Unpaid Debt

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.

 

 

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Upon Graduating – Financial Words of Wisdom

Many students recently marked a big milestone by graduating from school.  Looking back, what words of wisdom regarding personal finance would you like to have received when you left high school?

Personal finance does not have to be boring!  The National Endowment Financial Education – www.nefe.org has a couple resources to help your graduate be an independent young adult.

On Your Own –is a blog with a range from credit score calculated, making better money decisions, and the pros and cons of college?  This is a trustworthy site.

Another option is Smart About Money (SAM) is an in-depth, guided learning experience.  There are five sections with valuable tools, worksheets, calculators and quizzes.  Each course is about 45 minutes.

Cash Course targets college students. Some colleges and universities offer it especially for their students, but any student can enroll independently. It’s free, with no strings attached, but you do need to create a user account.

Forty Money Management Tips Every College Student Should Know – this Cash Course resource helps young people learn how to take control of their money instead of letting their money control them.

 

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Credit Reports: Changes in 2018

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!

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Could Rounding Up What You Pay Help You?

Having a debt – perhaps a mortgage or a car payment – may feel as if you have a ball and chain around you for the duration of the loan. Is there a way to lessen the load?

One option is to simply round up your payments.  Suppose your current car payment is $360 per month.  If you round up and make monthly payments of $400, that is like making one extra payment during the year on your car, and the extra money goes toward the principal on the loan. You’ll reduce your interest costs, and you will also pay off the loan faster.

Here’s a mortgage example: if your mortgage payment is $900, but you pay $1,000/month, the extra $100 goes toward the loan principal. That’s an extra $1200/year!  If $1,000 is too much for your spending plan, try $950, which is an extra $600 per year. Over several years, either strategy will save thousands in interest and get your mortgage paid off years early.  Read the fine print on your contract. Make sure your lender accepts larger payments.  Need to know so it helps your cause.

You can use the same strategy with any credit card bills where you are carrying a balance, and on any other loans, as well.

Every time you round up you’re getting closer to debt freedom without feeling much of a pinch. Once you start this habit, it will be hard to break. Fortunately, it’s a very helpful habit!

 

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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In the market to buy a home? Make sure you understand the terms…

Spring is in the air. Are looking to buy your first home or upgrade your current one? Understanding mortgage vocabulary will help your purchase or refinancing go more smoothly. Do you know the difference between  pre-qualification and pre-approval mortgage?

Even though the terms sound similar, mortgage pre-qualification and pre-approval are two very different processes.  A pre-qualification is designed only to give you an idea of the mortgage amount you might qualify for, based on information you provide without verification. Some mortgage professionals believe pre-qualification is virtually useless.

A pre-approval letter from a lender shows that you qualify for a specific mortgage amount based on an underwriter’s review of your actual (verified) financial information, such as your outstanding debt, credit history, income and assets.  Your home buying journey will be easier with a pre-approval letter.  Why? With clear verification that you will be able to get the loan you need, a seller of a home will take your offer more seriously.

If you want more information, Iowa State University Extension and Outreach offers a comprehensive homebuyer workshop online: A Place of Your Own.

 

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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So Why Do Children Not Understand Money Concepts?

In a 2017, a T. Rowe Price survey, found parents are talking to their children about shopping, but are skipping conversations about household budgets, savings and financial goals. Close to 75% of survey respondents say they regularly have conversations with their children about money, but the focus is on spending—not the family’s current financial situation.

Are we sheltering our children from money? 

The survey found that many parents think they strongly encourage their children to talk about money, the children only agreed 19% of the time.  One in four parents discouraged their children from talking about money.

Children want to learn the financial basics – 34% want to know how banks and credit cards work; and 29% want to learn about managing money.

Protecting children from the financial challenges and decisions faced by adults may not be giving them an opportunity to form habits that can prevent financial stress when they are older. Understanding the source of money, choices involved with use, and it’s limitations form a basis that will impact attitudes and skills in management.

There are places to teach money management – the grocery store, or when paying everyday utility bills. Lessons taught by parents will reinforce and strengthen school based lessons in financial literacy. Basic skills become stronger when practiced. It can include balancing a checkbook, keeping spending records, comparing returns from savings to other investment options.

The T. Rowe Price survey shows that only half or fewer of parents have strong financial habits. One example – more parents save for a family vacation than have an up-to-date will.  One in ten do not save regularly for retirement, purchase life insurance or save for a family vacation.

Where does your family fall in the 10% or 90%?

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Can You Change Your Behavior?

Now that the holiday bills are in, what do you think? Any worries or regrets? If so, how can you change your behavior to prevent worries or regrets next year?

This month, many folks have had mailboxes or autopay accounts full of holiday bills or credit card bills; I have a few myself.  But next year at this time it doesn’t have to be that way if we take action now.

Think about the amounts you spent on gifts, food, and other holiday-related expenses and add them up.  Divide the amount by 10 (months).  Suppose your total spending was $400. Then 400 ÷10 = $40; if you save $40 each month until November, you will have $400 available in November for next year’s holiday purchases.

Another approach could involve saving $20 per week; after a year you would have $1,040.  This could be a holiday fund or a vacation fund; the money could be used for other annual expenses too, like back-to-school costs or car registration. Think about your goals for this year and save accordingly.

People who plan to save excel in reaching their goals.

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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You Signed Up for a Credit Freeze on Your Credit Report – Are You Safe?

Here are a few places you may want to look into regarding protecting your credit report and personal information.

  • To prevent others from accessing your Social Security information follow the recommended security steps listed on the SSA site to establish password protection. Check your work history and contact your nearest SSA office to report errors.
  • File your income tax returns early. If a false return is filed in your name  the IRS  will allow you to file a paper return with additional information. The IRS investigates the false return and will invite you to opt-in to a PIN program. The PIN is sent by mail with a number to attach to your return. New ones are issued annually. Note: If you have put a credit freeze in place – you must do a temporary lift so the IRS can confirm your identity to issue the original PIN. All future tax returns must have the PIN or they will be rejected by the IRS.
  • The breach can result in false claims for benefits from private health insurance, Medicare, or Medicaid. Read all correspondence from your health insurance providers including settlement statements. Your first clue that false claims have been filed may be a call from a collection agency. If you have evidence of theft, contact medical providers for your records and take steps to remove the false information.
  • Are you aware of MIB – not men in black, but Medical Information Bureau. If you have applied for life insurance or private health insurance they prepare a summary of your health records using information from their member insurers.  Milliman Intelliscript reports information about your prescription drug information.
  • Your driver’s license number can be used for identification on bad checks. To find out whether any bad checks are attributed to your accounts, request your free annual consumer report from major check verification companies – ChexSystemsCertegyEarly Warning Services, and TeleCheck.
  • Ask the motor vehicles department to give you a copy of your driving record; most states charge for this, about $10. To protect yourself, ask the motor vehicle department to flag your license number for the police if they stop someone using your number.

This breach caused more headaches for consumers – protect your identity!

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Red Flags

My work in family finance has taught me to never give my social security number or the security number on the back of my credit card if the call wasn’t initiated by me. That practice has served me well on two recent occasions.

The first situation occurred after the purchase of a vehicle. The caller identified himself as an employer of the lender; he was verifying insurance coverage. I’ve received mail from lenders in the past asking that proper insurance coverage verification be sent, but never a call. The big red flag for me was when I was asked to give my social security number.  “The insurance issue was taken care of at the time of purchase,” I stated and hung up.

This weekend the call was from an individual that identified themselves as representing my satellite provider. The caller stated, “We’ve recently updated to a new satellite service and your receiver will not continue to function with the new service. Please turn on your TV and press menu twice. On the the screen please read the receiver ID number.”  (This all seemed accurate and a reasonable request.)

“Yes, your equipment will not continue to work properly, we’ll need to send you a new receiver,” he said. (More details about my service that were accurate.) Directions were given for how the exchange would occur. I stated the equipment had only been replaced a year or two ago and wondered how it could be out of date. “Your receiver is like a computer, he said, “over time the technology has to be replaced.”

The next item of business was the charge. The caller explained that I would be charged for the new equipment, but would receive a monthly credit for 24 months that would be twice the initial up front fee.  Then he confirmed my address, phone number and proceeded to read off my credit card number. It was my first red flag. I didn’t think I had ever shared my credit card with this provider. The number given was correct, but the expiration date was wrong. I immediately gave the correct one and then he read the security code. Pause, RED FLAG, RED FLAG, RED FLAG!  I didn’t give the right one. The caller seemed annoyed, “Are you absolutely sure that is the correct number?”  ” Yes”, I lied.  I was given a call back number, name and code number for the caller. My order would be shipped in one or two days.

I called the satellite provider next to verify and learned it was a fraud. I was directed to their fraud department for additional assistance. The next call was to the credit card company, even though they didn’t get the code they needed, there was too much information out there on that account. It’s been canceled.

I hung up on the call that came the next day!  Thinking back over the situation, it is very easy to be caught off guard. What saved me was a resolve to never share my social security number or the verification/security number on the back of credit cards unless I make the call.  Callers are clever, I’m adding the practice of saying, “In this case, I’ll call your company directly. Good Bye.”

Joyce

 

 

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Are You Protecting Your Personal Information?

Following the recent identity data breach, are you in the 19% who have checked to see if Equifax has compromised their personal information?  Or are you in the 81% who have not done anything as of mid-September?

Of the people who took action, 36% said they have placed a fraud alert on their credit.  Another 28% enrolled in a free credit-monitoring service offered by Equifax.  Twenty per-cent purchased another credit-monitoring service and 21% have frozen their credit.

What this breach means to you the consumer: it exposes names, addresses, Social Security numbers, birth dates, and driver’s license numbers. All the items needed to open new credit.

Unfortunately, you the consumer need to do the heavy lifting when it comes to protecting your identity.  Even though Equifax is offering free credit-monitoring service – you the consumer need to go to their site to check to see if you are affected, and then go through their multi-step enrollment process.

I found some interesting data about who is most concerned about the Equifax breach.   Are you 45 and older? Among this group, 72% were concerned.   Among younger adults, 57% were concerned.  Women were more concerned (70%) than men (62%).

There are still many unanswered questions – why did the breach happen, how did it happen, why did it take so long for Equifax to alert the public?

About three in ten Americans have faced some form of identity theft in the past.  There are more incidents in higher annual incomes.  If you have not checked – do it!

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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