Fall 2017 Dealing With Debt
ALSO INSIDE: Identifying Unfamiliar Banks Savings Options for People with DisabilitiesFall 2017Dealing with DebtTips to help you borrow wisely and pay off loans and credit card billsF E D E R A LD E P O S I TI N S U R A N C EC O R P O R A T I O N
D EA LING W ITH DEBTHow to Dig Out of Debt? Grab More Than One ShovelMillions of Americans are dealingwith debt overload every day. If you’restruggling to pay your loans, creditcards or other bills, here are some stepsyou can take to begin managing theproblems.Create a budget. Budgeting gives aclear picture of what you can affordso you can balance your income andexpenses. The “Budgeting and SavingsTools” worksheet in the FDIC’s MoneySmart financial education program canhelp you get organized (see www.fdic.gov/savingsworksheet).Try to get a clear picture of yourmonthly income and expenses. “Evenif you have a regular weekly, bi-weeklyor monthly paycheck, budgetingenough money to pay your regularexpenses and pay down debt may not beeasy,” said Elizabeth Ortiz, the FDIC’sdeputy director for consumer andcommunity affairs.Ortiz added: “Also, many individualshave incomes that vary considerablyfrom month to month because theywork on a contractual or temporarybasis with hours that equate to full- orpart-time work. For them, budgetingcan be tricky, especially when theyare trying to pay down debt. Thatmakes it especially important to knowhow much money is available and theexpenses that must be paid regularly sothat accidentally overspending doesn’tbecome an issue.”Contact your creditors about easierways to make your most importantbill payments. Many people findit helpful to schedule their essentialmonthly payments sometime soon afterthe deposit of their first paycheck of themonth. In that case, you can ask yourlenders, utility providers and creditcard issuers to change your monthlybilling-cycle date to line up with yourfirst monthly paycheck.Also, if you think you can’t makepayments as scheduled, you can beproactive and ask your creditors toconsider an extended payment planthat results in lower monthly bills2over a longer period of time. Keep inmind, though, a longer payment periodcould mean you’ll pay more in interest.“Discuss a payment plan that can helpyou avoid getting too far behind,” saidBerry Holston, an FDIC consumeraffairs specialist. “That’s especiallyimportant with a mortgage because ifyou have problems repaying the loanyou could lose your home.”Have a strategy for saving moneyon interest and fees. Consider payingoff debts with the highest interest ratesfirst. Also, avoid late fees by makingsure all bills are paid on time.“You can track payment due dates ona calendar or use your bank’s onlinebill paying service,” said Heather St.Germain, an FDIC senior consumeraffairs specialist. “Many banks offer thisservice, which allows you to see all ofyour bills in one location online andmake payments directly from your bankaccount.”Consider getting help from areputable credit counselor.Many companies and public serviceorganizations offer assistance toindividuals in creating a budget andlearning to manage money, includingdebt, often for free or at a low cost.Under the Credit Repair OrganizationAct, companies and serviceorganizations are required to explainthe total cost of the service, timeframesto see results, a written contract ofthe services you will receive, and yourright to cancel service without chargeFDIC Consumer Newswithin three days. The Federal TradeCommission (FTC) offers tips on howto find and choose a credit counselor t-counselor.Also, be on guard against companiesthat promise to settle your debts orerase a bad credit history if you paya big fee upfront. These are usuallyscams to steal your money and perhapsvaluable information like your SocialSecurity number, without delivering ontheir promises.Know your rights if a debt collectorcontacts you. Debt collectors haverules they must follow under the FairDebt Collection Practices Act, such asproviding you with a debt validationnotice stating the amount you owe andthe creditor’s name. Debt collectorsare also limited on when and howoften they can contact you. For moreinformation on dealing with debtcollectors, see the next page.To learn more about solving a debtproblem, check out the Summer 2014FDIC Consumer News article “5 Tipsto Help Rebound from a Bad CreditHistory” at ry.html.Also see the FTC’s “Dealing with Debt”page (www.consumer.ftc.gov/topics/dealing-debt) and suggestions from theConsumer Financial Protection Bureau(go to www.consumerfinance.gov andsearch using the key words “behind onbills”). QFALL 2017
D E A LING W ITH DEBTHaving a Problem with a Debt Collector? You Also Have ProtectionsDebt collection problems are amongthe most common complaints receivedby the FDIC and the ConsumerFinancial Protection Bureau (CFPB).Many of these complaints suggest thatsome collectors may be demanding thatpeople pay debts they’ve already paid ornever owed.If this happens to you, remember thatthe Fair Debt Collection Practices Act(FDCPA) is the principal federal lawaimed at protecting consumers fromabusive, deceptive and unfair debtcollection practices by third-party debtcollectors (companies hired by lendersto collect debts on their behalf).For example, debt collectors areprohibited from harassing you withrepeated phone calls. Collectors alsoare prohibited from calling before8 a.m. or after 9 p.m., or contacting youat work if you are not allowed to receivecertain communications there. Theyare not allowed to make false claimsabout a debt owed or a lawsuit beingpursued, or to threaten to garnish yourwages. Within five days of being initiallycontacted, the collector is required toprovide a written “validation notice” ofhow much you owe, to whom, and whatto expect next if you want to dispute thedebt, unless the information has alreadybeen provided by the collector in theinitial communication or you havepaid the debt.The law also says that after you tella debt collector in writing that yourefuse to pay or that you want the debtcollector to stop communicating withyou, the collector can only contact youone more time — either to tell you thatall communications have ended or that itwill take a specific action, such as suingyou, to collect the debt.While most debt collectors adhere tothese rules promoting the fair treatmentof consumers, other collectors may not.Be aware that con artists sometimespose as legitimate debt collectors. “Theymay even claim to be governmentofficials, including law enforcement,attempting to collect on a non-existentFDIC Consumer Newsdebt,” noted Sandra Barker, an FDICsenior policy analyst. “Other possiblesigns of a fake debt collector include acaller who threatens you with violenceor is unwilling to validate the debt byproviding proof that it exists.”In one recent example, the FederalTrade Commission (FTC) filed chargesagainst two individuals who allegedlycreated several businesses that appearedto be law firms to take people’s moneyfor fake debts by falsely threatening tosue or have the individuals arrested ifthey did not pay.In general, how can you protect yourselfwhen a debt collector contacts you?Find out the collector’s name, addressand phone number. Obtain the dollaramount they say you owe, includinginterest charges or debt collectionfees. And, ask what the debt was usedfor and who the original creditor was.“Getting all of this information helpsyou determine if the debt collector islegitimate and if the information aboutthe debt is accurate,” said Heather St.Germain, an FDIC senior consumeraffairs specialist.She added: “If you are not sure the debtis yours or the amount of the debt isaccurate, write to the debt collector todispute the debt or have the companyprovide more information. If you knowthe debt is not yours, write a letterimmediately to the debt collector andrequest to not be contacted again. If thedebt is yours, but you can’t afford to payit, try to negotiate with the collector topay a certain amount and have the restforgiven.”Also take note of how old the debt is.Some states have laws preventing debtcollectors from filing lawsuits to collectdebts that are several years old.If you believe a debt collector hasviolated the law, here are steps you cantake:File a complaint with a federalregulator. Two federal agencies —the CFPB (www.consumerfinance.gov/complaint or toll-freeFALL 20171-855-411-2372) and the FTC (www.ftccomplaintassistant.gov or toll-free1-877-FTC-HELP) — share overallenforcement responsibility for theFDCPA and accept complaints aboutdebt collectors. If you file a complaintwith the CFPB it will contact thedebt collector and try to help reach aresolution. While the FTC does notresolve individual complaints, it usesthe information submitted to identifypatterns of fraud and abuse withincertain industries and businesses. TheFTC also will provide informationabout what next steps you can take.The FDIC, Federal Reserve Board,Office of the Comptroller of theCurrency and National Credit UnionAdministration also handle complaintsabout debt collection practices atthe federally insured depositoryinstitutions they supervise. The agenciesalso forward complaints to otherregulators as needed. To determinewhich regulator has jurisdiction over aparticular banking institution, so youcan submit a complaint to the correctagency, you can call the FDIC toll-freeat 1-877-ASK-FDIC (1-877-275-3342)or use BankFind, the FDIC’s onlinedirectory of FDIC-insured financialinstitutions, at https://research.fdic.gov/bankfind.Report the problem to your stateAttorney General’s office or toother state or local regulators. It’spossible that a debt collector also maybe violating state or local laws. If so,the relevant State Attorney Generalcan sue a debt collector on behalf of thestate. Other state or local regulators thathandle consumer complaints can takeaction on your behalf. If you need helplocating your state’s office, start withthe National Association of AttorneysGeneral’s website at www.naag.org/naag/attorneys-general/whos-my-ag.php orcall 1-202-326-6000.Note: Even if a debt collector violatesthe FDCPA, this does not erase anylegitimate debt you owe.continued on the back page3
D EA LING W ITH DEBTThinking of Co-signing a Student Loan? Know the RisksMany parents and grandparents dreamof helping loved ones attend college andpost-graduate programs. One way tohelp them qualify for a student loan orobtain a loan at a lower interest rate isby being a co-signer. When co-signing aloan, you are promising to pay the loanback if the student-borrower fails to doso. But FDIC Consumer News wants toremind readers that co-signing a loan isnot a decision to be taken lightly.According to the Consumer FinancialProtection Bureau (CFPB), an increasingnumber of consumers are carryingstudent loan debt into their retirementyears. From 2005 to 2015, the numberof Americans age 60 or older with oneor more student loans quadrupled fromabout 700,000 to 2.8 million, and theaverage debt load for these individualsroughly doubled from 12,100 to 23,500. This includes parents who haveco-signed a student loan or have takenout a student loan on behalf of theirchild — in the latter, only the parent isresponsible for repaying the debt.“Many people don’t realize that if youare a co-signer on a student loan, youare just as responsible for the loanpayment as the primary borrower, whoin this case is the student,” said ElizabethOrtiz, deputy director for consumer andcommunity affairs at the FDIC. “Thatmeans a lender can pursue both you andthe student-borrower at the same timeto repay the loan if the loan goes intodefault.”If you are considering co-signing astudent loan for a family member, youmay want to do the following first:Make sure you have maxed outfederal loans and federal financial aid.Families should consider scholarshipsand financial aid from the federalgovernment, states, schools, companiesand organizations, as well as federalstudent loans offered by the U.S.Department of Education. Federal loansoffer important benefits for studentborrowers, like fixed interest rates andincome-based payments. Most studentstake advantage of federal student loans aswell as other financial aid, such as grants4and work-study programs. Families alsocan use “PLUS” loans — federal studentloans that can be taken out by parentsand, in some cases, stepparents (but notgrandparents or legal guardians), and donot require co-signers, except in limitedcircumstances.Students who are left with a gap infinancing their education costs aftermaximizing federal loans and financialaid may turn to private student loansissued by a bank or another financialinstitution. However, unlike federalstudent loans, private loans often requirea co-signer because most students havea limited credit history (a record ofborrowing money and paying it back).Ask key questions: For the lender: How soon can I bereleased from my repayment obligationsas a co-signer? Most lenders allowfor a co-signer to be released fromthe loan obligation after a certainnumber of on-time payments by thestudent-borrower. However, termsand conditions for being released varyfrom lender to lender. For additionalguidance, visit the CFPB website (seebelow) and search using the key words“co-signer release.” For your family member: How do you planto repay this loan? Student loans appearon both the student-borrower and theco-signer’s credit report along with othercredit obligations, like credit cards or carloans. Remind the student-borrower thatfailure to make timely loan payments canreduce your credit scores as well as hisor hers, and that can make it harder toobtain credit with optimal terms, such asa lower interest rate. For yourself: Can I repay this loan, ifnecessary? “As with any major financialIf you are a co-signer on astudent loan, you are justas responsible for the loanpayment as the primaryborrower, who in thiscase is the student.FDIC Consumer Newsobligation, you should always prepare abudget, consider repayment plans thatwill fit that budget and have backup plansif the student-borrower defaults on theloan,” said Ortiz.Parents or grandparents thinking aboutco-signing a student loan also often ask iftheir Social Security payments or otherincome could be withheld (garnished)if the student-borrower defaults on theloan. The answer depends on the typeof loan. Private loans: Banks and other privatecompanies that offer private studentloans are not allowed to garnish federalpayments if the student-borrower orco-signer can’t or won’t repay the loan.The lender, however, can pursue otherways to collect the amount due. Federal loans: A borrower who defaultson a federal student loan may be subjectto the garnishment of money fromincome tax refunds, Social Securityincome and other federal payments.Consider alternatives to co-signinga loan. It’s often preferable to act as aguarantor on a student loan instead ofa co-signer. As a guarantor, you onlybecome responsible for a loan in defaultafter the lender has exhausted all meansof getting repayment from the primaryborrower. In most instances, the loandoes not appear on your credit reportuntil the lender seeks repayment fromyou.For more information about studentloans, start at the websites of the CFPB(www.consumerfinance.gov) andthe U.S. Department of Education(StudentAid.gov). QFALL 2017
D E A LING W ITH DEBTPreventing an Accidentwith Your Car Purchase:Tips for Auto FinancingWhen and Why YourCredit Card InterestRate Can Go UpA car is often one of the most expensivethings people buy and, like a home, it isgenerally an essential part of daily life.Since most people use loans or leases(rental contracts that last a few years) topay for an automobile, FDIC ConsumerNews offers these suggestions.You may have heard news recently thatinterest rates are on the rise. That’sgood news for depositors wanting toearn more on their savings accounts.It also means that the interest ratescharged on your credit cards may goup.Research the different financingoptions. Car buyers interested infinancing have several options, includingtraditional bank loans. Consumers mayalso want to consider whether to get aloan from the auto dealership or a leasefrom the dealership or a leasing companywith the option to buy the car at the endof the lease period.Most credit cards have a variableinterest rate, meaning the rate will riseor fall based on changes in a particular“index” of interest rates nationwide.In addition, your card issuer candecide to increase your rate undercertain circumstances. For example, acard issuer may raise your interest rateif you are 60 days or more late payingyour credit card bill or if you have asignificant drop in your credit score.If your card has a low introductoryinterest rate, the rate will increaseonce the promotional period ends. Asfor fixed-rate credit cards, the interestrate will not rise or fall with changesin any specific index, but the rate cango up for other reasons, such as latepayments. (Note: Fixed-rate creditcards are very rare in the marketplacetoday.)Leases have become more popularrecently, in part because they generallyhave lower monthly payments, butunderstand that you won’t own the carat the end of the lease. Also, know thatleases generally come with conditions,including fees if you go over mileagelimits or damage the car. If you decideyou do want to keep the car at the end ofthe lease period, you could end up payingmore in total than you would have if youbought the car without leasing it first.Only borrow what you can afford. Ifyou decide to use a loan to finance yourcar purchase, remember that the loanpayment isn’t the only expense of buyinga car. Other expenses include insurance,gas, maintenance, repairs, and inspectionand registration fees. Include these costswhen determining how much you canafford to pay each month. Keep in mindthat, in the worst case, if you can’t makeyour loan payments your car can berepossessed by the lender.Shop around and compare multipleoffers from different lenders. Ingeneral, the following features determinehow much you will pay for an auto loan: The dollar amount financed. Thisdepends on the price of the car you buy,including “add-ons” like an extendedwarranty, minus any down payment orFDIC Consumer Newstrade-in. “The higher the down paymentyou can comfortably make, the lessyou will have to borrow, and you maybe offered a lower interest rate,” saidKathryn Fritzdixon, an FDIC financialeconomist. The Annual Percentage Rate. The APRis a combination of the interest rate aswell as certain fees you pay to borrowthe money for your car. The APR iscomparable across loans, and lenders arerequired to provide you with the APRfor the loans you are considering. The term (length) of the loan. Recently,auto lenders have been offeringlonger-term loans than in the past, somefor up to seven years. “A longer termmeans you may have lower monthlypayments, but because you pay interesteach month, you will end up payingmore overall,” said Fritzdixon. “It’s bestto choose a shorter term as long as themonthly payments stay within yourbudget.” If you’re buying a used car,she said to be especially careful aboutlonger-term loans because the car mayneed to be replaced before you finishpaying off the loan.For more tips on topics such asshopping for auto loans and decidinghow much you can afford to borrow,see information from the Federal TradeCommission (www.consumer.ftc.gov/topics/buying-owning-car) and theConsumer Financial Protection uto-loans). QThe Credit Card AccountabilityResponsibility and Disclosure Actof 2009 (the Credit CARD Act)helps protect consumers from manyinstances of sudden interest rateincreases. Under the law, your cardissuer generally cannot raise the rateif you’ve had it for fewer than 12months. Your card issuer also mustprovide you with a 45-day advancenotice of a rate increase, which canonly
Debt collectors have rules they must follow under the Fair Debt Collection Practices Act, such as providing you with a debt validation notice stating the amount you owe and the creditor’s name. Debt collectors are also limited on when and how often they can contact you. For more information on dealing with debt collectors, see the next page.
letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt. Can a debt collector contact anyone else about my debt? If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you.
UNIFORM DEBT-MANAGEMENT SERVICES ACT Prefatory Note Background The consumer-credit-counseling industry originated in the early twentieth century in the form of debt adjusters (also known as debt poolers, debt consolidators, debt managers, or debt pro-raters). This first generation of credit counselors consisted of profit-seeking enterprises that
Debt and Equity Risk and Return Return Risk Debt Return limited to interest rate Low risk All equity must be eroded before any loss for debt Equity Unlimited upside More risky than debt Takes the first losses of value The more debt there is, the more risky the equity As long as returns on debt taken on exceed the interest rate on the debt,
abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate com-merce. (e) Purposes It is the purpose of this subchapter to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt
Standard Operating Procedure October 19, 2018 College written procedure that states the authority to issue debt, what types of debt may be issued, structure of the debt, the process, and how debt will be managed. A glossary of terms is at the end of this Debt Management Standard Operating Procedure. The Governing oard’s Finance and Audit
Typyp gical Stakeholders Dialog Around Technical Debt “Technical debt of 500K over 200K lines of code” “60% f th d bt i d t l k f it t t ”“60% of the debt is due to lack of unit test coverage” “‘Pay back’ 70% of unit test coverage debt prior to shipping the software” “Other ki
Adjusting Journal Entry - To record Series 2019A Debit Credit Debt Service Fund Other financing source Proceeds From Bonds {6} 38,999.73 Debt Service Fund Other financing source Premium On Debt Issuance {8} 57,642.62 Debt Service Fund Asset Debt Service Checking {6 8} 96,642.35
1550-1950, which she curated with Anne Sutherland Harris for the Los Angeles County Museum of Art; the show was accompanied by the catalogue of the same title co-authored by both scholars. Linda Nochlin has written numerous books and articles focusing attention on social and political issues revealed in the work of artists, both male and female, from the modernist period to the present day .
