by Joel Francois

As of Friday March 2 2012, Massachusetts Attorney General Martha Coakley announced revised debt collection regulations designed to provide stronger consumer protections by addressing changing technology.

 “Given the industry’s recent advances in technology, we concentrated on how we could bring our regulations up-to-date and streamline them to be consistent with other state and federal agencies. These amendments ensure that the playing field is level for both creditors and consumers so that all parties are better protected.” AG Coakley stated.

Highlights of the amended debt regulations include:

• A definition of “creditor” that includes a buyer of delinquent debt who hires a third party to collect, also known as a “passive debt buyer.”- This rule would make passive debt buyers liable for misconduct of the collection agencies that collect their debts.

• A provision requiring that a debt collector must determine in good faith whether the debt is time-barred (past the statute of limitations), meaning they are no longer collectible through court action. A debt collector must make a specific disclosure to consumers if applicable.

• Amended sections to reflect technological advances such as cell phones, phone recordings and text messaging and other data usage fees. Abusive dialogue by phone recordings and text messages are also covered by the regulations to include various acts and practices prohibited by the federal Fair Debt Collection Practices Act (FDCPA).

These changes represent yet another example of increasing pressure on debt collection practices.  Massachusetts residents should be aware of these changes and understand how they could impact specific cases.

Copies of the revised regulations are available on the Attorney General’s website at www.mass.gov/ago/regulations.

by Joel Francois

With 2012 approaching, let’s try to actually fulfill a common new year’s resolution-become debt free.  I will list the top 10 resolutions that will help get your credit card debt under control.

1.       Stop using credit cards

Whether you shred them, leave them home or lock them up. In order to be debt free, you must be comfortable with only using cash. Do not close them because that can have a negative effect on your credit score (see no. 6).

2.       Stop applying for new credit

This is a no brainer, you can‘t reduce your debt by adding new debt. Having too many credit inquiries within a certain time frame will also have a negative effect on your credit score.

3.       Create a monthly budget

Writing down all of your monthly expenses and income will give you an unbiased view of your finances. You have to make sure annual and quarterly expenses are also factored in. This is important and should be as detailed as possible.

4.       Request a free credit report

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a FREE copy of your credit report, at your request, once every 12 months . You should exercise that right every 12 months to know exactly what is on your credit file.

5.       Purchase all three credit scores

Credit scores are based on information the credit bureau keeps on file about you and are used by lenders use to determine your credit risk.  It is important to know your score to establish your current credit baseline.

6.       Calculate your debt-to-credit ratio

Your debt-to-credit ratio (also known as utilization ratio) shows the percentage of your available credit you are actually using. To find out your credit utilization simply divide your credit card balance by your credit limit then multiply by 100. The lower your credit utilization, the better.

7.       Settle and payoff collection accounts

One of the first steps would be to get a resolution on collection accounts.  Depending on your situation, you can contact the debt collectors directly or hire a debt settlement company to negotiate on your behalf.

8.       Pay off smaller credit cards first

One strategy to eliminate debt is to make the minimum payments on the larger accounts and make larger payments to payoff the smaller accounts.  This strategy helps motivation by providing  faster results.

9.       Open a new savings account

Now that you no longer use your credit cards, it is smart to start a new rainy day fund to cover unforeseen expenses. We would open an account with a small bank or credit union.  Setting up automatic weekly or monthly payments is a great way to force yourself into funding the account.

10.   ” Those who cannot remember the past are condemned to repeat it”

Becoming debt free has to become a new way of life. Why do all of the hard work and sacrifice to find yourself in the same position again? Remember all your hard work in getting there.

Chances are there are a number of errors on your credit report right now that you are unaware of. It is amazing the number of” hidden surprises” that can surface when looking at a credit report. These issues can have a major impact if you are trying to do debt consolidation, purchase a car, home or just looking to get your credit back on track.

So I’ve decided to put together a quick checklist of the most important things to look for on your credit history report:

Is my Social Security number accurate?

Credit data is primarily reported using your Social Security number. If there is any discrepancy with the Social Security number on your credit report, it could lead to a number of problems including having someone else’s debt reported to you, and vice versa.

Are there any name variations or Aliases?

This is pretty common and occurs when different name variations are given to different sources.  Aliases can mean using you’re your full name, middle initial, or maiden name. Problems can arise when you have relatives at the same address with the same or similar name -JR or SR for example .

Are there any addresses that you do not recognize?

A quick and simple way to verify whether you are an identity theft victim is to verify the addresses listed. If you see an unfamiliar address, you should investigate immediately because it means that it was used on a credit application.

Credit inquiries

Credit inquiries can tell you who has accessed your credit file. “Soft inquiries” (when you make the request) do not affect you credit score. When banks, creditors, collectors make a request it is called a hard inquiry and it does have a negative effect on your credit score.

Duplicate credit accounts

There are many cases where one credit account is reported by the original bank, one or two debt collectors or a debt purchaser. This can mean that one credit account is affecting your credit score on more than one occasion.

Collection items

Accounts that are past due show up as collection items. Make sure that you recognize these credit accounts and verify that they should be listed as collection items.

Public Records

Public records can be a bankruptcy filing, civil judgments, foreclosure or any tax lien. These can remain on your credit report for between 7 and 10 years and should be verified and addressed as soon as possible.

Charged off accounts

A credit card account is usually charged off after 180 days, or six months delinquency.  These accounts are then sent to 3^rd parties for collections or sold. Always verify by using the original account numbers that these accounts are now showing up, more than once.

What is debt to credit ratio?

The debt to credit or utilization ratio has a major effect on your credit score. To find out your credit utilization simply divide your credit card balance by your credit limit then multiply by 100. The lower the percentage, the better. Ideally, the ratio should be 30-50%.

Are account statuses up-to- date?

Your credit score is a live snapshot, so it is imperative that all of your credit account statuses are updated accordingly. All paid, settled, and closed accounts should be reported as such.

I put this guide together to help you navigate through the amount of data on a credit history report. Click here to request your free credit report every 12 months.

While hanging out with some friends and ex-coworkers who a work in the credit card collection industry this weekend this topic came up. These are some things that bill collectors do not want to hear during a phone call. They hear these terms repeated  and nothing gets them worked up more than the following:

• “I already paid somebody else”

•  “The phone number you have called is disconnected”

• “I just filed bankruptcy”

•  “Don’t you have something better to do?”

• “She moved out of the country

• “Why did they give me the credit card, when they knew my situation?”

•  “I am contacting the Attorney General’s office”

• “F.D.C.P.A (Fair Debt Collection Practices Act)”

• “I am on Social Security”

• This is past the Statute of limitations”

• “I already have a judgment against me”

• “He’s in jail”

•  “I am unemployed”

•  “The phone number you have called has been changed to a non-published number”

•  “I checked online, you can’t say that”

• “You can’t get blood from stone”

To all my friends still in the collections industry you secret is safe with me. Happy Thanksgiving!

]]> http://www.fnafinancial.com/top-phrases-debt-collectors-never-want-to-hear/feed/ 0 http://www.fnafinancial.com/black-friday-shopping-tips-without-credit-cards/ http://www.fnafinancial.com/black-friday-shopping-tips-without-credit-cards/#comments Mon, 21 Nov 2011 21:59:26 +0000 admin http://www.fnafinancial.com/?p=664 by Joel Francois

Credit cards make shopping On Black Friday a breeze. You walk in the store, pick something you like swipe the card and you come home – the hero. There is a cost to this convenience, in addition to   becoming best of friends with credit card debt; you are adding an additional financial burden to you and your family.

 For those of us who are constantly battling increasing credit card debts. Here are some tips to us survive Black Friday.

Start holiday shopping early

Christmas comes the same time every year. We have approximately 12 months to develop a plan and to execute it if we desire to save money and keep our credit card balances low. Why wait until December 1 or Black Friday to begin our Christmas shopping? Why not begin in January or early February when the winter clearance begins for many retailers. By spreading out your shopping, you will give yourself more time to find the right deals and you will be less likely to charge any purchases as you won’t be spreading yourself so thin financially.

Create a shopping budget

Make a reasonable shopping list, and stick to it. If you don’t shop with discipline, you will overspend and make last minute, unnecessary purchases that will only cause you to go over-budget and most likely rack up those credit cards. When most people begin planning for their holiday shopping, they only think of gifts and then give themselves one solid amount for those gifts. This is a sure fire way to set yourself up for overspending as budgeting just for gifts leaves out other holiday needs such as travel and food – both of which are integral parts of the holidays.

Make monthly payments without adding debt with Layaway

As reported by the Wall Street Journal layaway— the practice that allows us to put store items on hold while we pay them off in incremental payments with no interest charges added- is making a comeback. Layaway was made popular during the Great Depression but nearly became extinct due to the instant gratification of credit cards. A number of national retailers including TJ Maxx, Marshalls, Sears and Kmart offer the layaway option. The demand for layaway is stronger than it has been in years, thanks to the credit crunch.

Use self control to not use credit cards

You won’t make it through the holiday season debt free unless you learn to keep yourself under control. While it is fun to shop for loved ones, it is also costly. Don’t let yourself get carried away with buying the latest, biggest and shiniest. Are you working on paying back credit card debt? Is your emergency savings non-existent? Take some time to evaluate how much you can realistically spend on holiday shopping.

 Leave credit cards at home and stop at the bank.

 Paying with cash will curb impulse buying and shopping. Shopping with cash instead of credit cards will cut your holiday spending by 23% according to Lindstrom. Avoid the ATM and use a teller to request larger bills like 50s and 100s, you will be less likely to break them on unnecessary purchases.

Beware of store cards discounts

A discount of 30% off sounds especially tempting when you’re spending big on holiday shopping. But remember that each time you apply for a store card, it initiates a hard inquiry on your credit report.  You will be tempted to spend more than you should at one store. And chances are, the annual percentage rates on most store cards would be a lot higher standard credit cards .

Search out online coupons codes

Don’t just settle for the first products you find. Research alternative options from the Internet and circulars. To search for coupons and discounts on sites like couponcabin.com, and Coupon Mountain before making any purchases. Shopping online can also greatly reduce shopping expenses. Certain items, such as electronics, books, and movies, can be purchased for significantly lower prices. The additional time it takes can more than pay for itself, by providing better choices and pricing.

Block out those holiday commercials

Holiday advertisements and marketing are specifically targeted to appeal to pleasant and warming emotions. Keep your emotions in check this holiday shopping season by changing the channel when one of those commercials comes on.

These are just some of the tips to help you survive the holiday shopping season.  Just know that you are not alone. This Holiday Season About 71% of consumers plan to use cash or debit cards as their primary payment method when buying holiday gifts this year instead of credit cards. 8 Million Fewer Americans plan on using Credit Cards for Christmas purchases. So when you are done give yourself a pat on the back because you have were able to participate in the holiday traditions and are still continuing on the path to be debt free.

I was speaking with a close friend a couple of days ago about credit card debt and credit scores and he mentioned something interesting. He has never been late on his credit card payments, yet lately he has noticed his credit score decreasing. With a little investigating, we realized that his utilization ratio was over 80%.

Utilization Ratio has an increased role in the calculation of your (FICO) credit score. This ratio compares your credit card balances to your credit limit. The higher the number, the more negative effect on your score. Credit reporting agencies in general like to see a 30-35% ratio, which translates to a $3500 balance for an account with a $10,000 limit.

In late January 2009, credit score creator Fair Isaac Corporation (FICO) introduced its updated scoring model known as “FICO 08”. This new credit scoring model was designed to more accurately predict consumer borrowing behavior, such as the likelihood that a borrower will be able to repay a loan.

One of the major changes with this update is that the FICO score is more sensitive to the utilization ratio. At the same time, it will be less punishing to those who have had one serious credit setback (charge-off or repossession) or have small (under $100.00) collection accounts.

So it is very important that you not only pay your credit cards on time, but you also keep constant watch over your balances and limits. Considering the current practice of many banks to quickly lower consumer’s credit card limits, you can easily see you score decrease without warning.

Credit cards can be like winters in Massachusetts- cold, hard to predict and always worth paying attention to.

Many people often call me looking for help with their debt and during the initial discussion I always ask if they have looked at their credit report recently to see what’s on there and to my surprise a large number of those people have no idea where to begin to look to get a credit report.

It’s very important to constantly monitor your credit report so that you can keep a check on what’s being reported by creditors and agencies. Often times creditors are sloppy in their reporting and there are things that can make it onto your report that simply aren’t yours. For example, if you have a common name like Kathy Smith and your social security number is 012-34-5678 and your birthday is 01/15/1965 this potentially could cause you some headaches at some point with regards to your credit report because there are many Kathy Smiths out there and if there is one that has a SS# of 210-43-4598 or a birthday of 01/05/1965 the way the credit bureau’s algorithms scan for matching info, the second Kathy Smith’s information may end up on your report. If the second Kathy Smith is someone who doesn’t pay her bills on time this could potentially affect the first Kathy Smith who has a history of always paying bills on time.

If erroneous information gets onto your credit report it can be a major project trying to get it off your report, not to mention a waste of your valuable time. Also, it could be bringing your credit score down because of this mistake. Another good reason to view your credit report consistently is identity fraud. You certainly wouldn’t want to find out at the wrong time that there is debt in your name that someone fraudulently obtained. But this in itself is a story for another day.

So, how do I get my credit report? Well, in 2003 Congress passed the Fair and Accurate Credit Transactions Act (FACT Act). This law was enacted with the goal of improving credit report accuracy and fairness by encouraging people to review their credit report. The law stipulates that people are allowed to receive one free credit report from each of the credit bureaus in the course of a twelve month time frame. There are three major credit bureaus from which most of your credit history is documented are Experian, Equifax and Transunion.

To get a free copy of your credit report simply go to www.annualcreditreport.com , choose a credit bureau from which you would like to pull a report and then enter in all of your personal information. Once all the information is verified it will bring you into the site and from there you can view and print your credit report.

A helpful hint: because you only get one free report from each bureau in a twelve month period it’s best to view one report from one bureau and then four months later view another from a different bureau and again in another four months the final bureau. This way you can consistently stay on top of your credit reports for free.

In an upcoming blog we’ll discuss credit scores, how they are calculated and how to improve your score but for now if you are having trouble keeping up with your debt or have already fallen behind on some accounts feel free to contact us for a free consultation. Francois and Associates is committed to helping Massachusetts residents resolve their credit card debts and improve their finances.

Once In a while we get this perfectly logical question, “why can’t I settle these credit card debts myself?” In certain cases you can settle a debt yourself. A better question should be:

“Can I get the same results you can?” and that answer is NO.

I like to think I am a smart, well rounded person but I could never wake up tomorrow and decide to fire my mutual fund manager and start investing in the stock market myself, essentially gambling with my financial future. Make no mistake about it, tackling credit card debt without the help of an experienced debt relief professional is like taking a trip down to Mohegan Sun. There are a number of factors that can affect the outcome of a settlement negotiation:

• Who is the creditor?
• Which creditor is more aggressive?
• How does one settlement affect your other accounts?
• What are the settlement terms?
• Which collection agency has the account?
• What time of year is it?
• What about your other accounts?

These are just some of the questions that you should be able to answer before negotiating credit card debt on your own. A wrong answer to just one of these questions could lead you down the wrong path. In order to become truly debt free you have to see the big picture at all times. You have to think about not only the one account in front of you but also the other handful of accounts that are in the same situation. That is where experience becomes invaluable.

The credit card debt industry is dynamic, it changes constantly. There are cases where credit card companies change their collection policies weekly. A great settlement today can become an awful settlement tomorrow. Someone who is constantly dealing with these creditors gives you the best chance to beat these odds.

Now don’t get me wrong, all debt relief companies are no created equal. We get calls daily from Massachusetts residents who are unhappy with their current credit counseling or debt settlement company. What I am saying is to get the best RESULTS consistently you need a great team in you corner –Just so happens that I know of one right here in Woburn, MA.

We all lead busy, stressful lives, that requires making many decisions (big or small) daily. From raising children, changing jobs, going back to school to dealing with credit card debt, the list can be pretty daunting. So how do we manage these decisions? Some of us tackle the issue straight on, some do lots of planning, many use denial and unfortunately most of us put these major decisions to the back of our brains hoping that somehow the future will bring a solution out of nowhere. This is the biggest hurdle we face when talking with potential debt settlement clients, it is a stance we take not just with finances. We brush off things involving family, friends, work and our futures.

The Direct Marketing Association reported in 2009 that only 3% of Massachusetts residents respond to financial mailings they receive. These are people that have a need and can afford many of these products and only 30 out of 1000 will call back. That is 970 out of 1000 people who will simply “sweep it under the rug” hoping for a miracle down the line.

Every couple of years I am reminded of this problem by our favorite state agency: The Massachussetts Registry of Motor Vehicles (RMV). We all know the story, $40 parking ticket becomes $95.00 problem in a year, excise tax goes from $75 to $135.00 before you blink. And we think credit card interest is bad. Although each time I tell myself” never again”, I always seem to end up in the same line talking to the same rep about the same ticket.

Of course I don’t know why we like to sweep things under the rug. I guess life feels easier when you don’t have to think about things that bring on more stress and anxiety. What I do know is that it is only temporary relief. Your crazy in-laws are still around, that extra 25 pounds won’t go away on its own, and that being debt-free just won’t happen by magic.

I am hoping that 2011 is the year that we all meet our challenges head on and move towards a brighter future.

So you’ve finally come to the realization that you need to do something about your debt situation and can no longer continue to struggle to make payments….now what? You talk with friends or family and they tell you all kinds of things that you should do and to call this company or stay away from that kind of program which gets you even more confused and now you just want to go back into hiding with your debt.

The truth is and despite what any friends might tell you, there are only three options to get help with your debt. And depending on your situation one of them is most likely a good fit for you. The first thing you need to asses is whether your current finances are enough to pay off your debts. If you are just making minimum payments make sure your interest rates are not so high that when you make the payment the balance doesn’t go down at all or if it does it’s so insignificant that you feel like you’ll never pay the balances off. If you can only send in the minimum payment check on your statement to see how long it will take you to pay off that balance. It will tell you.

If you decide you can’t continue long term with those payments then most likely you need help. So what are your options from there? Well the first option is credit counseling. Credit counseling companies will help reduce your interest rates and payments and put you into a program anywhere from three to seven years. The downside of this kind of program is that your payments will still be relatively high as you are going to pay off those balances in that short time frame. Most credit counseling companies work for the credit card companies. If your available cash flow is too short to make payments in a credit counseling program then it’s onto the next option.

Debt settlement is a viable and legitimate program where your balances are negotiated down to a lesser amount and the remaining balances are paid off over a negotiated period of time. The debt settlement company will work for you in getting you the most favorable terms from the creditor. They payment you make into this kind of program is usually much less than what you were paying the creditors and most likely within your budget. The settlement company’s fee is already included into the payment so you don’t have to come up with large amounts of money to pay them as well as your creditors. If you decide to add extra money into the program you can do so without penalty and it will only help you achieve your goal of becoming debt free faster than the original program terms. A good debt settlement company will get you out of debt in four years or less.

Finally, the last option to get help and only if you can’t afford the previous two programs would be to file bankruptcy. To do this you would need to speak with a bankruptcy attorney to see if this is the best route for you to go and to see which of the two chapters you would qualify for (7) or (13). Filing bankruptcy will hurt your credit score more so than any of the other programs available.

No matter which option you choose make sure you deal with a Massachussetts based company that you know you can walk into anytime if you have questions or concerns while in the program. It’s always easier to sit down with someone face-to-face and get all the facts and options laid out for you. To take it a step further, a reputable company should be willing to meet you in the comfort of your own home where your confidentiality is assured.

If you are in need of a financial analysis or want to assess your situation in detail Francois and Associates, The Baystate’s premier debt relief company can help. Call today and they will follow through with a complete assessment of your situation and review all of your options for free.