Chapter 5

Unscrupulous Debt Collectors

Posted on February 25, 2015 by Melissa Hart

In January 2015, the U.S. Department of Justice sued a Texas-based Commercial Recovery System, Inc., a debt collection company that allegedly impersonated attorneys, law firm staff, judicial employees and mediators.  The company threatened people with lawsuits, seizure of their property, or wage garnishment.  All these practices are against the law.  Under federal law, debt collectors–including collection agencies, lawyers who collect debts, and companies that buy delinquent debts and then try to collect them–can’t use abusive, deceptive or unfair practices to collect from you.

For additional information, click here.

Teaching Suggestions

  • Ask students to check a local Consumer Credit Counseling Service to learn about their services provided to consumers.
  • Ask students to compile a list of places a person can call to report dishonest credit practices, get advice and help with credit problems.

Discussion Questions

  1. Which federal law(s) protect your rights if you are ever contacted by a debt collector?
  2. If you need help regaining control of your finances, what resources are available to you?
Categories: Chapter 5, Consumer Complaints, Debt | Tags: , | Leave a comment

The Seven Baby Steps (Dave Ramsey)

Posted on February 18, 2015 by Melissa Hart

“Get out of debt the same way you learned to walk–one step at a time.”

This article describes Dave Ramsey’s seven steps that anyone can take to get out of debt and begin to manage their personal finances.  These seven basic principles have been taught by Mr. Ramsey via radio, books, Financial Peace University, live events, and online.  Listed below are the seven steps discussed in this article.  Note:  You can get more information about each step by clicking on the “Learn More” tab.

  1. Begin by creating a $1,000 emergency fund.
  2. Pay off all debt using the debt snowball .
  3. Save 3 to 6 months of expenses in a savings account.
  4. Invest 15 percent of household income into Roth IRAs and pre-tax retirement accounts.
  5. Create a college funding plan for your children.
  6. Pay off your home mortgage early.
  7. Build wealth and give.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Ask students visit the Dave Ramsey website.
  • Discuss some or all of the seven baby steps described in this article. Reminder:  Students can get more information by clicking on the “Learn More” tab.

Discussion Questions

  1. How can the seven baby steps help you manage your personal finances?
  2. Do the steps in this article make you want to change your priorities and what’s important in your life? Justify your answer.
Categories: Budget, Chapter 1, Chapter 2, Chapter 5, Debt, Financial Planning, Home Buying, Savings | Tags: , , , | Leave a comment

Newly Married with $52,000 of Debt

Posted on February 14, 2015 by Melissa Hart

My Wife and I Never Discussed Money Before Getting Married–and Ended Up with $52,000 of Debt

Prior to tallying up our debt, we’d talked about traveling internationally, starting a family, and, some day retiring comfortably. There was so much we wanted out of life, but . . .”

This is an excellent article that describes what can happen when a soon-to-be-married couple doesn’t talk about finances.  Fortunately, the two people in this article–Deacon and Kim Hayes–realized they had a problem and then took steps to get their finances back on track.

Specific steps this couple took can make a big difference over time.  Among the suggestions included in this article are:

  • Writing down all your assets, debts, income, and expenses.
  • Prepare a budget and review each item for opportunities to save money.
  • Replacing a newer, expensive car with an older car.
  • Selling unwanted or unneeded items online.
  • Using any extra money to repay debt.
  • Establishing an emergency fund.
  • Saving and investing a specific amount each month.

Consider This:  Deacon Hayes–the author of this article–became a financial planner and now shares his story with his clients.

For more information, Click Here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss why engaged couples need to discuss their finances before they get married.
  • Stress how easy it is to get in debt and how hard and how much time it takes to get out of debt.

Discussion Questions

  1. Assume you are dating someone who seems to spend more than they make. In this situation, would you continue to date this person?  Explain your answer.
  2. One of the suggestions included in this article is that people write down their assets, debts, income, and expenses. How can this suggestion help a young-married couple plan their financial future?
  3. Assume you have credit card debts and an automobile loan that total $75,000. What specific steps can you take to reduce or eliminate your debt?
Categories: Budget, Chapter 1, Chapter 2, Chapter 5, Chapter_11, Debt, Financial Planning, Financial Planning Topics, Investments, Savings | Tags: , , , , , | Leave a comment

Free Credit Scores

Posted on January 28, 2015 by Melissa Hart

“Free credit scores” sounds good, right?  But what if you signed up for “free credit scores,” then found out you were enrolled in a credit monitoring program that costs $29.95 per month?  Not so good.  That’s what the FTC says happened with a company called One Technologies, Inc.  Now the company has agreed to settle the FTC’s charges that it misled consumers by advertising “free credit scores” but failing to tell them that they would be enrolled in a credit monitoring program for a monthly fee.

One Technologies, Inc. offered people “free” online access to their credit scores through at least fifty websites, including freescore360.com, freescoreonline.com , and scorescense.com.  But according to the FTC, the company didn’t clearly inform people that once they got their score, they would pay $29.95 per month for a credit monitoring program.  You could only get out of that monthly fee by calling to cancel.  Some people had to call multiple times.  Others were denied refunds.  One Technologies, Inc. will pay $22 million to compensate its customers and must get their consent before billing them.  Also, it must provide the customers with an easy way to cancel.

For additional information, click here.

Discussion Questions

  1. What can you do if you become victim of a deceptive marketing practice?
  2. Where can you get your free credit report at least once every year?

Teaching Suggestions

  1. Ask students to obtain their credit reports from Experian, TransUnion, and Equifax.
  2. Ask students to search the Internet for “free credit scores” and summarize their findings.
Categories: Chapter 5, Credit Scores, Frauds and Scams | Tags: | Leave a comment

Refinancing Loans: Not Just for Mortgages

Posted on January 24, 2015 by Melissa Hart

Most people know they can refinance a mortgage—that is, replace an existing loan with a new one that may offer better terms.  But did you know you can also refinance personal loans, including auto loans, credit cards and student loans?

“Refinancing a personal loan may save you money, especially if you get a lower interest rate, a lower monthly payment or other benefits,” notes Susan Boenau, Chief of the FDIC’s Consumer Affairs Section.  “However, refinancing does not always equate to saving money or better terms.”

Understand potential pitfalls in refinancing a personal loan.  For example:

  • You may have a higher APR than what you were originally paying when the promotional rate ends.
  • Closing a credit card account also reduces your available credit and may adversely affect your credit score.
  • A balance transfer may result in your account having multiple interest rates.
  • You may be assessed a prepayment penalty if you refinance a loan before it matures.
  • If your credit score is low, wait to refinance until you can raise it.

For more information, click here.

Teaching Suggestions

  • Ask students to prepare a list of similarities and differences between a home equity loan and refinancing personal loans.
  • Ask students to use the Internet to obtain information about refinancing.

Discussion Questions

  1. What are the possible advantages and disadvantages of refinancing?
  2. What are your legal remedies if a credit reporting agency engages in unfair reporting practices?
Categories: Chapter 5, Debt | Tags: | Leave a comment

Auto Dealer Financing

Posted on January 17, 2015 by Melissa Hart

You want a car and need financing, but your credit isn’t so great.  Most dealerships have a Finance and Insurance (F&I) Department that will tell you about their financing options.  To get the process started, the F&I Department will ask you to complete a credit application, which includes your monthly income and information on current credit accounts, including debt you owe.

At least that is how it’s supposed to work.  But there have been reports that some dealers inflate your income information for the financing without your knowledge.  That can cause you serious financial harm.  You could be saddled with car financing that you can’t afford to repay.  That means your car could be repossessed and your credit score could take a hit.

The Federal Trade Commission has a few tips to help you avoid unscrupulous finance deals:

  • Consider your options for financing. You might be able to arrange financing directly with a credit union or finance company before you pick a car.
  • Research the dealer before visiting the sales lot. Check the dealer’s reputation online by searching for the company’s name with words like “scam,” “rip-off,”or “complaint.”
  • If a dealer encourages you to overstate your income, take it as a sign that the dealer is not reputable, and leave the dealership.
  • Ask to see the credit application, completely filled out, before you sign it. Make sure your income and other personal information is correctly listed.

For more information, click here:

Discussion Questions

  1. Why is it important to consider other sources of financing before visiting an auto dealer?
  2. What might be the consequences if an auto dealer inflates your income?

Teaching Suggestions

  1. Have students visit an auto dealership to gain additional insight into this high-cost financing service.
  2. Have students make a short presentation with a summary of their findings.
Categories: Chapter 5, Chapter 6, Financial Services | Tags: , | Leave a comment

Be Smart About Your Smartphone

Posted on November 1, 2014 by Melissa Hart

You just bought the latest Smartphone.  You loaded all your favorite apps–online banking, GPS, even an app to track your health.

But now your phone is full of information about you–how much money you have, where you are and whether you’ve gained a little weight.  Your information can cause problems if it’s in the wrong hands.  Want to protect it?  These tips are for you:

  • Set you phone to lock automatically. When you don’t use the phone for a few minutes, the phone should automatically lock itself and require a password to reopen.
  • Use passwords for your phone. In addition to a password to unlock your phone, use a different passwords for each shopping or financial app. Don’t share your passwords with anyone.
  • Be wise about Wi-Fi. Don’t send personal information on a public wireless network in a coffee shop, library or hotel. Wait until you can use an encrypted Wi-Fi network that requires a password.
  • Foil phishing attempts. Don’t text or email personal information, and delete any texts or email messages that ask for it. If you must give out personal information, do it only if you type in the organization’s web address yourself and you see signs that the site is secure–either “https” (the “s” stands for secure) or a lock icon.
  • Connect to Bluetooth carefully. Bluetooth makes it easier for you to connect your phone with other devices. But, like other wireless connections, Bluetooth also can make it easier for thieves to steal your personal information. So, connect to Bluetooth in private, uncrowded areas only. Don’t forget to turn off Bluetooth when you are not using it.

Now you are ready to start using your new phone, right? Before you toss your old Smartphone,  remove all your personal information.  It’s important to protect your personal information from the moment you start using your phone until you get rid of it.

For additional information go to

http://www.ncpw.gov/blog/be-smart-about-your-phone

http://www.consumer.ftc.gov/articles/0272-how-keep-your-personal-information-secure

Teaching Suggestions

  • Ask students how they get rid of all the personal and financial information stored in their mobile devices.
  • Why is it important to use strong passwords with your mobile device, laptop, credit, bank, and other accounts?

Discussion Questions

  1. Why is it important to protect your personal information from the moment you start using your phone until you get rid of it?
  2. What steps should you take to remove personal information before discarding your mobile device?
Categories: Chapter 5, Identity Theft | Tags: , | Leave a comment

Stop Debt Collector’s Empty Threats

Posted on October 25, 2014 by Melissa Hart

Calls from debt collectors can add to the stress of having financial problems.  When these calls involve harassment, threats and intimidation, the situation can get worse–especially if you don’t know your rights

In 2014, the Federal Trade Commission filed a complaint against National Check Registry for violating the Fair Debt Collection Practices Act by using outrageous and intimidating methods to get people to pay debts immediately, often debts that were in dispute.  The company will tell the victims that they had committed check fraud or another crime and threatening them with lawsuits, garnishments, arrest or imprisonment if they don’t pay within 12 or 24 hours.

According to the FTC complaint, National Check Registry has no authority to make arrests or seek other criminal punishments for failure to pay these debts.

For additional information go to

http://www.consumer.ftc.gov/blog/stop-debt-collectors-empty-threats

Teaching Suggestions

  • Ask students what actions are commonly recommended if a person has difficulty making credit payments.
  • Ask students to outline the actions they should take when they receive phony debt collection calls.

Discussion Questions

  1. Are debt collectors allowed to discuss your debt with anyone other than you, your spouse or your attorney?
  2. What can you do if you think that a debt collector has violated your rights?
Categories: Chapter 5, Debt | Tags: | Leave a comment

Prescreened Credit and Insurance Offers

Posted on September 27, 2014 by Melissa Hart

Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer.  Prescreened offers–sometimes called “preapproved” offers–are based on information in your credit report that indicates you meet criteria set by the company.  Usually, you receive prescreened solicitations via mail, but you may also get them in a phone call or in an email.

For additional information, go to

http://www.consumer.ftc.gov/articles/0148-prescreened-credit-and-insurance-offers

Teaching Suggestions

You may want to use the information in this article to discuss

  • Why some people prefer not to receive prescreened offers in the mail, especially if they are not in the market for a new credit card or insurance policy?
  • What might be some advantages of receiving prescreened offers?
  • Ask how many students have received prescreened offers and what did they do with them.

Discussion Questions

  1. Can prescreening hurt your credit report or credit score?
  2. How can you reduce the number of unsolicited credit and insurance offers you receive?
Categories: Chapter 5, Credit Cards, Credit Scores | Tags: , | Leave a comment

Data Breaches and Credit Freezes

Posted on September 24, 2014 by Melissa Hart

News reports of large-scale data breaches–like the September 2014 announcement from Home Depot–have prompted many people to consider a credit freeze.  Also known as a security freeze, this tool lets you limit access to your credit report, which makes it more difficult for identity thieves to open new accounts in your name.

Remember, credit freeze doesn’t prevent a thief from making charges to your existing accounts.  Even if you elect a credit freeze, you still must monitor your existing credit card and bank accounts for charges you don’t recognize.  Also, remember that you can check your credit reports for free, every few months by visiting AnnualCreditReport.com or calling 1-877-322-8228.

For additional information, go to

http://www.consumer.ftc.gov/blog/data-breaches-credit-freezes-and-identity-theft-oh-my?utm_source=govdelivery

Teaching suggestions

You may want to use information in this article to discuss

  • The difference between a credit freeze and a fraud alert.
  • If anyone can see your credit report, is it frozen?

Discussion Questions

  1. Does a credit freeze affect your credit score?
  2. Does a credit freeze stop prescreened credit offers?
  3. How can you place a freeze on your credit report and how do you lift a freeze?
Categories: Chapter 5, Identity Theft | Tags: , , | Leave a comment

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