and must obtain a letter from the Trustee of the court, stating the dollar amount the applicant can borrow. See HUD Handbook 4155.1. Essentially Chapter 13 lets you speed the process up to a year faster. The wording of the HUD website is misleading, since it is not a letter from the Trustee or the court you will need. You will need a Court Order signed by the Judge.

In order to get the Court Order, our office will need the following:

1. A Good Faith Estimate from your Lender 2. A copy of the Real Estate Purchase Contract. 3. At least 45 days to get the Court Order signed, after we receive a copy of the Good Faith Estimate.

Feel free to Email the office with any Questions.

A Question from Steve -- Too Much Spread Out Debt

2007-01-05T08:49:00.000-07:00

I received the following comment from Steve on my New Year's Day Post and since the blog is still somewhat nascent and I want to see how this works, I'm going to post his comment and answer his question. The hope is that in the future I can use the blog as a medium of communication with clients and readers to assist them in the future at a lower cost than the economics of a legal practice might allow. Since I know Steve, I'm sure he isn't going to mind being made a guinea pig.

I have an issue: I have so damned many accounts open, installment, credit card, mortgage on a couple of properties, etc., that I can't keep track of stuff any more. I mean, literally, I can have 50 bills a month or more. I have some set up on auto pay, but am loathe to set everything up because I can envision situations that would create a whole different financial nightmare.Do you have any suggestions for ways to manage this kind of a situation? I don't like the idea of taking out a home equity loan to pay a bunch of things off, but is that maybe the right thing to do?

I'm a big believer in automatic payments, but you have to have a regular income sufficient to cover those payments or you can end up in bank fee hell.

I crave more information to give better answers. These questions are good ones to ask yourself to begin to find out exactly where you are at.

How much money are you spending each month in interest?
What is your credit score currently?
How does your debt break down between secured installment loans (usually cars and furniture), credit cards, unsecured loans, mortgages and other types of debt?
Are you making minimum payments or are you paying extra on principal?
Are you contributing to a retirement account? Other savings account?
Do you have reserve funds?
What is your monthly income? outgo?
What are your monetary habits?
What are your financial goals?

Those are the questions that I came up with off the top of my head this morning. Over the next week, I'd like to address some fundamental concepts of financial management that pertain to this problem. My inclination is to work on removing most of your debt -- completely. Reducing the debt will have numerous benefits, not the least of which is incredible savings on interest payments.

So, in the coming week I'm going to post on the following:

Credit Scoring and its importance
Debt Roll-up -- developing a plan to get out of debt
Considerations on what debt to retain and what debt to pay off

Steve, if you'ld like to email me more information about your situation, I'd be happy to disguise the information and use you as a case study.

Thanks for the question.

Happy New Year -- Credit For the New Year

2007-01-01T23:34:00.000-07:00

Well, New Year's resolutions can come and go, but a resolution on your credit can mean money in your pocket not just this years, but in years, even decades to come. Just a preview of what is coming this year: 1. How to clean up your credit after bankruptcy. 2. Explanations of FICO scores and how they work. 3. The evils (and occasional good) of the Credit Card industry 4. The evils (and occasional good) of Banks 5. The evils (and maybe once in a lifetime good) of Pay Day Loans 6. Bankruptcy and what it can and can't do for you. I would like to get this blog to be event and question driven. Post a comment or a question and I will see that it gets answered.

And it gets worse . . .

2006-12-24T23:01:00.000-07:00

For an update of our poor soul who paid $10.00 for a $10.00 cash advance, the $10.00 fee put her $0.99 over her credit card limit and the bank assessed her a $35.00 overlimit fee. Her $10.00 loan cost her $45.00 in the matter of a day. Dare we calculate the interest rate? $45.00/$10.00 = 450% interest per day. 365 days times 450% = 164,250% annual percentage rate. Considering the bank pays .15 % annually on their savings accounts, I'd say they are making out OK.

How Does It Feel to Pay Over 36,500% Interest? Not Good

2006-12-19T13:43:00.000-07:00

Often, people don't think about the interest rate they are charged when handling an electronic transaction. I saw this one today and realized that the poor girl who did the transaction was being charged more than 36,500% on a very, very short term loan by the bank.

She made a transfer of $10.00 from her credit card to her checking account and was immediately charged $10.00 Internet transaction fee. On top of that the $20 total got added to her credit card balance which she will also have to pay interest on. Fees, particularly on small transactions, can be outrageous if you look at them as interest charges (which they are.)

The Pay Day Loan Case of Ralph Meggett

2006-12-18T17:37:00.000-07:00

The six pay day loans posted below are the contracts signed by Ralph Meggett (an alias). For larger versions of the contracts, just click on the image of the contract. Ralph is a good guy who has been victimized by the pay day loan stores and so I've agreed to keep him anonymous and he has agreed to let me utilize him as a case study for the blog as our office attempts to assist him through this financial crisis. If you would like a closer look at the contracts, click on the image for an enlargement.

Ralph's has a total of $1,650.00 out in pay day loans right now. These loans are the only debt that he has. The principal balance on these loans exceeds his monthly take home salary of $1,600.00. Without interest and without paying for food, shelter or clothing, Ralph wouldn't be able to pay these loans off in a month even if the stores weren't charging him 500% interest. The total interest due on these loans in the twelve weeks allowed by the law is $2,763.06. For Ralph to pay all of these loans back, he would have to pay $4,413.06 in three months -- his entire salary for three months.

Ralph can't pay back these loans. Ralph couldn't pay back the first $400.00 loan that he took out to help his girlfriend get a plane ticket. When Ralph couldn't pay the first loan, he went and got another one. Ralph is a conscientious fellow and he never missed a payment until he came to see our office about bankruptcy options. The result of his diligence was to dig himself so deep into the hole that he couldn't escape.

The pay day loan stores promulgate the idea of going to other stores to get loans to pay off their loans. Imagine a big game of musical chairs, with each store hoping not to be the one caught when the music stops. The music in this case is poor Ralph's salary. The risk gets spread out among the stores. The payments come in for a while. After six weeks, a store breaks even. The store just needs the game to last a month and a half and they win.

We are going to attempt to save Ralph in the coming months. Follow the progress. We are going to try and do this without having Ralph go through the expense and misery of filing bankruptcy.

Check Smart $400 Loan 469.29% Interest

2006-12-18T17:26:00.000-07:00

Utah Title Loans $200 Loan 505.38%

2006-12-18T17:25:00.000-07:00

Ready Money $150 Loan 521.544% Interest

2006-12-18T17:23:00.000-07:00

PDQ Check Exchange $150 Loan 521.43% Interest

2006-12-18T17:21:00.000-07:00

USA Cash Services $300.00 Loan 521.45% Interest

2006-12-18T14:09:00.000-07:00

QC Finance $450.00 Loan 443.22% Interest

2006-12-18T14:02:00.000-07:00

Pay Day Loans in the News

2006-12-17T21:38:00.000-07:00

PAY DAY LOANS IN THE NEWS

Writing about pay day loan stores should probably always be done in red -- because that is where they will take you. The Salt Lake Tribune had an article on pay day loan stores today and I thought at the very least I should get the link up.

I have a particular aversion to pay day loan stores, but my hatred is not directed solely at such establishments. I'll post up some contracts here on the blog that show interest rates in excess of 1000% per annum. Yet, even contracts with interest rates this high pale in comparison to ATM fees. (Have you ever calculated the 10% $2.00 fee on $20.00 pulled from an ATM? Assuming that the interest is for one day, rather than a near simultaneous electronic transaction, the annual percentage rate on ATMs are about 3650% per annum.) While federal banking laws exclude banks from any effective state regulation, bankers (who happen to fund pay day loan stores) are loathe to pass any laws capping interest rates.

In this blog, I will be able to provide anecdotal evidence about pay day loan abuses. I have seen individuals on Social Security with interest payments on their loans that exceed their entire monthly income. One important reform that should be implemented immediately is a regulatory law requiring pay day loan stores to make some simple credit inquiries before allowing a loan:

1. Are you in a Chapter 13 Bankruptcy?

2. Do you have any other pay day loans outstanding with other stores?

a. If yes, what is the principal balance of the outstanding loans?

b. Is the principal balance more than one sixth of your monthly income?

If the answer to questions 1 and 2b are yes, then the loan should be against the law. Failure to make this simple inquiry or to give a loan when one of the questions has been answered in the affirmative should then be made a violation of the state's Deceptive Practices Act, which entitles the consumer to recover damages and attorney fees. Violation of this law should also be allowed as a defense against any collection efforts.

I'll refine this a little bit and send it out to some of the legislators that are proposing legislation to further regulate the pay day loan industry and keep you posted of what is happening.

IMPORTANT CONSUMER INFORMATION ON PAY DAY LOANS:

My ideas for enhancements to the law doesn't mean that there aren't already laws in place regulating this industry. One Utah law specifically regulates the post dated check loan industry, Utah Code 7-23-101 et. seq. I'll highlight portions of the law that can help the consumer throughout this blog.

PAY DAY LOAN TIP ONE:

A post dated check lender may not collect additional interest on a loan after 12 weeks from when the loan was made. The interest on a post dated check loan is capped in Utah. On most pay day loans this means that the total amount you owe is limited.

The Pursuit of Happyness

2006-12-15T22:41:00.000-07:00

I just got back from the new Will Smith movie, The Pursuit of Happyness. Like the spelling of "happyness", something about this movie is wrong. I was disturbed. Movies that have hidden and misleading messages bother me -- and I didn't like the messages of this movie.

The movie presents an important concept and then stomps all over it. The concept comes when Will Smith's character, Chris Gardner, is opining about Thomas Jefferson and the Declaration of Independence. He muses that Jefferson called it the "pursuit of happiness" because you could never quite catch it. The running, the chasing, the pursuit would be illusive with the prey remaining just out of reach. How do you end the pursuit of happiness? In the movie, Chris Gardner doesn't declare happiness until he lands a six figure commissioned salary brokerage job.

The bright and shiny happy people in the movie were the rich. The poor were downtrodden, mentally ill, hostile and dishonest. The poor guy won't pay you back the $14 he owes you, but the suit will fork over the $5 you gave him for cab fare. The message of the movie was MONEY = HAPPYNESS.

The movie conflates two concepts and doesn't distinguish them -- survival and success. Most of the movie is focused on survival. The movie captures the truly horrific feeling of an empty wallet. Halfway through the show, I was thinking -- "Hell, I feel this way at home and I didn't have to pay $7.75 to feel poor." I am amazed every day at the thin line between disaster and survival. I see clients everyday who are walking that tightrope or worse, who have fallen off already and just barely managed to grab on to the tightrope and are now moving hand over hand across the chasm of poverty. Over 90% of the people I see have had one or a combination of these three things happen to them:

1. Lost job or income.

2. Divorce

3. Major medical issues.

In the movie, Chris Gardner suffers the first two and it nearly destroys him. He fights against all odds and eventually escapes the poverty. This is the survival aspect of the story.

The success is revealed for the most part in the comments about the "real" Chris Gardner flashed upon the screen. This year he sold a minority share in the brokerage he started for a multi-million dollar profit -- a profit that originates from a host of Chris Gardners slaving away at dead end jobs and who will never see the success of the protagonist.

He succeeds wildly, but I couldn't shake the tragedy of all those who didn't have his skills, perseverance or luck. The movie wanted to create a sense of loss and then have it redeemed through hard work and perseverance -- the realization of the American Dream. Survival is the American Nightmare. Something is wrong when the United States Bankruptcy Code is the closest thing we have to a National Health Care Plan. Something is wrong when the richest country in the world has a large homeless population. Something is wrong when Pay Day Loan stores are more prevalent than churches. When did you last read the Declaration of Independence? Read it again. Think about how things are now. I'm going to write more on this later.

The only happiness that comes from the single eyed pursuit of wealth is one that is misspelled and misplaced.

The Joys of Fresh Starts

2006-12-14T23:21:00.000-07:00

I love fresh starts. Writing on this blog has become a continual act of fresh starts. The beauty of a fresh start is you get to start over. I miss the college days when each semster ended in the climatic finals and I got to spend the rest of my winter or summer break afterglowing in the relief of no assignments. Real life rarely provides such a clear opportunity for fresh starts. As you may (or may not) be aware, I deal in fresh starts. I make my living helping people start fresh using the federal bankruptcy laws. I'm not going to get into the bankruptcy law just yet, because Congress in its infinite wisdom has seen fit to throttle free expression in regards to the bankruptcy law, so I've got to post a whole list of disclosures up on the blog, before I get into heavy duty bankruptcy reform legislation issues. When I left the practice of law, I was hoping that I could facilitate changes for consumers in their credit habits and do something right in an industry that routinely kills the consumer. I was beat into submission while working outside the legal arena by the pressure of the dollar. The dollar of the investor dictates what happens and the investor is interested in a high rate of return, not in helping the consumer. There is no investor-client relationship. Great ideas to help the consumer are chewed up by the desire to make a buck. I hope to make the blog very interactive as I add clients, their friends, family and others to my new little blog universe. At last count, I was easily over 5000 bankruptcy clients I've assisted since I started practicing law. I have a lot I want to talk about in relation to this topic. Since this is simply an introduction, I'm going to list the topics I'm interested in discussing and I will get to them all eventually, but if you have something in particular you want to discuss, let me know and I'll get up a post on it as soon as possible. Potential Topics:

Bankruptcy Reform Legislation
Chapter 7 versus Chapter 13
Secured Debt and Bankruptcy
Morality and Bankruptcy
Morality and the Credit Card Industry
Historical Perspectives on Credit
Credit and the Bible
Pay Day Loan Store Rip Offs
Rent To Own Rip Offs
Credit Card Rip Offs
Credit Correction Rip Offs
How to Rehab Credit
Required Bankruptcy Disclosures
Fair Credit Reporting Act
Fair Debt Collections Practices Act
Causes of Economic Distress
Reviews of Books Relating to Credit and Debt
Reviews of Companies and How They Treat the Consumer
Children and Money
Wealth Creation
Buying Cars
Buying Houses

Well, twenty two is a good number to start with. I hope to keep the blog conversational and I hope to have your continual input in the dialouge.

Two Month Hiatus

2005-08-22T13:13:00.000-06:00

It has been over two months since I posted to the blog and since I stopped doing the newsletter. I'm going to start the newsletter again, although in a modified format. Frankly, the more glum side of me says that no one knows of the blog's existence and even those few who do don't read it. On the bright side, the need for credit rehab is greater than ever. Credit rehab is almost exclusively the province of people who want to own a home or possibly a car. Otherwise, outstanding credit has little appeal. I know all the arguments: It affects your car insurance. It limits your options. It is important to pay your bills. The bottom line is the main motivating factor to fix one's credit is a house or a car. No one seems to be going through the hell of fixing their credit to buy a four wheeler. Certainly there are exceptions, but the people who are excited and willing to do the work on credit are those who are in need of housing or transportation. The future of this blog and the newsletter that is associated with it is going to have a shift in focus towards housing and car issues. The other problem I see is that no one talks straight in this industry. Credit repair for the most part is a sham. The thing is the sham produces some results. Just enough results to keep customers from rioting. The seething resentment towards financial institutions that are so quick to turn the human condition into FICO numbers is far too powerful to cause too much outrage at the much less outrageous credit repair company that throws a few handfuls of ink, paper and stamps at the credit bureaus for too much money. In part, because the end result for many of the credit repair companies customers is that 1) they get a house when they otherwise wouldn't have or 2) they get a slightly better rate. With as much money as a mortgage company will gouge you with over the next thirty years, the gouging of the credit repair crowd pales in comparison. It feels good to be writing about this again. If you post it, they will come.

Attempts To Add RSS Feed

2005-06-16T22:19:00.000-06:00

I'm still learning the new technical items and probably should just try and learn .html, but I've got too much to do, so I guess I'm stuck with trying to use services that are provided by Blogger and others. I managed to get the RSS feed up so, please add it to your newsreader -- whatever it might be (I still use MyYahoo for mine). I've added feeds from other sites, so I'll be interested to see if we can get it working for the blog. Let me know your successes and failures. If you want instructions on how to use an RSS feed, I'd be happy to give you instructions. Essentially what it will do is allow you to be told whenever an update is given to the blog. I'll just have to write things that are so enthralling that you absolutely must add the site, because you won't want to miss a thing.

My Response

2005-06-14T18:50:00.000-06:00

As you can see from the email, nothing really happened -- kind of a "Don't Worry, Be Happy" response, along with a promise that something might be done to help in the future. I was a little irritated when I wrote back: I wasn't looking to share my comments. I was looking for someone who actually read what I wrote. If you read what I wrote, you wouldn't have written the response you did. It appears to be a brush off form letter, much the equivalent of the treatment I received from your general manager at the store. Let me spell it out for you simply:Your defective product caused me to lose an $1100.00 laptop. What are you going to do about it? At least direct me to your legal department or insurance claims. Thank you, Kent Winward I'll keep you posted of further developments. Also, I received one response from one of the readers of the Credit Rehab newsletter that they had had similar experiences with Best Buy in the past. I would love to hear what happened.

Best Buy's First Email Response

2005-06-14T18:48:00.000-06:00

Well, Best Buy replied with a form email that did absolutely nothing. Here is the email in its entirety. Kent, Thank you for contacting Best Buy about your recent experience with our Riverdale store. I'm Adam with Customer Care. We apologize for any frustration caused by the level of service you received when attempting to return your power supply. Best Buy takes great pride in providing a fun and easy shopping experience for our customers, and we have shared your comments with the management teams from the appropriate departments who will review the situation for improvement opportunities. Please be certain Best Buy will continue to focus on satisfying our customers every chance we get. Thank you for sharing your comments with Best Buy. Please don't hesitate to contact us with additional questions or concerns. Best wishes from Best Buy,Adam and the Customer Care Team TRACKING NUMBER: A00004219115-00014714608

On Getting Thrown Out of Best Buy

2005-06-13T13:08:00.000-06:00

Well, I wasn’t arrested. I was escorted off the premises of Best Buy however with the Manager, Chris Anderton, muttering general threats that he would call the police to escort me out if I didn’t leave voluntarily. I left, but over all I was distressed at my treatment and the callous disregard in which my cause was handled by the “management” at Best Buy. So here is the story --- My daughter, who lives with her mother, lost the power supply cord to her laptop. I went into Best Buy to procure a replacement cord. They did not have any in stock. I met with their sales representative who got on-line and ordered the part from Best Buy’s website. I paid with my debit card and had the cord delivered directly to my daughter at her mother’s house. The cord arrived and it was a 19 volt power cord and the laptop was designed for 18.5 volts. Shortly after getting the new cord, the power supply on the mother board was fried and inoperable. In other words, there was no juice to run the computer. I took the laptop to a repair location and was told I would need to purchase a new motherboard, a cost of $400 or $500. I decided to go to Best Buy and address the fact that their defective documentation on the web site had caused this damage. In case you are wondering, product liability is strict liability. This means that the retailer and manufacturer who put a product in the stream of commerce are responsible for any damage it causes regardless of whether they make a mistake or not. In this instant, they did make a mistake and the product was defective for the purpose for which they were selling it. This is the legal jargon, but the bottom line is this: Best Buy sold it to me. The product was not as advertised and defective. Best Buy is responsible for the damage it caused. Now, being an advocate of consumer rights I felt impelled to address this matter with Best Buy. I took the laptop and the cord into the store. I met with a rather charming young employee, who had the appropriately monikered “Geek Squad” emblazoned in a bright orange on his polo shirt. He was amiable, helpful and courteous. I explained the problem. He quickly realized he was over his head and paged a manager. One of the other technicians came to see what was happening and when told the manager had been paged, replied “You might as well have put some cheese on a hook and thrown it out into the middle of the store. You’ll have to go find him, otherwise he will never come.” An assistant manager showed up and listened to my story and replied that it sounded like Best Buy would have to make and insurance claim (the result I was looking for), but that the general manager would have to be the one who decided. So far everything was going according to plan. I was asserting my individual rights against the corporate powerhouse. I was doing it politely and my daughters were busy shopping trying to buy other things while I resolved this issue. Enter the villain. The general manager had apparently taken the military origins of his title a little too seriously and was running the store more like Attila the Hun than someone concerned with customer retention and customer service. I explained the problem to him. He said it wasn’t Best Buy’s problem, that if I wanted to go after the manufacturer of the cord I could, but they would do nothing. There was no discussion, just a flat refusal. I began to explain the concept of strict product liability to him and then he escalated the conversation, saying that if I was going to talk “legal” then I’d have to talk to the legal department. He pulled out a card, which fortunately had his name on it and scribbled: 1-888-BestBuy and said to call them and talk to their legal department. I won’t go into it now, but I’ll put up the entire menu options on the blog if you want to see them. In short, there was no button to push for a “legal department.” Having my Cricket cell phone, I called the number while I was still in the store. I determined after ten minutes of menus that I wasn’t going to get a claims department. I walked back and asked the manager for another number, rather than just brushing me off to an automated machine that didn’t even have an option fro a “legal department.” When I asked him for a number that really worked, he turned his back and walked away from me. I’m going to say that again – He turned his back and walked away from me. Now, I responded as anyone would and raised my voice and said “Don’t walk away from me when I’m talking to you.” At this point, he came unglued and started threatening to call the cops on me and here are a couple of direct quotes: “You’ll never set foot in MY store again” and “Get out of MY store.” (I’m sure the stockholders of Best Buy will take exception to his proprietary comments and I wanted to point this out to him, but I couldn’t really get a word in edge wise as he was attempting to escort me to the door.) The entire time he was threatening me with the “cops”. I was standing outside of the entrance when he again threatened me with the cops if I didn’t leave his store. I pointed out to him that in fact, I was outside the store. He then looked slightly startled and rushed back into “his” store to torment other customers and employees. This got me thinking about customer service. I was pretty irritated and was telling everyone not to shop at Best Buy, including the drive through attendant at Wendy’s. (She thought I was a little strange, as did my daughters.) The manager could have handled it a number of ways, including helping me really get in touch with the claim department, rather than giving me the brush off. I know that he lost at least one sale that day because my daughters didn’t get their CDs they were wanting to buy. Instead, I took them to Graywhale CD Exchange, where we had a pleasant experience bad-mouthing Best Buy and generally partaking of the more anarchic atmosphere. Also Graywhale, has lots of used CDs at below retail prices.

Best Buy Policy and Complaint Letter

2005-06-13T13:06:00.000-06:00

From Best Buy’s Web Site: Need assistance? Customer Care is here to help. To inquire about the products and services found on our Web site or in our stores, contact us by phone, mail or e-mail. We're happy to assist you 24 hours a day, 7 days a week. The information you provide will be handled according to our Privacy Policy. Email to Best Buy: Your staff helped me procure a power supply cord for my daughter's laptop. The power supply cord was defective and ruined her lap top. I took the laptop and the cord into the local store at 4177 Riverdale Road, Riverdale, Utah and requested assistance. Initially, your technical support staff was very helpful and actually in fact confirmed the problem most probably originated from the power supply cord. They paged the manager, Chris Anderton. We waited for quite some time. Another technical support representative came up and said of Mr. Anderton, "You might as well have put some cheese on a hook and thrown it out into the middle of the store. You’ll have to go find him, otherwise he will never come.” After quite a long wait, Mr. Anderton arrived and refused to listen to my problem. He gave me the 1-888-Bestbuy number to contact your "legal department." After wading through the automated menu, I informed him that I would like an actual number to the legal department. He turned his back on me and began to walk away. I raised my voice and told him not to turn away when I was talking to him. He became belligerent and threatened to call the cops on me and have it so I could never set foot in the store again. I left the premises, but my problem was completely unresolved and I was treated rather shabbily. In fact up until Mr. Anderton got involved, the staff had been helpful and courteous. The Assistant Manager had even suggested that we work on an insurance claim, but that he would have to defer to the general manager. I've purchased numerous products at Best Buy in the past. This experience has soured me quite a bit. I know for a fact that my daughters didn't buy $60.00 worth of CDs that day, because your manager was busy threatening me with the police, rather than helping me with my problem. I would appreciate it if someone could contact me about this as soon as possible. Sincerely, Kent Winward

Best Buy Phone Menu

2005-06-13T13:04:00.000-06:00

1 For Sales 2 For Service and Support 3 For Rebates, Receipts and Store Questions 7 “If you aren’t sure where to go” More Detailed Menu Options * To Repeat a Menu After pressing 7, you get the same three things over again. 1 Purchase products and support, check status of orders 2 All your repair questions 3 For rebates, receipts and store hour questions * To Repeat a Menu 9 To Return to the Main Menu (which happens to be the same as the sub-menu) “I hope that was helpful” As you can see, no legal department or complaint menu option.

Aspire Visa: A Visa To Avoid

2005-06-04T00:48:00.000-06:00

To add to the long list of credit cards to avoid in a post bankruptcy world, Aspire Visa is fast moving to the top. I’d known for some time that Aspire is the quintessential rip-off. In fact, I’d started to write something for this newsletter about Aspire, when an actual solicitation fell into my lap, thanks to one of the readers of this newsletter. So without any delay, let’s break down the whole solicitation. The Outside of the Envelope The outside of the envelope looked something like this: We think Invitation Number 4770-634551464570 you deserve John or Jane Doe more credit! Main Street Any City, State 99999 You’re Pre-Qualified No Deposit Required In analyzing this solicitation, remember the target for this advertisement – someone with poor credit. What are the three most common objections to getting credit that someone with poor credit is going to have? 1. I’m not worthy of credit. 2. I won’t qualify. 3. I don’t have any money. The ad writers for Aspire have come up with answers to all three objections, all on the front of the envelope! (Sorry about using the exclamation point, but the mere analysis of the ad makes me want to put an exclamation point after every sentence! Well, either that or simply throw up.) The “I’m not worthy” objection. Despite whatever credit crime you may have committed in the past, Aspire Visa wants you to know that they think you deserve to be treated more fairly. Even those with poor credit want to be deserving and accepted. The ad writer is appealing to that innate sensation we all have when things have gone wrong it is because we have been treated unfairly. You just have to like someone who doesn’t think you are a complete screw up, but rather thinks you’ve been given a raw deal. The “I won’t qualify” objection Well, it didn’t take a large amount of brain power in the Aspire board room to come up with “You’re Pre-Qualified”. If you notice however, they didn’t say you are “pre-approved.” Pre-approval is ubiquitous in the credit card solicitation business and pre-approval suggests that you are a little bit before approval and you still have to send in the application to get actual approval. In fact, pre-approval is usually accompanied by the equally ubiquitous asterisk*. The * means look at the bottom of the page to see what we really mean. I’ll save you some time and tell you what to read when you see “Pre-Approved” on any credit card solicitation: “Pre-approved” means that you have been specially selected to receive this offer of credit from us. Please keep in mind that certain creditworthiness criteria that we established in connection with the offer must be met or verified before credit can actually be extended to you.” (Source: Household Bank Credit Card Solicitation – although any credit card solicitation would do.) Now, most people with bad credit have learned to read the asterisk or they learn to quickly read them after they get turned down, so Aspire is consciously trying to separate themselves from the not really approved “pre-approved” crowd¨, when they say you are “pre-qualified.” As a final, not so- subliminal hint that you are pre-qualified, rather than pre-approved, look at the invitation number above the address. It has sixteen digits and starts out with a "4" just like every Visa in my wallet. The “I don’t have money” objection Besides the obvious “No Deposit Required”, there is something more subtle and sinister going on here. Who pays a deposit for a credit card? The answer an objection that shouldn’t be an objection and get you thinking that a deposit is necessary. This is important because the Aspire Visa marketing gurus are about to contractually obligate you to an incredibly large deposit. THE OFFER (OR SACRIFICE) Knowing that you are pre-qualified and not pre-approved, that you are worthy and deserving and you don’t need any money down, just what is Aspire going to give to you? You are going to receive a credit card with a $300.00 limit with the following fees already charged to your fragile credit limit: $150.00 annual fee, $29.00 account opening and $6.50 monthly maintenance fee. This $185.50 is also going to be charged 19.5% A.P.R. In case you were wondering, this is how you legally counterfeit money. You write up a piece of paper that answers the three objections of the credit poor. You tell them you will give them credit. You charge them $185.50 (and $6.50 a month) for telling them that you will give them credit. You charge them nearly 20% interest on that money. They sign a contract and you send a bill and start collecting money. Just in case the offer isn’t enough, you promise them that if they pay well on their $185.50 and $6.50 a month and 20% interest that they are “pre-approved”* for a credit limit raise in four months. They also throw in a few “Kangaroo Facts”: The Kangaroo Fact from their brochure: Consistently making your minimum payment on all accounts by the due date can improve your credit score over time. Remember that the best way to improve your credit score with revolving debt (credit card debt) is to have high limits and low balances. You can’t accomplish this by making just the minimum payments – unless you want to wait twenty years. Your Aspire Visa does not require a deposit. Your available credit line may be reduced by certain fees that will be billed directly to your account . . . Sounds like you don’t have to pay any money to use this card, right? Wrong! (There is that damn exclamation point again.) Two paragraphs later, they have this gem: After you receive your card, a first payment of $20 must be received and processed before you can activate your card and use your account. They must not be speaking the same English language that I’m speaking. I must have forgotten my definition of “deposit.” I went to the American Heritage Dictionary and found that indeed, I did remember what a deposit was: 3. A partial or initial payment of a cost or debt: left a $100 deposit toward the purchase of a stereo system. I swear that $20.00 fits the definition of a deposit, as in I paid a $20.00 deposit toward the use of an Aspire Visa. If only the Aspire Visa didn’t require a deposit.

Credit Correction and Credit Repair

2005-06-02T00:43:00.000-06:00

I've been giving a lot of thought to the entire credit repair industry. Most of the credit repair is focused on dealing directly with the credit bureaus. After reviewing the cases that have been filed as a result of the Fair Credit Reporting Act, this is a difficult approach that is often met with little success. Attorneys have been slacking in their duties to their clients in developing creative solutions to their problems. This is actually a problem with many in the law profession. Creativity tends to be punished. Judges and other attorneys rail against attacks on the status quo. The status quo is comfortable. The status quo is known. You don’t want to rock the boat or at least two things will happen to you: 1. You become a target for the protectors of the status quo. 2. You will be ridiculed for innovation, no matter how creative or correct. In the field of credit repair and correction, the name of the game seems to be get as much money with as little work as possible. The work consists of sending letters to the credit bureaus requesting them to verify incorrect data. Where is the creativity? Where is the actual representation of the client?

First World, Ha Ha Ha!!

2005-05-26T11:41:00.000-06:00

I recently read a book entitled "First World, Ha Ha Ha!" by Elaine Katzenberger It is a collection of works about the Zapatista uprising in Chiapas Mexico on January 1, 1994. The Zapatista movement or EZLN was mostly made up of native decedents of the Mayans Indians. For centuries their land had been taken from them and they had been forced to live in destitute poverty. Children have had no realistic opportunity to attain what little education the government attempted to provide. NAFTA seems to have been the last straw for the EZLN, whose organization had begun as early as the 1980's. The Mexican government touted that NAFTA would bring the country into "The First World." In reality NAFTA, in conjunction with illegal changes in the Mexican Constitution, would break the backs of the poor farmers in southern regions such as Chiapas. So on January 1, 1994 (the day NAFTA took effect) the EZLN overthrow local government throughout the state of Chiapas and opened up negotiations with the national governement. The Zapatista uprising challenged the basis of capitalist technocrat thought in Mexico. In response Mexicans across the country joined in open defiance of the Mexican administration. Thousands marched in a plazas shouting "Primer mundo, ja ja ja!" (First world, ha ha ha!). While poverty in the United States may not warrant an armed uprising, the Zapatista movement can serve as an example of questioning the kangaroo facts provided by government and big business. "First World, Ha Ha Ha!"is published by City Lights and can be found at Amazon.com. I highly recommend it.

Kangaroo Fact Re-Post

2005-05-23T13:07:00.000-06:00

I'm still trying to figure out the best way to post on to this blog. I want a separate link for Kangaroo Facts, so I'm resubmitting the explanation. Did you know that twenty people die every year in Australia from kangaroo attacks? In case you have a trip planned to Australia in your near future, let me suggest the three give-away signals to let you know that the kangaroo is about to be transformed from a cute bouncy animal with a pouch to a brutal, boxing death machine. The Three Signs a Kangaroo is About to Attack: 1. The kangaroo smiles at you. The kangaroo isn’t really smiling, it just looks like it. The kangaroo is actually baring its teeth at you, in the kangaroo equivalent of a snarl. 2. The kangaroo checks its pouch. Before becoming a brutal killer, the kangaroo makes the Darwinian check of the pouch to preserve the life of any young marsupials. 3. The kangaroo checks behind him. In an almost human reaction, the kangaroo looks behind to see if you have any back up that could thwart his retreat after the attack. When the kangaroo looks back, you had better be running or you could be on Australian Fox News: Tonight – Kangaroo Gone Bad – Tourist Ignores Simple Warning Signs. So why am I educating you on kangaroos? I’m not. Maybe I entertained you, but I certainly didn’t educate you, because all of that is made up. Fabricated. A lie. I don’t know how many, if any, people died from kangaroo attacks in Australia. I don’t have the foggiest clue what would make a kangaroo attack or what the precursor to the attack would be. The point is how many of you were convinced? It is simple to sound authoritative. It is simple to spout off facts that have a semblance of reality and draws on a cursory knowledge we have of a subject. I generally recall seeing some nature show with a kangaroo pummeling a man. It is the only mental picture I need and suddenly everything else just falls into place. What does this have to do with credit and personal finance? Many, many people want to give you “kangaroo facts” about how money works, about bankruptcy and about credit. As a feature of this newsletter, I’m going to expose the “kangaroo facts” as we find them. Let you know when something is just a bunch of hot air, rather than information that can really save your financial life. If you run across something and are wondering if it is a “kangaroo fact” or not, send us an email and we will research the validity of what you are being told. For example, if you really want to know about what it is like to travel in Australia and what can really kill you when you visit, read Bill Bryson’s amusing travelogue, In a Sunburned Country.

Credit Correction -- The Liability (or lack of liability) of the Credit Bureaus

2005-05-14T00:24:00.000-06:00

I spent the week reading court cases from lawsuits filed by consumers against credit bureaus for erroneous reports. The overall outlook from a consumer point of view was grim. It was discouraging to read about the struggles people had to have their credit reports corrected and the surprising lack of accountability of credit bureaus for screwing up. One of the most discouraging was Cousin v. Transunion. The case starts out promising – Cousin has won a judgment against Transunion for over $50,000. Transunion appealed the decision and won on appeal and Mr. Cousin actually received nothing, even though the Court agreed Transunion had negligently reported items on his credit. To give you an idea of how daunting the task of credit correction can be, I’ll give you a list of what happened to poor Mr. Cousin over a seventeen year period. (Remember this is what happened to someone with a flawless credit history – just think how they treat those of us with a few dings on our credit.) 1. In 1984, his brother stole his identity, bought two cars and didn’t pay. 2. In 1993, his brother again used his identity to buy a car through GMAC and put another derogatory mark on Cousin’s credit. 3. At the end of 1993, he sent a dispute letter about the identity theft. 4. Transunion refused to remove the negative report from GMAC, sending a form much like the one I printed a portion of in last weeks newsletter. 5. In May of 1994, Cousin sued Transunion to have the negative report removed. 6. The lawsuit was settled in January of 1995 and Transunion agreed to take off the negative reports caused by Cousin’s brother. 7. Cousin got a copy of his reports a month later and the negative reports were still on his credit report. 8. It was finally removed after a phone call by his attorney in March of 1995. 9. On November 15, 1996, Cousin went to buy a car. The car dealership pulled his credit, including a report from Transunion that still showed another negative item from his brother. 10. The car dealer also sent a request to have Cousin get a loan from GMAC, who got a report from Equifax, that also had another negative item from Cousin’s brother on it. 11. Cousin was told he didn’t qualify for the car loan. He requested a copy of his Transunion report and found the new negative item on the report in January of 1997 and sent a dispute on the new account. 12. Cousin got a new report a month later that deleted the new negative item and put the old one with GMAC back on. 13. Cousin sent a letter in March of 1997 outlining how the GMAC account had been removed in a prior lawsuit and that if they didn’t get it fixed he was going to sue. 14. In April, the GMAC account came off of Cousin’s report for one day. It was back on his report a month later in May as well. 15. Cousin sued and the case went to trial in May of 1998. 16. He won $50,000 in damages and $4,470.00 in punitive or penalty damages against Transunion. 17. On April 9, 2001, the appellate court threw out the judgments, because Cousin’s denial of credit had not been the result of the negligent or willful misreporting by Transunion. The moral of the story? Stories like this make me laugh at the credit reporting industry’s assertion that credit correction is something that anyone can handle themselves. Two lawsuits and an appeal later, Mr. Cousin got nothing but headache and heartache. The other grim reality is that now, more than ever, credit scores affect how much you pay, how much your insurance rates are and whether you can make necessary and vital purchases. I would encourage any of you who need or want to fix your credit reports to read properly to come armed with patience and the advice of good legal counsel. For credit correction services, contact The Credit Correction Clinic. Click here for more cases on the Fair Credit Reporting Act.

Cutting Costs with Clark Howard

2005-05-14T00:23:00.001-06:00

Matt was right. Clark Howard is a nationally syndicated radio talk show host and for the most part, I’ve found him to be accurate and conservative in his approach to personal finance and cost cutting. My father is a fan of Clark Howard. If you knew my father, you would realize that compared to him, I’m a rank amateur at cost cutting. So it isn’t surprising that Dad likes Clark Howard. He also has a new book out on teaching kids about money, Clark Smart Parents, Clark Smart Kids. Each radio show usually has some kind of advice or suggestion for cutting costs. A brief view of his website found the following cost cutting ideas: 1. Discount Travel 2. Discount Tires 3. Energy Efficient Appliances 4. Long Distance Plans 5. Health Insurance

Bankruptcy Reform -- Unintended Impact

2005-05-14T00:23:00.000-06:00

Apparently the first impacts of Bankruptcy Reform Legislation are already being felt, according to a report from the Clark Howard show. I have been unable to verify the accuracy of portions of the report, but whether it is a kangaroo fact or not it makes for a heck of a story. The publicity about bankruptcy reform is scaring people into paying down their debt, so the credit card companies are already starting to lose money. While amusing, the net result is that credit card companies are going to be trying harder than ever to get you into as much revolving debt as they can. So keep a wastebasket close to your mail box, because the solicitations will keep coming.

Kangaroo Facts: Menolve Fresh Start

2005-05-14T00:20:00.000-06:00

In case you missed last weeks newsletter, a kangaroo fact is something that sounds plausible or realistic, but actually isn’t. This week’s kangaroo fact is brought to you by Menlove in Bountiful, Utah. I pulled the following kangaroo fact from Menlove’s website. Fresh Start Offers: · Low 12.95% Interest Rate · 98% of all applications are approved · 500 New and pre-owned cars in inventory · 20 friendly employees dedicated to your satisfaction What is the truth? The low 12.95% interest rate disguises the true fact that the cars are often priced far above high book. I redrafted the ad, just so you can see what they are really saying: Put You In a Hole Immediately Offers: · Net Interest Rate of near 65% compared to the price you would pay for the car if you had good credit or cash · 98% of all applications are approved because we want your money · 500 used cars in inventory, all bought on the cheap · Our friendly employees will switch off your car’s ignition remotely if you don’t pay My brother did the newsletter’s first cartoon, based on Menlove’s Fresh Start Program.

2005-05-14T00:19:00.000-06:00

Menlove Fresh Start

Children and Finances III

2005-05-14T00:00:00.000-06:00

I’ve resorted to bribery to get my children to force my children to listen to me about money. This may be hypocritical and ineffective – or it just may work. I’ll just have to keep you informed of any progress – slow as it may be that I might make. I got my youngest daughter to agree to read Rich Kid, Smart Kid with me over the next couple of weeks in exchange for a new cell phone. My oldest daughter is excited about a new job she might have, so we will have to see how that goes too. I’ve just found it very difficult to discuss money with my kids because of long standing bad habits that we have established over the years. I would love to hear of any success stories you might have.

Clark Howard

2005-05-07T10:44:00.001-06:00

http://clarkhoward.com/ Here is a great website for consumer protection information. Some good things included on this website are:

Cell Phone number porting
Internet deals
Mailing list opt out (this works try it!!) Telemarketer opt out (this is a federal law type of )

One of the neat deals is that they have a consumer protection hotline that you can call with your questions. I believe that it is free I would like someone to try it out and post the results. Browse around and let me know what you find. He also has a radio show on KSL but I am unsure of the time it is on. Matt

Credit Correction -- The Consumer Statement

2005-05-06T23:58:00.000-06:00

Here is a typical comment on a communication from a Credit Bureau, in this case Transunion, about providing a consumer statement, rather than continuing to dispute a legitimate negative report: If you are not satisfied with the resolution of the investigation, you may add a consumer statement to your TransUnion credit report. This is a section of your file where you can provide additional explanation. If you would like, we can even help you write this statement. I am amazed at how inviting they make the “consumer statement” sound. They will even “help” you write it. Under Section 611 of the Fair Credit Reporting Act, the credit bureau (not you) has the responsibility for verifying erroneous information on your credit report. So why do they want you to give a consumer statement so badly? Two reasons: 1. By helping you write a statement, they get a chance to have you verify the information contained in the credit report. The statement becomes a permanent part of your file, which can then be used to verify the very information you want to have removed. It is like the hangman saying he will be happy to help you weave your own noose. 2. If you write a statement, maybe that will placate you and you will stop asking them to do what the law requires them to do. For more information on credit correction services, please click here to inquire further.

Bank Fees

2005-05-06T23:56:00.001-06:00

There was a great article entitled “Protection Racket” in Business Week on May 2, 2005 about fees and finance charges from banks for their “free” checking. Even our good friends at US Bank are not immune from these charges. The best advice from the article? Pay attention to what the banks are doing to you. To view the article online, you may need to sign up for online access to the magazine (it is one of those free things I was talking about above – a savings of $45 for a one year subscription).

Second Chance Checking

2005-05-06T23:56:00.000-06:00

When I came out of bankruptcy, the only bank that treated me with dignity and respect was U.S. Bank. I’ve banked there since 1997. As banks go, they have treated me incredibly well. When I was making a deposit yesterday, I spoke with Don Johnson (his real name) at the Ogden Smith’s Branch about U.S. Bank’s Second Chance Checking program. All you need is a $100.00 to open up a new checking account and the fact that you may have been previously reported on Chex Systems does not prevent you from getting an account. The account has Internet Banking and Bill Pay, interest on your account balance and a U.S. Bank Check Card. Based upon my past experience with U.S. Bank and how helpful Don was, email him or give him a call at 479-0112 if you know of anyone who needs an account.

Cutting Costs -- Using the Internet

2005-05-06T23:55:00.000-06:00

One of my most recent attempts at cost cutting has been to use the Internet to find items that I would otherwise buy or be tempted to buy. While I’m not espousing committing acts of piracy or copyright violations, there is a lot of free stuff that you can gain access to right on the Internet – books, movies, music, art and magazines. I’ll give you some links to web sites I’ve particularly liked. Books: Project Gutenberg: Over 6000 free electronic books, including most classics University of Virginia Library: Over 1800 books, journals and e-books University of Pennsylvania Library: Over 20,000 books Million Book Project: 10,000 down, 990,000 to go Movies: Yahoo Music Videos: Watch the music videos you want without MTV Internet Archives: Open source (non-copyrighted) movies Feature Films: Full length movies that are in the public domain – the most famous being “Night of the Living Dead” IFilm.com: Shorts, trailers and viral videos Audio: Live Music Internet Archives: Great if you are a Grateful Dead or Toad the Wet Sprocket fans, along with many others Podcasts: Music, radio and any number of audio options Sound Click: Numerous audio files Magnatunes: 373 Complete MP3 albums College Classes: UC Berkley Lectures: Bill Clinton, Umberto Eco, Aldous Huxley and many more Princeton Lectures: Attend an Ivy League School without the tuition If you have a cost saving internet site, let us know.

Kangaroo Facts

2005-05-06T23:54:00.000-06:00

Did you know that twenty people die every year in Australia from kangaroo attacks? In case you have a trip planned to Australia in your near future, let me suggest the three give-away signals to let you know that the kangaroo is about to be transformed from a cute bouncy animal with a pouch to a brutal, boxing death machine. The Three Signs a Kangaroo is About to Attack: 1. The kangaroo smiles at you. The kangaroo isn’t really smiling, it just looks like it. The kangaroo is actually baring its teeth at you, in the kangaroo equivalent of a snarl. 2. The kangaroo checks its pouch. Before becoming a brutal killer, the kangaroo makes the Darwinian check of the pouch to preserve the life of any young marsupials. 3. The kangaroo checks behind him. In an almost human reaction, the kangaroo looks behind to see if you have any back up that could thwart his retreat after the attack. When the kangaroo looks back, you had better be running or you could be on Australian Fox News: Tonight – Kangaroo Gone Bad – Tourist Ignores Simple Warning Signs. So why am I educating you on kangaroos? I’m not. Maybe I entertained you, but I certainly didn’t educate you, because all of that is made up. Fabricated. A lie. I don’t know how many, if any, people died from kangaroo attacks in Australia. I don’t have the foggiest clue what would make a kangaroo attack or what the precursor to the attack would be. The point is how many of you were convinced? It is simple to sound authoritative. It is simple to spout off facts that have a semblance of reality and draws on a cursory knowledge we have of a subject. I generally recall seeing some nature show with a kangaroo pummeling a man. It is the only mental picture I need and suddenly everything else just falls into place. What does this have to do with credit and personal finance? Many, many people want to give you “kangaroo facts” about how money works, about bankruptcy and about credit. As a feature of this newsletter, I’m going to expose the “kangaroo facts” as we find them. Let you know when something is just a bunch of hot air, rather than information that can really save your financial life. If you run across something and are wondering if it is a “kangaroo fact” or not, send us an email and we will research the validity of what you are being told. For example, if you really want to know about what it is like to travel in Australia and what can really kill you when you visit, read Bill Bryson’s amusing travelogue, In a Sunburned Country.

Children and Finances II

2005-05-06T23:53:00.000-06:00

My attempts at educating my children about money were hit and miss this week. As both my daughters hit me up for funds, I realized that I had spoiled them way too much and neither one of them had a clear conception of how to earn and control money. My seventeen year old could be moving out next year and I realized with some panic that I haven’t taught her what it takes to pay monthly bills or how to plan her financial future. Actually, I haven’t taught them much of anything, except how to spend money I earned. I’m reading Rich Kid, Smart Kid and I’ll review that and provide more experiences next week.

On Graduation

2005-05-06T15:28:00.000-06:00

I graduated this morning after many years at Weber State University. Yesterday, I went to the alumni center and was surprised at what they placed in a Weber State University envelope with my cap and gown. I shouldn't have been surprised at the contents of the envelope given my experiences in higher education. Like most baby-faced high school graduates I went to college with almost no education on the subject of credit and even finances in general. The only thing that I had learned in my twelve years of public education was how to write a check. (Not surprising I was taught how to spend money but not how to manage it.) I filled out two credit card application my first week on campus in order to receive a free CD and a free t-shirt. Those two credit cards are still on my credit report. It seems that my time at Weber State was destined to have bookends of credit. The envelopes contents were the following: 1. Credit Union information on car, home or consolidation loans 2. Info on consolidating student loans 3. 50% discount with North American van lines 4. Auto insurance information I was expecting a nice flowery letter from the alumni center which praised me for my accomplishment of graduating and the wonderful benefit it would be in my life. I was of course disappointed and was left wondering whether I should get a loan or use my 50% off coupon to move.

Student Loans

2005-04-29T23:51:00.000-06:00

Certainty used to be limited to death and taxes – add student loans to that list. Student loans are invincible. Most loans will die if enough time passes or you file bankruptcy. Student loans simply become stronger and more virulent the longer you neglect them. So what do you do if you are behind on your student loans? Even more importantly, what do you do if you can’t afford your student loan payments? One method is to see if you qualify for loan consolidation. You qualify for loan consolidation if you meet the following requirements: 1. You are in default. 2. You have at least one Direct Loan 3. You agree to pay under the Income Contingent Repayment (ICR) Plan or have made satisfactory repayment arrangements. While this means it may take you twenty five years to pay back student loans, at least it is income based and actually something you can accomplish. If you would like more information on the consolidation programs, go to the Federal Student Aid website. The link will take you to the Borrower’s Service Portion of the website. You can also click on the FAQ’s and then choose Question 12 Can I Consolidate a Defaulted Loan. If anyone else needs information on options with student loans, let me know and I will help you out. I’d also like to hear any success stories you might have had with your student loans.

Definitions:

ICR: A repayment plan that bases a borrower's monthly payment on their yearly income (AGI), family size, and loan amount. As a borrower's income rises or falls, so do the payments. After 25 years, any remaining balance on the loan will be forgiven, but borrowers may have to pay taxes on the amount forgiven. Direct Loan: A federal program that provides loans to student and parent borrowers. The loans are Federal Direct Stafford/Ford Loans, Federal Direct Unsubsidized Stafford/Ford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans. Funds are provided by the federal government, through participating schools or the Loan Origination Center, to eligible students/borrowers.

More Misses -- Free Annual Credit Report

2005-04-29T23:50:00.000-06:00

I’ve had a few more experiences with https://www.annualcreditreport.com/ after last weeks newsletter. Both of the problems came when attempting to enter Transunion’s website to get the credit reports. The verification process was so difficult, that even after numerous tries at verifying the identity, the site simply told my friend that she wasn’t who she said she was and they weren’t going to let her get the report without calling a 1-800 number. The moral of the story is to have account numbers, past addresses and other personal information handy when you try and access your reports.

Cutting Costs -- The Library

2005-04-29T23:49:00.000-06:00

My biggest discretionary budget item has been primarily books. Now, this weird quirk of my character aside, I happened to rediscover the library and instantly saved myself from spending a bunch of money at Barnes and Noble. The library has changed since I was younger. You can now check out videos, DVDs, audio books, and CDs. You can gain internet access. You can also check out books by the dozen. The best part about the library though is its cost – FREE (as long as you bring the books back on time). So before dropping twenty bucks at Media Play, consider going to the library. Web Sites: Weber County Davis County Salt Lake City

Car Lot Science

2005-04-29T23:47:00.000-06:00

This week I got to read the new book, Blink by Malcolm Gladwell. The book is about how our minds make snap judgments – in the blink of an eye. One study recounted in the book tells about a visit by 38 subjects to 242 car dealerships in the Chicago area. All the participants presented themselves as young professionals and instructed on how to barter hard for the price of the car. Here is a chart showing the results of the study: Race/Gender Initial Offer From Sales Agent Price After 40 minutes of Negotiation White Men $725.00 above invoice White Women $935.00 above invoice Black Women $1,195.00 above invoice Black Men $1,687.00 above invoice $1,551.00 above invoice The point of the survey was that not that the sales agent was racist, but that the sales agent is paid on commission, so the higher above invoice the bigger the pay check. The sales agents had been programmed to think that black men would pay the most for cars and acted accordingly. For more information on the study, see Blink starting at page 92. The study and numerous others showing how differences in gender and race can affect your purchasing power are found in Pervasive Prejudice? By Ian Ayres. My blink reaction to the study was that you would see similar results if the sales agent is told that you are “credit challenged.” Immediately you fall into the category of someone desperate for a car and someone from whom a higher price can be extracted. Coming soon to our web site: Car buying tips to help you before you venture out amongst the wolves.

Children and Finances

2005-04-29T23:46:00.000-06:00

As my seventeen year old daughter is talking to me about her desire to get a job for the summer, I realized that I have probably not done the greatest job in educating her about money and financial responsibility. I’m reminded of this every time we go to the mall and I feel like a human ATM machine. I wish I had infinite words of wisdom to impart to you and say with the authority of Moses hauling tablets down from the mountain that this is how you teach your children about money, but I don’t. I just know that she isn’t being taught how to handle money from anyone else, so I am the one who has that educational responsibility. In the coming weeks, I’ll keep you posted on my efforts to educate her and my efforts to educate myself on how best to instruct her.

Credit Correction

2005-04-22T23:44:00.000-06:00

Effective May 1, 2005, Rehab My Credit has teamed up with the Credit Correction Clinic, a local law firm that specializes in credit correction services. If you wish to sign up for their services for one year at the rate of $50.00 per month, you will also get, in addition to the Credit Correction Services, a Last Will and Testament, Living Will and Medical Directives, which can be worth up to the total amount you pay for the Credit Correction Services. So not only does your credit get corrected, you also avoid any type of Terry Schiavo incident in your family.

Hits and Misses -- Free Annual Credit Report

2005-04-22T23:40:00.000-06:00

I’ve had hit and miss success with the web site https://www.annualcreditreport.com . This web site has been set up to make sure that the three credit bureaus are in compliance with modifications to the Fair Credit Reporting Act which allows those of us in the Western States to get one free Credit Report a year. Be ready with account numbers and amounts you owe on your debts for verification purposes. You will have to download a credit report from each of the credit bureaus, so check all three boxes for each bureau. HITS 1. Truly Free Credit Reports. 2. The website is fairly easy to follow – as web sites go. 3. Transunion and Experian make it easy to come back and see your credit report for the next thirty days. (Equifax tries to sell you stuff if you want to see it for the next thirty days, so I’ve never bothered. Just print the reports out and you can look at them when you want to. ) MISSES 1. Numerous attempts to sucker you into lots of extra services that you probably don’t need. Remember that when you are getting your credit report, you are only dealing with one of the three, so any service you get, to be truly effective you would have to sign up for three separate times – once each for each credit bureau. 2. Sometimes the website has not responded very well and I’ve had to re-enter the data over and over again. 3. When I tried to retrieve my report from Experian, it told me I’d already got my free report for the year, even though I hadn’t. A full list of questions and answers about the free credit report can be found at https://www.annualcreditreport.com/cra/helpfaq?currState=UT&ion=W

Cutting Costs -- Cell Phones

2005-04-22T23:39:00.000-06:00

Phone service seems to be a necessary evil. I’ve relied almost solely on my cell phone. My monthly bill is $45.00 a month with 500 minutes long distance. Now the same company is offering unlimited long distance for the same price. Plus, you get it with no credit check. How? Cricket. The down side to Cricket is that you can’t use it off of the Wasatch Front, although it does reach out to Tooele to the West, Springville to the South, and North Ogden to the North. The biggest cost of Cricket can be the phone. At the risk of sounding like I’m promoting my brother, he is a Cricket dealer and can set you up with a low price phone and Cricket service. He also has prepaid cell phone service at 10-15 cents a minute, if you need something other than Cricket without a credit check. He also can sign you up for other services that do require credit checks. Call Bart at (801) 388-0231 or email at bartwinward@yahoo.com.

Bankruptcy Reform Legislation

2005-04-22T23:35:00.000-06:00

On Wednesday of this week President Bush signed the new Bankruptcy Reform legislation. The new law won’t go into effect for six months. If you are currently in a Chapter 13 make sure you don’t let the case dismiss, since the ability to re-file is more difficult under the new law. Another significant change increases the time between filing Chapter 7 cases from six years to eight years. (I never have figured out where the urban legend “7 year” requirement came from.) Much of the media commotion about the new law seems to be centered on the fact that it will be harder to file. It will be harder to file because it will be more costly and time consuming. The actual requirements and effects of the bankruptcy will remain relatively unchanged. Also, over 90% of those who could file Chapter 7 in the old system will still be able to file Chapter 7 in the new system. Many of the Chapter 13 cases (at least in Utah) will become Chapter 7 cases as well, since the ability to save a car in the Chapter 13 by lien stripping (lowering the amount and interest owed on the car) is removed by the new legislation. The Bottom Line? The changes in the Bankruptcy Law simply make it more imperative than ever that as you rehabilitate your credit that you do it wisely and conservatively.

Blog Beginnings

2005-04-22T23:28:00.000-06:00

Thank you for reading the Rehab My Credit blog. I want to make the blog as effective and informative as possible. I know one thing that will make this blog more effective is your feedback. Ask questions and we will get the answers. As the blog grows, I anticipate adding even more contributors and valuable links that will keep you up to date on what is going on in the world of credit and responsible financial management. Thanks again for reading and please email me with your questions at kent@rehabmycredit.com.