What happens if a credit card balance goes unpaid? If you aren’t receiving collection calls, does it mean the debt is no longer a problem?
All states have statute of limitation laws setting a time when a debt can no longer be collected. Credit card debt is considered open account debt because the lender has the option to change the terms of the agreement at any time. Iowa law states open account balances can no longer be collected after 5 years from the last charge, payment, or admission of ownership of the debt in writing.
Once the original lender has exhausted their attempts to collect and elects to discharge the balance, the debt is sold to collection agencies. Timelines vary for when an account is sold, typically at 180 days. Collection agencies will contact you and attempt to collect a settlement. If the agency is unsuccessful they may bundle the uncollected debts and sell it again to a different agency. Attempts to collect your debt can occur at any time in the five year period and can result in court action. If the debt results in a court judgement to pay, it is valid for 20 years. Iowa allows actions to be taken to renew judgements extending the time when active collection can take place.
Ignoring unpaid debt won’t make it go away. Resources that may help are available through the Iowa Attorney General’s office, the Consumer Finance Protection Bureau, the National Consumer Law Center, and local attorneys.
Many of Iowa’s County Extension Districts are celebrating their 100-year anniversary this year. Wayne County, where my office is located, is one of them. Starting in January a team of county staff have developed plans for a special day.
Lending a hand with the effort has raised my awareness of how fortunate you can be when someone at work or in your family takes on the responsibility to preserve history. Staff at the office have had some fun “aha” moments sorting through papers, pictures, annual reports, and other archived materials. It has also exposed flaws and errors.
Glue, is definitely an enemy to pictures and paper. So is lack of duplication. At one point, the files containing 50 and 75-year histories were misplaced, much to the consternation of a former employee who had invested sweat equity putting them together.
Guidance for doing a better job can be found at the National Archives:
- Use a 3-2-1 back-up plan. Make three copies, use two different forms of media, and store one copy off site.
- Metadata to record includes Who, What, Where, and When.
- Use picture mounting tabs and plastics that are stable – polyester, polypropylene or polyethylene.
- When a very important paper needs restored, find a Conservator.
As landmark celebrations end or you finish family reunions, time improving maintenance of special papers, pictures, and history would be a nice gesture for the future.
Geocaching is an electronic treasure hunt. It is a great low-cost activity, and can be fun year-round. It is easy to catch on to and there are caches all over – literally around the world (2 million to be exact).
To get started set up a free account at geocaching.com, then download the free app to your smartphone or purchase a GPS unit. Search near you for a cache, use your app or plug the coordinates into the GPS to start hunting.
Many geocaches are found in safe places like rest areas, parks and cemeteries or near landmarks. What you will find may be very small like a pill fob OR it may be larger, like an ammo box. Some will be harder to find than others but they are never buried. Inside will be a log to sign. There may also be “swag” like geodes, stickers, patches, pins, marbles, key chains, lanyards, and geocoins.
- Dress appropriately.
- Let someone know where you are going or enjoy navigating with someone else – perhaps a child or grandchild.
- The caches are secret so don’t let passersby know what you are doing.
- If you take something, you should leave something of equal or greater value.
- Always return the cache to its hiding place.
- Bring your own pen to sign the log, then enter your find at https://www.geocaching.com.
Discover what is hiding near you today! How many will you find?
Written by Sandra McKinnon, Human Sciences Extension and Outreach family finance specialist and geocacher since 2009
(Photo by Christopher Gannon/Iowa State University)
A big thank you is in order from Iowa consumers to the Legislature, Governor Kim Reynolds, and Attorney General Tom Miller for passage and enactment of Senate File 2177 . Beginning on July 1st you will no longer be charged fees to use a “freeze” on your credit report.
The Equifax Breach put many individuals in a pool of consumers whose personal information was compromised. Faced with potential misuse, one step to limit damage was freezing your credit report at the three credit reporting bureaus, but the cost was $30. In passing the new law, Iowa government officials reasoned that consumers should not be forced to bear the cost when a reporting bureau is negligent.
The credit bureaus are also making other changes: what data they collect; how it is reported; and credit score calculations.
- All public record information, except for bankruptcy, is being removed from files.
- Reports on medically-related debts are held for six months before posting to allow for insurance closures.
- Medical debt is given less weight compared to other consumer spending when calculating your credit score.
- Rent data can now be included in your credit report; only positive reports will be accepted.
- A series of auto or mortgage inquiries are treated as one event.
- Paid collection accounts will be removed from reports.
- Keeping a card open that is paid in full will not help your credit score if it isn’t used. A card that is not used in a 3-6 month time period is dropped from credit score calculations.
Checking your credit report for accuracy is a good habit to maintain. If you haven’t checked yours in the past 12 months, now would be a good day to start!
Let’s be truthful, some of us do an excellent job helping our 17-18 year old get ready for the real world even if we also remember situations when we hope they didn’t pay too close attention to our bad habits. Adult finance is complicated by some natural tendencies toward spending and savings. I’ve heard more than one parent wonder out loud how a child could grow up in their house and manage money the way they do.
Whether you have full confidence in their money management skills or expect to get several calls asking for guidance when the issue is totally out of hand, here are some tips that may help you and the 17-18 year old in your life:
Reduce their risks-
- Review your insurance policies and find out if the coverage extends to include their property while they are living away from home temporarily. If they are leaving home permanently, pick up information about renters policies and explain it to them.
- Share tips about auto insurance coverage. Remind them that valuables in the vehicle are not insured. Consider whether it makes financial sense to have them insured through their own policy. If the premium will exceed 10% of the value of the vehicle, it may be time to switch to liability only.
- If they will continue to be covered by your health insurance plan: 1) confirm they will have access to the network providers; 2) make sure they are carrying an insurance card; and 3) share a quick reminder of typical preventive services and what to plan for co-pays.
- Recommend filling out their W-4 with a 0 for withholding exemptions until they have filed their first tax return. Several part-time jobs combined together can result in underpayment of taxes due.
- Consider giving them a list of the records you save, electronically or on paper, for financial reasons.
- Give them a shredder. Not an exciting gift, but important to keep their identity intact.
Keep the door open for conversations without judgement. We’ve all done stupid things with money – why not make sure the young adult learns some lessons from you and not the hard way.
Iowa’s new legislation will allow “health benefits plans” to be sold for coverage in 2019. The health benefits contracts will not offer the ten essential areas of coverage mandated by the Affordable Care Act. Mental health, maternity care, and treatments for addiction are examples of coverage that can be dropped and may result in lower costs.
It’s important to remember the new benefits plans are not insurance. Reading the offered plan will be important to understand what is covered and your rights if you disagree with decisions to not pay a claim. The Iowa Insurance Division will not have authority over the plans and has no responsibility to review issues that arise if benefits are denied. The plans fall under ERISA laws administered by the Department of Labor.
While consumers will be able to consider selection of coverage with fewer benefits, they also will be considering a product that lacks some of the traditional back-up security used by insurance. Health insurance providers participate in a risk pool, where money can be borrowed if there are extremely high claims in any one year. The new benefits plans won’t have this protection, a reason why they are apt to be highly selective when offering coverage to clients.
Extension’s health insurance education programs encourage individuals to compare coverage to needs and to read and understand their policies. Those consumer skills will be equally beneficial when comparing health insurance policies to health benefits plans.
Is your W-4 declaration of withholding allowances the same one you filled out when you started working for your organization, and that was decades ago? The W-4 form tells your employer the amount of federal and state income tax to withhold from your paycheck. Our tax laws are a “pay as you go” model. A penalty is assessed if you don’t have sufficient funds withheld to cover your expected tax liability.
When a tax return results in a “taxes due” outcome, individuals are likely to take action – they change their withholding elections to avoid having to pay next year. On the other hand, when tax returns result in significant refunds, taxpayers don’t always take steps to adjust withholding, even though that would place more income in their own hands to manage.
W-4 forms aren’t user friendly and that may be a reason we avoid updating them. It may also take a trip to the HR office if you can’t submit the form online. To change a pension or annuity withholding you will use a W-4P.
It’s easy to make errors, especially if you have multiple sources of income. The IRS has a Withholding Calculator available to help. It has been newly updated to reflect the recent changes in tax law that will impact 2018 tax returns. IRS Publication 505 is recommended for individuals who have self-employment income or must claim capital gains. (This one is not yet updated for the new tax legislation).
Round up your most recent paycheck stub and tax return before you start. Remember: federal and state treasuries make lousy savings depositories.
In our early 20’s, my husband and I drove a Ford Pinto to Colorado. Our modest vacation was inexpensive. When we had children, camping in a tent at a state park meant family fun.
It wasn’t always easy to set funds aside and not use them for immediate needs. Employer’s mandatory retirement savings made a difference. If you want to avoid a sleeping bag or to travel in a non-air conditioned car in your 70’s, find out if you are maxing out your contribution.
Adding one more retirement fund today with modest amounts means a better chance you can rent a nice motel room in the future!
America Saves and Retirement: Secure Your Future can help.
The last major breakdown at our house was a heater that is used in the barn, in the space where ewes and baby lambs are in small pens to bond before they move into larger pens. We were past any options for patching or repair. Replacement cost: $325.
Unplanned breakdowns may look different at your house, but the cost is probably similar:$300-$500. Saving between $20 and $40 a month will build a “rainy day” fund to tap into for unexpected expenses and opportunities. If you don’t spend it this year, next year you’ll accumulate more. Start the habit of saving for those “rainy day” events.
America Saves offers more tips and resources to get you started.
America Saves Week 2018 begins on February 26th. During America Saves Week there will be six days of events to promote the theme of creating a habit of setting money aside for the future:
Monday, Feb. 26: Save with a plan
Tuesday, Feb. 27: Save the easy way….automatically
Wednesday, Feb. 28: Save for rainy days
Thursday, March 1: Save to retire
Friday, March 2: Save the extra
Saturday, March 3: Save as a family
This year a team of Extension professionals is sponsoring a contest with a chance to win one of three $100 Amazon gift cards. All you have to do is share your favorite savings strategies.
Write your advice on an electronic index card. Match your strategy or tip to one of the America Saves themes. Post the picture on Twitter using the hashtag #ASWSSIC. You can enter up to 6 times, use a different theme with each entry. Additional entry steps and the official entry form can be found at eXtension Index Card Contest.
You have the entire month of February to promote your ideas and share what has helped you make savings a part of you financial management habits. Following along will give you a chance to see what works for others and find new habits or behaviors to adopt. To further promote America Saves Week and good savings habits, Money Tips will feature a daily blog based on the savings themes. They will arrive in your mailbox Feb. 26th – March 3rd.