My question concerns negative things on the credit history and buying a house.  I had my credit history pulled because I was thinking about buying a house.  When the financial person saw it, he said that I had some bad marks and needed to take care of them. I contacted the credit card people and they told me that these things would not be removed for 7-10 years.  Does this mean that I will no be able to buy a house until then?  I know people who have worst credit histories than I do, and yet, they have been able to buy a house.  My scores range from as low as 502 to 602.  How can I get my score up if slow payments stay on my record for 10 years?

Congratulations! The process of purchasing a home can be overwhelming, but it can also mark a very happy time in one’s life.

It is true that a bad mark remains on your credit report for 7 – 10 years.  However, what you should be concerned with is the most current activity.  This is what hinders your credit score most.  35% of your credit score comes from credit payment history.  In other words, pay your bills on time and do not be late.

If you have not ordered your credit reports, do so, it will not hurt your score.  Go to www.annualcreditreport.com and get all three reports, free of charge. You will be charged if you would like to see your credit score.  Review these reports with a fine comb. Make sure that you not only understand what is on your report, but that the information is accurate.  Contact any creditors that are reporting erroneous information.  If you feel that you should debate an item on your report, do it.  Do not wait until a lender looks at your report and has questions that you cannot answer.  We usually recommend that you review your credit at least six months before you plan to apply for a loan so you will have the ability to fix any problems in your report first.  You should enter the lender’s office with explanations to all of the items on your credit report.  Be equipped.  Be prepared.

Rest assured that it will not take you will not have to wait 7 – 10 years before you can purchase a home but keep in mind the higher your credit score the better (lower) interest rate. This better rate could save you thousands over the life of the loan.  Although, cleaning your credit report and raising your credit score takes time, it will not take that long. It is also important that you do not make any large purchases with credit during this time because it would have a negative effect on your credit. Even though you have negative marks on your credit report, most of your score will reflect what you are doing today.  Until you get that loan, be on your best financial behavior. Below is a complete list of how your credit score is determined.

Should you need further information on mortgages, review the Educational Materials section of our website.  Since you have already spoken with someone in regards to a mortgage, call them and ask what you need to work on.  It would not hurt to get some pointers straight from the horse’s mouth.   Finally, be positive.  A high credit score does not necessarily mean that you have the financial capability to make a mortgage payment.  Just as a mid range score will not impede you from getting a loan.  Good luck.

Dear Client,

It is with great pleasure that I can take this opportunity to tell you about DMCC’s latest accomplishment; we have recently been designated an Approved Housing Counseling Agency by the U.S. Department of Housing and Urban Development.

This means that DMCC has met certain industry standards and federal guidelines to provide housing counseling services, including budget counseling and financial management workshops. DMCC has been offering budget counseling and workshops for over 11 years; this accreditation is yet another affirmation that we do a legitimate job of helping many consumers improve their personal financial situation. It also allows us to
expand our programs to help individuals
with their housing needs.

In this regard, we have developed a new Foreclosure Prevention Program that we are now offering for free to anyone who is suffering from a financial hardship and is finding it difficult to pay their monthly mortgage. Our housing counselors will identify solutions to avoid foreclosure that meet the individual’s personal goals and, if applicable, assist the individual with obtaining a loan modification through available government programs. If you or anyone you know could benefit from this program, or to learn more about it, please call our office and ask to speak to a housing counselor.

Aside from our new housing initiatives, DMCC continues to stress the importance of education. We are constantly adding articles and materials to our website to aide in keeping you ahead of your finances and informed on the latest fiscal news. For instance, our budgeting worksheets are a good way to keep your spending in check, especially as the holiday season approaches. And, if you haven’t signed up for our free bi-weekly ezine Thrifty Spending, I encourage you to do so; it is an informative email containing useful tips to reduce your spending and save money.

Thank you for your commitment to DMCC and your continued efforts to become debt free. If there is anything we can do to serve you better, please let us know.

Sincerely,

Phil Heinemann
Executive Director

  Your Guide To Debt Freedom
   A Quarterly Educational Publication

Your Wallet: A Loser’s Manual. How to protect your money, your credit record — and your sanity — if you become a victim. Consider this: Your wallet is stolen. You immediately call your bank and credit card company to report the problem, close old accounts and open new ones. You even remember to call the Social Security Administration to notify them that you had your Social Security card in your wallet. At the end of the day, you feel fairly confident that the incident is behind you.   READ MORE

Overdraft Programs: Consider Your Lower-Cost Alternatives  The traditional overdraft programs, which may charge up to $25 or more to automatically cover purchases or transactions when you don’t have enough money in your bank account, are expensive and fees can add up quickly.  READ MORE

Fraud Alert: Text Messages, Pop-Ups and Downloads to Avoid. Be on guard against “urgent” requests and unsolicited “deals” on the Internet FDIC Consumer News has reported how criminals masquerading as legitimate businesses or government agencies have tricked consumers into divulging valuable personal information over the computer, phone or fax in order to drain bank accounts.  READ MORE

Client’s Corner:  Click HERE to read important information regarding your account.

Ask DMCC:  In each newsletter, DMCC will answer a question from one of our clients. If you have a specific question you would like answered, you can submit it to education@dmcconline.org. Click  HERE to read the latest question submitted by one of our readers.

Letter from The Executive Director

Mission Statement/IRS Treatment of Client Payments to DMCC/Disclosure

FEATURE ARTICLE: How to spot ATM skimmers

Skimmers applied to card readers (think fake card readers on top of the real ones) are designed to capture debit card magnetic stripe data, while tiny wireless cameras or overlays to existing personal identification number pads are designed to capture PIN information. Once thieves capture such data, they can use it to make fake cards or sell the information on the Internet to others.

Besides learning what skimming devices look like, consumers can also employ other strategies to spot the devices, according to John Pearce, director of commercial marketing for banking-financial and government systems at the security company ADT, which sells antiskimming technology. He recently shared the following strategies with us.

Perform an A.T.M. Inspection Before swiping your card, Mr. Pearce recommended that consumers examine A.T.M.’s for tell-tale signs of skimmers like visible glue marks or residue around the reader or PIN pad. Also, look for loose parts (tug on the card reader, say, to see if it comes off or if there is a loose appendage recently added to the machine). “You want to inspect the card reader slots first and foremost,” Mr. Pearce said. “If there’s any residual of glue around the PIN pad area or around the card slot, there’s a pretty good chance there was skimming activity in the recent past.”

Perform an A.T.M. Area Inspection Mr. Pearce also recommended that consumers look around the A.T.M. area to see if anything looks out of the ordinary. For instance, is there a cola can or pack of cigarettes on the top of the A.T.M. or promotional literature nearby? If so, look closely to make sure there’s no miniature camera hidden in such spots. Check the ceiling above the A.T.M. for such cameras as well. While legitimate security cameras for the banks will be clearly overt and visible, these cameras will be hidden and about three-fourths of an inch square in size, Mr. Pearce said.

Cover Your PIN When you type in your PIN, Mr. Pearce recommended using your other hand to shield the keypad to block it from video cameras hidden in the light above the keypad or elsewhere. This can also help protect your information from “shoulder surfers,” people who Mr. Pearce said stand off to the side to try to record your PIN.

Know Which A.T.M.’s to Pay Special Attention To Mr. Pearce recommended being extra vigilant and cautious when using A.T.M.’s at heavily trafficked areas like malls, airports and gas stations. In many cases, he said, skimming can go unnoticed in such locations because there aren’t any personnel monitoring the machines. In addition, if you’re having problems using a machine, avoid any offers from help from strangers. “They know you are having a problem because they caused the problem to take place in the first place,” Mr. Pearce said, noting that they would ask for your personal identification number as they try to enter your card.

Know When to Use Your Credit Card In situations where your card goes out of your line of sight (like at a restaurant or hotel), Mr. Pearce recommended using a credit card rather than a debit card.

MONEY SAVING TIP: Clean your car’s air filter.

A clean air filter can improve your gas mileage by up to 7%, saving you more than $100 for every 10,000 miles you drive in an average vehicle. Plus, cleaning your air filter is easy to do in just a few minutes – just follow the instructions in your automobile’s manual and you’re good to go.

DID YOU KNOW….that your credit can affect your job search?

According to a survey released by the Society for Human Resource Management in 2010, 13% of the companies surveyed check the credit reports of all candidates and 47% check some candidates.

Employment related credit checks are legal in most states and the information that is provided to employers is limited.  No credit scores are divulged only your report.  Employers look at long term trends, not necessarily if you missed a payment or were late with your credit card payments a few times.

In order for an employer to check your report, they need your signature giving them permission.  You are entitled to deny them access, but that may cost you the job. If you have serious credit issues, it is recommended that you be upfront about them and the reasons why these issues exist.

Regardless of whether you are hired or not, it is a good idea to take care of the negative information on your report.  You may not be concerned with having to get a loan, but what if you were to lose your job tomorrow?  Straightening negative marks on your credit report takes time; don’t wait until the last minute.

For assistance on how to resolve disputes on your credit report, click on http://www.dmcccorp.org/category/education/worksheets/

For a complete article visit bankrate.com

International scam artists use clever schemes to defraud millions of people across the globe each year, threatening financial security and generating substantial profits for criminal organizations and common crooks. They use phone, email, postal mail, and the Internet to cross geographic boundaries and trick victims into sending money or giving out personal information. While con artists can be clever, many can be foiled by knowledgeable — and equally canny — consumers. Here are 10 things you can do to stop a scam.

1 Keep in mind that wiring money is like sending cash: the sender has no protections against loss. Con artists often insist that people wire money, especially overseas, because it’s nearly impossible to reverse the transaction or trace the money. Don’t wire money to strangers, to sellers who insist on wire transfers for payment, or to someone who claims to be a relative in an emergency (and wants to keep the request a secret).

2 Don’t send money to someone you don’t know. That includes an online merchant you’ve never heard of — or an online love interest who asks for money or favors. It’s best to do business with sites you know and trust. If you buy items through an online auction, consider a payment option that provides protection, like a credit card. Don’t send cash or use a wire transfer service.

3 Don’t respond to messages that ask for your personal or financial information, whether the message comes as an email, a phone call, a text message, or an ad. Don’t click on links in the message, or call phone numbers that are left on your answering machine, either. The crooks behind these messages are trying to trick you into giving up your personal information. If you get a message and are concerned about your account status, call the number on your credit or debit card — or your statement — and check it out.

4 Don’t play a foreign lottery. First, it’s easy to be tempted by messages that boast enticing odds in a foreign lottery, or messages that claim you’ve already won. Inevitably, you’ll be asked to pay “taxes,” “fees,” or “customs duties” to collect your prize. If you send money, you won’t get it back, regardless of the promises. Second, it’s illegal to play foreign lotteries.

5 Don’t agree to deposit a check from someone you don’t know and then wire money back, no matter how convincing the story. By law, banks must make funds from deposited checks available within days, but uncovering a fake check can take weeks. You are responsible for the checks you deposit: When a check turns out to be a fake, it’s you who is responsible for paying back the bank.

6 Read your bills and monthly statements regularly—on paper and online. Scammers steal account information and then run up charges or commit crimes in your name. Dishonest merchants sometimes bill you for monthly “membership fees” and other goods or services you didn’t authorize. If you see charges you don’t recognize or didn’t okay, contact your bank, card issuer, or other creditor immediately.

7 In the wake of a natural disaster or another crisis, give to established charities rather than one that seems to have sprung up overnight. Pop-up charities probably don’t have the infrastructure to get help to the affected areas or people, and they could be collecting the money to finance illegal activity. Check out ftc.gov/charity fraud to learn more.

8 Talk to your doctor before buying health products or signing up for medical treatments. Ask about research that supports a product’s claims—and possible risks or side effects. Buy prescription drugs only from licensed U.S. pharmacies. Otherwise, you could end up with products that are fake, expired or mislabeled — in short, products that could be dangerous. Visit ftc.gov/health for more information.

9 Remember there’s no such thing as a sure thing. If someone contacts you promoting low-risk, high-return investment opportunities, stay away. When you hear pitches that insist you act now, guarantees of big profits, promises of little or no financial risk, or demands that you send cash immediately, report them to the FTC. For more information about investment fraud, visit cftc.gov.

10 Know where an offer comes from and who you’re dealing with. Try to find a seller’s physical address (not just a P.O. Box) and phone number. With VoiP and other web-based technologies, it’s tough to tell where someone is calling from. Do an internet search for the company name and website and look for negative reviews. Check them out with the Better Business Bureau at bbb.org. One bonus tip: Visit OnGuardOnline.gov to learn how to avoid internet fraud, secure your computer and protect your personal information.

Law enforcement agencies around the world work together to stop scammers and provide consumers with the information they need to avoid fraud. If you believe you have been scammed, file a complaint with the Federal Trade Commission at ftc.gov, or call 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4621.If you are outside the U.S., file a complaint at: econsumer.gov. All complaints are entered into the Consumer Sentinel Network, a secure online database used by hundreds of law enforcement agencies in the U.S. and abroad.

Federal Trade Commission

DMCC Mission Statement

Our mission is to provide consumers education and budget counseling to improve their financial literacy and assist them in the management of their personal finances. We are committed to providing credit counseling through educational programs and materials, personal budgeting, and debt management plans to financially distressed consumers, while maintaining fiscal integrity and utilizing the highest quality standards in the industry.

IRS Treatment of Client Payments to DMCC

Client payments to DMCC are considered to be equal to the fair market value of debt repayment services provided by DMCC and therefore, do not satisfy the IRS requirements for donative intent. Please review this with your tax preparer.

The subject matter contained in our educational publications is for information purpose only. We suggest that you consult your financial or other advisors when planning for your specific need or requirements

Question: I am interested in purchasing a home and a friend of mine told me to look into bi-weekly home mortgages.  Could you please explain to me the advantage of this loan over a traditional monthly mortgage?

Answer: Recently banks have come up with creative ideas to help the consumer pay their mortgage on a bi-weekly basis instead of the traditional once a month method. Through this method of payment, you can pay off your home in less time with less money. By simply paying half your monthly payments every two weeks, you will eliminate seven to nine years of an average thirty year loan. You will earn equity in your home faster because more of your payment is being applied to the principal of the loan instead of the interest. At the same time, making bi-weekly payments of one half your monthly payment will result in paying an additional monthly payment amount each year, which will result in a greater savings over the life of the loan. Your lender, interest rate, escrow payments, etc. all remain the same. If you have the discipline to budget your money and have a desire to pay off your loan in a shorter period of time, bi-weekly payment plans on your new or existing mortgage can be a tremendous benefit.

Example: A comparison chart of a typical lenders’ Monthly Schedule to the Bi-Weekly Schedule. Terms used: 30 year loan $110,000 @ $1,000 monthly payment.

To submit your question to DMCC, please write to:  education@dmcconline.org and in the subject line write, Ask DMCC

• GE Money has recently acquired certain accounts from Citibank Retail USA.   If you have received notice or have noticed your statement is now from GE Money and not Citibank, please forward the document or statement to DMCC to update your account.  You can fax the statement to DMCC at 954-545-4510 or mail it to us at 700 W. Hillsboro Blvd, Bldg 1, Ste 105, Deerfield Beach, FL 33441.  Be sure to include your client ID on the notice.
• Are you getting your monthly creditor statements?  Your statement is your  monthly receipt that the monthly disbursement was properly credited to your account.  If you are not getting your statements, please contact the creditor to verify they have the correct address for you on file.  Any creditor address change must be communicated with DMCC.
• Talbots does not send out statements for all accounts enrolled on the debt management plan. To request a statement, please contact their Billing Department at 781-741-7706.
• American Express charge cards that do not accrue interest are not sent monthly statements. If you want to get monthly statements for American Express charge card, please contact them at 888-258-3741.

Advice for Seniors:   May 2010 update

A reverse mortgage is essentially a loan against your home that you do not have to pay back for as long as you live there. It allows homeowners age 62 or older to borrow cash from the equity in their homes without having to make monthly payments. A reverse mortgage is often advertised as a great source of easy money for older homeowners to supplement their income, pay healthcare expenses or use the money as they please. But as FDIC Consumer News has reported in the past, while there are potential benefits to a reverse mortgage, it may not be the best option for everyone. With the number of potential borrowers growing with the aging population, it’s important that homeowners fully understand the risks involved. Here are our latest tips.

Remember that a reverse mortgage is a loan that must be repaid. “Not all advertisements clearly indicate that a reverse mortgage is a loan,” said Mira Marshall, an FDIC Section Chief specializing in consumer issues. “In fact, a reverse mortgage is a very complicated loan that uses home equity as collateral, just like the mortgage you probably used to purchase your home.”

Reverse mortgages allow homeowners to receive cash in a lump sum, through monthly payments, as a line of credit whenever they need money, or any combination of these options. Unlike traditional mortgage products, homeowners do not make any monthly payments to the lender. However, they eventually do have to repay the principal and interest when they move, sell the house or pass away. And, because no monthly payments are being made, the amount owed will grow over time as interest costs build up and, in some cases, as additional funds are advanced.

The borrower also is still responsible for paying the property taxes and insurance and maintaining the house. Failure to do so can cause the reverse mortgage to become immediately due and payable in full.

The rules to determine how much you can borrow through a reverse mortgage are complex. For example, the total amount of cash available is a percentage of the home’s value that will vary by the age of the borrower and the location of the property. And if there’s a co-borrower, the value is determined by the age of the youngest borrower.

Let’s say your house has a market value of $250,000, you owe nothing on a mortgage and the youngest co-owner is 70 years old. Even though your home equity is about $250,000, with a reverse mortgage and depending on the location of the property, you can borrow only up to approximately $130,000. In contrast, with a traditional home equity loan, it may be possible to borrow up to 100 percent of the value of the home.

Be aware that not all reverse mortgages carry insurance and other protections from the federal government. The most common type of reverse mortgage — the Home Equity Conversion Mortgage or HECM — is offered as part of a program from the U.S. Department of Housing and Urban Development’s Federal Housing Administration. The FHA has protections for the lender as well as the borrower. In the case of the latter, for example, if the borrower or heirs sell the home to repay the reverse mortgage (instead of keeping the house and repaying the loan otherwise), the total debt will never be greater than the value of the home.

However, there are several types of reverse mortgages that are not FHA-insured. These are mostly reverse mortgages developed and offered by private companies, nonprofit organizations, and state and local governments. They may not offer the same guarantees and protections as an FHA-insured HECM.

Understand the costs and fees, which can be significant. Most reverse mortgages have an origination fee, closing costs and periodic servicing fees. There also is an additional monthly insurance premium for an FHA-insured reverse mortgage. The total amount of fees will depend on the loan product. And while the costs and fees can be added to the reverse mortgage instead of being paid up front, doing so increases the loan balance and incurs interest charges.

Borrowers also should keep in mind that the more cash they take out and the longer they go without making loan payments, the interest charges and other costs can use up much or all of the equity, leaving fewer and fewer assets for the borrower or heirs. And if you or your heirs want to keep the house instead of selling it, the full loan amount would be due and payable from your own funds, even if it’s more than the value of the property.

“Because the costs and fees can be extremely high,” said Mike Evans, an FDIC Fair Lending Specialist, “most experts generally advise homeowners not to take out a reverse mortgage if they plan to stay in their home less than five years or if they simply need extra money for small expenses.”

Do your research and shop around before committing to a reverse mortgage. To understand the potential pros and cons of a reverse mortgage, talk to financial advisors and qualified housing counselors. Depending on your circumstances, there may be other, less expensive options available to you. Explore different kinds of loans (including a mortgage refinancing, a home equity loan and a home improvement loan) and programs from local government agencies or nonprofit organizations. In some cases, it may even make financial sense to sell your home and downsize to a less expensive home or even a rental.

If you decide that borrowing money is the way to go, contact several lenders and compare the costs and benefits of the options they offer.

“Most financial experts also agree that it is never a good idea to use the funds from a reverse mortgage to purchase other financial products or services,” added David Lafleur, an FDIC Senior Examination Specialist. “Not only will you immediately incur expensive interest charges and other fees in connection with the reverse mortgage, but having large deposits or annuities may make it tougher for you to qualify for certain entitlement programs that take assets into consideration, such as Medicaid. Also, if you tie up money in CDs or annuities, you will be giving up easy access to funds you may need to meet your expenses.”

Additional information and guidance on reverse mortgages is available from HUD at www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm or by calling 1-800-569-4287.

Note: To receive an FHA-insured reverse mortgage, you must first speak with a HUD-approved counselor, who can provide you with information on this product and other alternatives so you can determine what is suitable for you.

This is a reprint of Spring 2010 FDIC article.

Free trial offers can be an efficient way to sample a new product or service without paying for a membership, subscription or extended service contract. Sometimes, though, if you accept a free trial offer and don’t cancel on time or according to the stated policy, you may be unintentionally agreeing to a contract to buy additional products and services.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says “try before you buy” offers can be effective ways to market. If you like what you try, you may want to go ahead and make the purchase. But if you don’t want to buy the product or service, you may need to cancel or take some other action on a particular timetable to avoid being charged.

When a company takes your failure to cancel before the end of the trial period as permission to continue billing you, you’ve made a “negative option” purchase. Sometimes, unscrupulous merchants make it tough for consumers to take the action that would prevent negative option billing: these merchants may hide the terms and conditions of their offers in teensy type, use pre-checked boxes as the default setting, and put conditions on returns and cancellations that are so strict it could be next to impossible to stop the deliveries and the billing.

Whiter Teeth? Flatter Stomach? Shiny Hair?

If you see a free trial offer online for a product you’re interested in, stop – and read the details.

Find the terms and conditions of the offer. If you can’t find them or can’t understand exactly what you’re agreeing to, look for another merchant. You don’t want to commit to recurring charges for products or services by mistake – or before you’ve tried them and made your decision.

Pay attention to pre-checked boxes. That check may bind you to terms and conditions you’re not comfortable with – or ready to accept.

Look for information about how you can cancel future shipments of merchandise or services if you don’t want them. Do you have to pay? Do you have a limited time to respond? If you’re not satisfied with the information in the offer, look for another one that meets your needs.

Read your credit and debit card statements very shortly after you’ve responded to a free trial offer – and often afterward – looking for charges you don’t recognize or didn’t authorize. Contact the merchant first to try to resolve the issue; notify the card issuer promptly if you see any unusual or unauthorized charges.

Reprint of FTC article 2010

FEATURE ARTICLE: Forgiven debt such as credit card settlements can trigger a tax bill

Getting a tax bill after you’ve gone through foreclosure is like having a bucket of ice water poured over your head after someone has made off with your pants. You’ve lost your home and probably don’t have much money, so why would you owe the IRS anything?

Here’s why: The IRS treats forgiven or canceled debt as taxable income.

For example, suppose you owe $400,000 on a home that goes into foreclosure, the bank sells it for $300,00 and writes off the rest of your loan. Under the tax code, the $100,000 in forgiven debt is taxable income.

In 2007, Congress enacted legislation that excludes up to $2 million in forgiven mortgage debt from taxes, as long as the loan was used to buy or improve the taxpayer’s primary residence. That means most people who lost their homes to foreclosure last year won’t have to pay taxes on the canceled debt, says Robin Christian, tax analyst for Thomson Reuters.

There are limits, though, to this relief. The exclusion is scheduled to expire at the end of 2012, which means homeowners who are starting to fall behind on their payments could face a nasty tax surprise in 2013. And individuals who have had other types of debts forgiven by their lenders could be in trouble right now.

Financial institutions that write off debt of $600 or more are required to send a Form 1099-C to the borrower and the IRS.

If you receive a 1099-C for debt that was forgiven as a result of a foreclosure, you need to inform the IRS that it qualifies for the exclusion, Christian says. To do this, fill out Form 982 on your Form 1040 and check Part I, box 1E.

Otherwise, the IRS may treat your forgiven debt as taxable income.

And there’s plenty of forgiven debt that falls into that category, including:

• Credit card debt. In recent years, some borrowers who have no chance of paying off their credit card debts have persuaded their lenders to settle for a reduced amount. These agreements could put an end to calls from collection agencies, but they could be replaced by calls from the IRS.

• Student loans. Getting a student lender to write off some of your debt is extremely difficult, but should you succeed, the amount of forgiven debt may be taxable, says Gil Charney, principal tax researcher for H&R Block’s Tax Institute. However, there’s an important exception: If your debt was forgiven because you worked for a specific number of years in your profession, it probably isn’t taxable, he says. For example, doctors who agree to work in rural areas in exchange for loan forgiveness don’t have to pay taxes on the canceled debt, Charney says.

To find out whether you’re eligible for this exclusion, read the provisions of your loan or talk to your lender.

• Mortgage debt from a second home. If you lose a vacation home or rental property to foreclosure, any forgiven debt is taxable, Charney says.

• A second mortgage or home equity line of credit that wasn’t used to improve your home. If you took out a home equity line of credit to update your kitchen, forgiven debt on that loan is excluded from tax, Charney says. However, a home equity line of credit that was used to pay for a vacation or child’s college tuition doesn’t qualify for the exclusion.

And remember, the exclusion for mortgage debt will expire at the end of 2012, unless Congress votes to extend it. Since foreclosures can sometimes drag out for months, homeowners who are facing the loss of their homes may want to take steps to complete the deal before the end of 2012, Charney says.

Other exceptions

Even if your forgiven debt doesn’t qualify for an exclusion, taxes aren’t inevitable. Individuals facing tax bills on forgiven debt have two options:

• File for bankruptcy. Debt that’s canceled as the result of bankruptcy proceedings isn’t taxable, Charney says.

• Prove insolvency. The IRS will reduce or eliminate taxes on forgiven debts if you can demonstrate that you’re insolvent. To do this, though, you must convince the IRS that your debts exceed the fair market value of everything you own.

If all you own is a car and a savings account, proving insolvency may be straightforward, Christian says.

But if you’re like most families, you own other assets, such as retirement savings, jewelry and life insurance policies.

“It’s not an easy calculation,” Christian says. “Someone who thinks they are insolvent ought to contact a professional.”

By Sandra Block @ USAToday.com

MONEY SAVING TIP: Non grocery store items are more costly at a grocery store. Make a separate list to purchase non-grocery items, such as painkillers, contact lens solution, etc., at a drug or discount store; most likely, there is one close to the grocery store.

DID YOU KNOW… that if you want to lease a car or get out of one, there’s a website that will assist you?  Swapalease.com will guide you through the entire process. Just choose a package that fits your needs and the rest is easy.

10 Things you can do to avoid fraud International scam artists use clever schemes to defraud millions of people across the globe each year, threatening financial security and generating substantial profits for criminal organizations and common crooks. They use phone, email, postal mail, and the Internet to cross geographic boundaries and trick victims into sending money or giving out personal information. While con artists can be clever, many can be foiled by knowledgeable — and equally canny — consumers. Here are 10 things you can do to stop a scam. READ MORE

Could free trial offers be ‘fee’ trial offers in disguise? Free trial offers can be an efficient way to sample a new product or service without paying for a membership, subscription or extended service contract. Sometimes, though, if you accept a free trial offer and don’t cancel on time or according to the stated policy, you may be unintentionally agreeing to a contract to buy additional products and services. READ MORE

Understand the risks and costs of borrowing with a reverse mortgage A reverse mortgage is essentially a loan against your home that you do not have to pay back for as long as you live there. It allows homeowners age 62 or older to borrow cash from the equity in their homes without having to make monthly payments. A reverse mortgage is often advertised as a great source of easy money for older homeowners to supplement their income, pay healthcare expenses or use the money as they please. But as FDIC Consumer News has reported in the past, while there are potential benefits to a reverse mortgage, it may not be the best option for everyone. With the number of potential borrowers growing with the aging population, it’s important that homeowners fully understand the risks involved. Here are our latest tips. READ MORE

Client’s Corner: Click HERE to read important information regarding your account.

Ask DMCC: In each newsletter, DMCC will answer a question from one of our clients. If you have a specific question you would like answered, you can submit it to education@dmcconline.org. Click HERE to read the latest question submitted by one of our readers.

Letter from The Executive

Mission Statement/IRS Treatment of Client Payments to DMCC/Disclosure

FEATURE ARTICLE: Wells Fargo, Chase, SunTrust cancel debit rewards program.

Wells Fargo said Friday that it will no longer offer its debit rewards program for new customers. This will go into effect March 27 at Wachovia and April 15 at Wells Fargo, while existing customers will remain unaffected for the time being.

JPMorgan Chase notified existing customers last week that their debit rewards programs will disappear July 19. The bank eliminated debit rewards for new customers in February.

Citi hasn’t made any changes yet, but said it is “in the process of evaluating potential changes to our rewards programs.”

SunTrust, a large regional bank, has also followed suit. The bank will no longer award points to customers beginning April 15, and the points that existing customers have racked up will expire Jan. 1, 2012.

Debit rewards are awarded to customers for actions like spending, carrying high balances and making minimum deposits. Customers can then redeem the points they collect for cash or gift cards or even electronics.

And these rewards programs are the newest target in the heated battle between banks and the Federal Reserve over a proposed rule that would limit “swipe fees” — or the amount retailers must pay the bank every time customers use their debit cards.

The 8 least evil banks

Financial institutions have already hiked ATM fees and threatened to impose debit card spending limits in response to the Fed’s proposed cap, claiming that they are now forced to find revenue in other areas.

So axing debit rewards programs is just one more way banks are hoping to recoup revenue they expect to lose. Or, they may be hoping to get consumers so riled up that the Fed thinks twice about imposing the new rules, said Curtis Arnold, founder of CardRatings.com.

“Debit rewards are so popular with customers and these days it’s something they expect to see when they sign up for a debit card, so they risk losing customers and won’t have the same customer loyalty,” said Arnold. “Maybe what they’re hoping will happen is there will be a consumer backlash that results in changes to the regulation, so that scrapping debit rewards can just be a temporary thing.”

Credit cards from hell

But until the Fed surrenders, Arnold said consumers are likely to see more banks slash debit rewards altogether or trim down the rewards they offer.

“The industry typically has a monkey see, monkey do mentality, so now that two major issuers have announced it, I can’t help but think we’ll see the others follow suit,” said Arnold.

Representatives at Bank of America and TD Bank said no changes have been made to their debit rewards programs yet.

U.S. Bank and PNC Bank representatives did not respond to requests for comment.

Article provided by CNNMoney.com

MONEY SAVING TIP: Planning a trip and need a flight?

Purchase your ticket no later than 14 days before departure. More airline tickets are sold Monday through Friday. And, more airline tickets are sold on Tuesdays, Wednesday and Saturdays, so these are the cheapest days to fly.  Also, try flying early morning or late at night that’s better too; you’ll be sure to save some extra money there, as these are the cheapest times to fly.

Take advantage of email alerts that many traveling websites offer.  They will notify you with some great deals.

DID YOU KNOW…the highest-markup items at the grocery story are on the shelves at about chest level? Reach up or kneel down to select the cheaper house or generic brands.

Deerfield Beach, FL – Free Seminars Supporting National Consumer Protection Week (3/6 – 3/12/11)

Debt Management Credit Counseling Corp. (DMCC) is participating in National Consumer Protection Week (a Federal Trade Commission’s campaign) by hosting two days of free financial literacy seminars at our location. The seminars will cover an array of topics including:

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Seth Porges is a major world traveler, with about a dozen countries visited in the last five years. He enjoys meeting new people and learning new cultures, but now with the demands of being a full-time magazine editor in New York, this travel enthusiast has found a way to bring the world directly to his apartment instead—and get paid all the while.

Using airbnb.com, a fast-growing peer-to-peer lodging website, Seth has been renting out the second floor of his two-story duplex apartment to travelers seeking short-term stays in the New York area. He’s been active on the site for about a year and earning great reviews from previous visitors on the site. “I’m booked solid through November,” he says, adding he charges about $90 per person, per night, sometimes more. The extra revenue is helping him pay his monthly bills and bulk up personal savings.

In this economy, with escalating food and gas prices and stagnant wages, who wouldn’t want to make extra money on the side? The trick, of course, is creating an additional revenue stream that requires little time or energy, as our lives are already jam-packed with work and responsibilities. For Seth, the solution is renting out his extra room. So popular is his listing, he has travelers asking to book his extra room in 2013. It’s easy money, Seth says, considering the task requires no heavy lifting or much time out of his day. It’s also a lot of fun, Seth says. He often hangs out with his guests, showing them around New York City and inviting them to outings with his friends.

But renting out a room in your home to a stranger isn’t for everyone. What about renting out your car? Car-sharing companies, such as RelayRides, JustShareIt and GetAround, help car owners rent their vehicles to neighbors and visitors by the hour, day or week. (Don’t worry: Insurance is included). Car owners can set their own rates, and the potential to make money is strong. Car owners at GetAround, for example, can earn about $2,000 per year, according to the company. At RelayRides, the company says average car owners earn between $200 and $300 a month.

Millions of people are also cashing in, while running everyday errands, such as shopping for food, getting a haircut or dining out. How? Mystery shopping. Some retailers will pay marketing companies to hire individuals to secretly review their products and services. Mystery shopping pays little, but the real incentive is in the perks, as shoppers usually get substantial freebies — free groceries, clothes, beauty treatments, etc.—for conducting undercover surveys.

Just make sure, like with any of these offers to make money, to watch out for frauds. The mystery shopping industry has its fair share of dishonest companies, according to career expert Tory Johnson, author of the New York Times best-seller “Will Work From Home”. She recommends only working with certified marketing firms and avoiding job postings that require you to pay any upfront fees. The Federal Trade Commission also suggests visiting the Mystery Shopping Providers Association (MSPA) website for a database of mystery shopper assignments.

by: Farnoosh Torabi 

Our current economy has many consumers worried about their finances.  The media has proclaimed that perhaps the homeowners that are or may face foreclosure in the future could have avoided this financial distress by educating themselves better before acquiring their home loans.  This is just one of the important issues that DMCC would like to cover with their educational program.

Below are just a few of the topics discussed in DMCC’s free financial literacy program, Debt, Money & Credit Concepts:

• Creating a realistic budget. You may know how much your take home income is and what your expenses add up to, but if at the end of the day you still cannot make ends meet, it is time to create a realistic, workable spending plan.
• Choosing a bank correctly balancing your checkbook.
• Preparing for retirement. The fact is, it is never too early to start saving for this time period. Learning the best way to receive your money’s worth in this economy is golden.
• Purchasing a home.  There are plenty of homes for sale these days and knowing just the basics on how to buy one, could save today’s consumer thousands of dollars.
• Shopping with credit. Purchasing the necessities as well as those luxuries is so easy with a credit card.  Understanding what that unpaid debt adds up to and how it affects your credit is key to managing your finances for today and for your future.

All financial matters are easier to handle with the right education. It is not too late to learn these and many more topics and DMCC has certainly made it easy with this free financial literacy program.  It is a self study course containing 12 separate lessons.  Upon completion you will receive a certificate and assistance to notify the three major credit bureaus about your newly acquired financial knowledge.

Visit our website at www.dmcconline.org and click on the link for the Financial Literacy Program. Register and begin to broaden your fiscal education so that you may look forward to a bright financial future. If you would prefer to receive a hard copy of this program, please contact us through our educational department and request one to be mailed to you.

Avoid Overdraft Fees

An overdraft can occur when you try to spend more money than you have available in your checking account. For example, let’s assume you have $40 in your account. You ask the phone company to electronically deduct $35 from your checking account to pay the bill. You now have $5 available. Next, you use your debit card to make a $10 purchase. You could overdraw your account if the bank allows the $10 purchase to be processed. This could cost you expensive overdraft fees. The amount you are overdrawn plus your bank’s fees will be deducted immediately, in full, from your next deposit(s) — including from payroll deposits made by your employer, government benefit deposits, and other direct deposits on which you may depend. These deductions will lower your account balance once again and may increase the risk of more overdrafts and costly fees.

ATM and Point of Sale Debit Card Purchases

In 2010, federal regulations took effect that provide certain protections for bank customers when their deposit account(s) are overdrawn. Customers now have a choice whether to opt-in to a bank’s overdraft program. By choosing to opt-in, the bank can charge you a fee to process point-of-sale (POS) or ATM transactions that exceed your account balance.

This is called the “opt-in rule” – if you do not opt in, the bank will decline your ATM withdrawals and debit card transactions at POS terminals if you do not have enough money in your account to cover the withdrawal or purchase. If you do not opt-in but the bank pays an ATM or POS item when your account is overdrawn, the bank cannot charge you an overdraft fee.

Checks and Other Transaction Account Payments

For other transactions that would cause you to exceed your balance, such as if you write a check that overdraws your account or for recurring bills automatically deducted from your account, your bank can choose whether to “pay” (cover) the transaction that would cause you to exceed your balance. If the bank decides it will cover the transaction, expect it to charge you an overdraft fee, which may average around $30. If the bank decides not to cover the transaction, it may charge you a “non-sufficient funds” (NSF) fee and the merchant also may charge you a returned check fee.

Two Ways to Avoid Costly Overdraft Fees in Automated Overdraft Programs

You can protect yourself from costly overdraft fees by:

1. Watch Your Balance.
   Track the money you deposit into and with draw from your account. You can do this on a paper check register or electronically. Remember to track ATM withdrawals, purchases you make with your debit card, bills that get debited electronically from your account, and checks. It also may be a good idea to keep a cushion of funds in your account to help prevent unintended overdrafts.
2. Link Your Checking Account to a Savings Account.
   If the accounts are linked and you do not have enough money in your checking account to cover a transaction, the bank will transfer funds from your savings account to your checking account to cover the difference. This can save you money over other overdraft programs because most banks will only charge you a small fee, if they charge at all, for transfers. But, this option is useful only if you have enough money in the linked savings account to cover the transaction. Otherwise, ask your bank about other less costly alternatives to over-draft payment programs, such as a linked line of credit or affordable small-dollar loan.

What should I do if I have a problem?

If you have a concern about your account, contact your financial institution. Explain the problem and how you would like to see the problem resolved. If contacting the bank does not produce desired results, you can contact the bank’s federal regulator for assistance.

To learn more about smart ways to manage your money, complete the FDIC Money Smart financial education program online through www.fdic.gov/moneysmart. You can also find financial education workshops or individualized counseling in your area.

To learn more about how to contact your bank’s federal regulator, call the FDIC’s Consumer Assistance Line at: 1-877-ASK-FDIC.

I have been in the DMCC program for about 2 years. My credit has improved a lot and I am not to far from reaching a credit score of 700. I am trying to refinance my car because I have an interest rate of 29% on my current auto loan. I have never missed a payment in 3 years and have another loan that will be paid off in two years with the same finance company. They are willing to give me another loan with just as high an interest rate, but would not refinance my car because they say that they are high risk company. My question is, what can I do to refinance my car to have a lower rate? I have tried to refinance but I always get rejected even though my credit has improved drastically. Thank you. Dafra fromTucson,AZ

First of all, let me congratulate you for all of your hard work trying to get your credit back on track. I am glad you followed through with the program that DMCC designed for you. Your commitment to the program has paid off and your 700 credit score is a great achievement.

Now, regarding your auto loan, probably one of the reasons that you are getting rejected for refinancing is that most likely you owe much more than the vehicle is worth. This is probably the result of the extremely high 29% interest rate you have been charged. When you make monthly payments to the finance company, most of that money is directed toward paying the interest. Because you have such a high interest rate, only a small part of your monthly payment is directed toward the money you borrowed to pay for the car—the principal. Meanwhile, as the years pass (we can assume the car is at least 3 years old), the car loses value—depreciates. Any lender would think twice before lending you the amount of money that you need to refinance your loan when the car that you are paying for is not even worth that much.

Another problem that you may be having is that, although your credit has improved, you are still considered a credit risk. Your credit score might be close to 700, but not until you reach that number will you qualify for preferential rate offers. This news might sound disheartening, but do not fret! You are not out of options yet. You are more likely to get a good rate on a loan from a bank or financial institution that you already have a relationship with. Speak with the bank where you have your checking or savings account. If you do not have a checking or savings account yet, now is the time to open one. Build a relationship with a reputable bank and then ask them about what sort of loans they offer. If you are a good customer, chances are they will want to give you a lower rate in order to keep your business. Do you have a home mortgage? If so, ask the bank that holds your mortgage about what kind of rates they offer.

If you still cannot get a loan with better terms than what you already have, you should consider raising your monthly loan payment in order to pay off more of the principal of the loan. Just by adding $100 to your monthly car payment, you can significantly reduce the amount of time it will take you to pay off the loan and the amount of interest charges that you will end up paying.

Dear Client,

The new year has brought some great changes to DMCC.  One of those is our new location in beautiful Lighthouse Point, FL. Unlike our previous location, our new office is a standalone building on US 1, a major South Florida thoroughfare and retail front.  This new location is also only five miles from the organization’s old office, making it an easy transition for DMCC clients, employees and vendors.

We are also pleased to announce that DMCC has been approved as an adopter of the National Industry Standards for Homeownership Education and Counseling (NISHEC).  As the economic downturn persists, many homeowners are dealing with reduced incomes and declining home values.  They struggle to avoid foreclosure, but navigating the system can be extremely difficult.  Housing counseling agencies can help, but it’s difficult for consumers to know which organizations they can trust.  The NISHEC can help make that decision easier.  NISHEC recognizes DMCC as an approved adopter of these standards and holds DMCC to a high standard of excellence, ensuring that consumers are provided the most consistent and critical information, advice and guidance.

Recently, DMCC was recognized by the Hometown News in Port St. Lucie, FL for its efforts in teaching students financial literacy. Focusing on teaching students the importance of credit and how it works, this educational program has been a part of DMCC’s mission since 2001. Our Education Department teaches everything from how credit is established to how to use a credit card. Our speakers make the presentation fun and easy to understand.  Administrators and faculty in the South Florida area interested in taking advantage of this free service should contact DMCC’s Education Department.  This service is also available for businesses that would like to offer educational seminars to their employees. To read more about this, refer to our Partner Programs.

We are always striving to make sure you receive the service and attention you need and deserve.  Whenever DMCC makes changes, we do it with you in mind. Furthermore, if during the process of becoming debt free there are particular financial educational topics that you would like to learn about, do not hesitate to inquire with us about it.

DMCC appreciates your commitment and we support your efforts to become debt free. If there is anything DMCC can do to serve you better, please let us know.

Sincerely,

Phil Heinemann
Executive Director