Facts Consumers Should Know Before Considering Credit Counseling or Debt Consolidation

There is one topic which every time I write about it seems to generate some hate mail while at the same time spawning a flurry of wonderful praise from consumers. Of course, the hate mail is always from a few people that happen to own these “certain types” of businesses I discussed and those businesses of course are Credit Counseling or Debt Consolidation companies; of which many “claim” to be non-profit organizations.

You’d almost have to be an ostrich with your head stuck in the sand to not see or hear at least one advertisement a day from a Credit Counseling or Debt Consolidation Company. However, you can expect this to change and change soon. Since this is a topic that tends to “stir up” the owners of these businesses, I am going to take a different approach by NOT sharing my opinion, but rather, the opinion of others. I will start with the news media and the Internal Revenue Service:
“(NPR News, May 15, 2006).

The Internal Revenue Service is revoking the tax-exempt status of some of the largest credit counseling agencies in the country. An IRS investigation disclosed that the firms solicited business from people seriously in debt and that they didn’t provide counseling or consumer education, as required.

Prodded in part by a congressional oversight committee and consumer advocates, the IRS began investigating dozens of credit counseling agencies — most holding non-profit status — two years ago. IRS Commissioner Mark Everson says the companies “poisoned an entire sector of the charitable community.”
Everson says in many instances, companies were organized merely to funnel business to loosely affiliated for-profit companies. Many of the firms spend millions of dollars on commercials that urge anyone with debt to call them to solve their financial woes. And because tax-exempt organizations are not bound by the federal do-not call list, the firms were able to randomly call consumers, pitching their services under the guise of a non-profit counseling service.

The IRS investigations are also likely to affect consumers, thanks to a new bankruptcy law that requires consumers considering bankruptcy to get counseling before they are allowed to file. The IRS wants to ensure that only legitimate non-profit agencies are doing the counseling. In addition to the actions announced Monday, the IRS is sending more than 700 compliance letters to the rest of the credit counseling industry (END).”

Since almost all Credit Counseling and Debt Consolidation companies claim a non-profit status, I feel most consumers are easily sucked in with their skepticism and defenses at bay. After all, when most of us hear the word “non-profit” the first thing we usually think of is a church or homeless shelter.

From the NPR article and the actions of the IRS, I think it’s fair to assume that many of these “non-profit” organizations have been operating under a scenario similar to that of a wolf guarding a hen house. However, this doesn’t mean all credit counseling and debt consolidation companies are bad but… you do need to know the truth about how they operate and their limitations.

The first thing you want to understand is these companies are ALL more interested in making money off you than they are in preserving your credit rating. The bottom line with either credit counseling or debt consolidation is that it absolutely ruins your credit. I can just hear the companies arguing this with a consumer right now, telling them nonsense like “It helps your credit since it tells creditors that you’re working on your situation and not just running away from it.” Listen… if one these places tell you that, than watch out. Why? Because they will lie to you about other things as well!

One of the first actions these programs usually require you to do is for you to CLOSE all your revolving credit accounts. You then make payments to the organization and they take care of everything for you. What this says to all your creditors (as well as anyone considering giving you credit) is that you are so out of control with your finances that you can’t even manage paying everyone back on your own. Therefore, you’re hiring someone else to do it for you!99% of the time these companies will claim they can negotiate with your creditors and get interest rates reduced thereby saving you money. While this is true, what’s also true is you can easily negotiate these same rates as well as they can by just calling your creditors yourself. You’d be amazed at how many of your creditors would love to hear from you (especially when the chips are down!). Not too mention, any money the counseling company was to save you would more than likely be sucked back up by their monthly fees (usually around $500 to $1,000 per year).

This brings us into a whole other dynamic of their business model. Because these companies always make their money off of monthly fees paid by the consumer, the longer they can keep those monthly fees coming in the more profitable their business will be. It’s for this reason that most consumers who sign up with these companies usually find themselves on payment plans with the lowest monthly payment possible (which turns out to also be the LONGEST payment plan as well). Not surprising is it?
Am I against Credit Counseling and Debt Consolidation companies? Absolutely not. After all, there are millions of people in America who will never be able to manage their finances. Credit to them is a destructive addiction much like alcohol or drugs and they will never be able to control it. Instead, it will always control them. We’ve all seen these people. Every time they are extended credit shortly thereafter they are in financial trouble (usually blaming it on some external factor). For these people I think these credit and debt counseling programs can be a good thing (as a ruined credit report is not a hindrance to them but actually an asset). It keeps them out of future financial trouble by forcing them to live their lives on a “cash and carry” basis; which is ultimately conducive to a better standard of living down the road.

On the other hand. If you’re good with your finances and have control with credit but went through some type of hardship beyond your control in the past (i.e. divorce, job loss etc); then the services of these companies will never be for you. You will do far better and preserve your credit rating by taking matters into your own hands. Reason being is that you understand your credit rating is a powerful tool that can help you move ahead faster, help others and help yourself as well as create the life you want. It all comes down to self-management. We all know that others will ultimately manage those who cannot manage themselves. Credit is no different. When you learn to manage it well, you are the master and it is the servant.

If you care about your credit and want to benefit from it in the future, then you will never rely on a credit or debt counseling service to help you get out of any trouble you find yourself in. Instead, you’ll look inward and get yourself out while preserving your credit rating the best you can. Credit and debt counseling is for people who are “ok” with throwing their credit rating in the trash so they can have “someone else” manage their payments for them (since they are unable to manage them themselves). And again, as far as negotiating interest rates, you can do just as good as them or better. If you don’t believe me just call any of your creditors and straight out tell them your situation. You will quickly find you don’t need to be afraid of them. They just want to get paid like the rest of us.

The Truth About Credit Repair

Have you ever wondered what companies send you when they claim you can erase your bad credit overnight? How about those ads that say you can get any major credit card 100% Guaranteed regardless of your credit?

Ads abound almost everywhere (online and off) selling books, systems and secrets to help you fix your credit in a hurry. Many of these programs have claims that read like the covers of supermarket tabloids “In 3hrs my credit score jumped from 580 to 676!”… “Erase bad credit and smash your debts with just 2 Magic Letters!”. “Create a completely new credit file in 24hrs!” Are these types of claims ALWAYS too good to be true? The answer is “Yes and… no”.

While many people would love for you to believe that the only thing that can fix bad credit is time; in reality… nothing could be further from the truth. The fact is, time is only one factor that will fix a credit report (but it’s a far cry from being the only factor). How can I back this up? Easy. Under a consumer protection law known as the Fair Credit Reporting Act (a.k.a. the FCRA) the only negative information that can remain on your credit report is not what is accurate… but what can be proved as such. What’s this mean to you?

It means any negative item on your credit report can only remain there if it is accurate and CAN BE PROVED AS ACCURATE under the guidelines of the FCRA. This undisputable fact presents consumers with both good news and bad news. The good news is that through the FCRA your credit score can most likely be improved dramatically in a very short period of time with only a modest amount of effort on your part.

The bad news is that while the actual “work” will take very little of your time, it is vital that you have good information on “how” to go about it. This is the bad news; 9 out of 10 courses on restoring your credit will do nothing more than lead you into a snake pit. This is because they provide you with out-dated “Boiler Plate” dispute letters, which are rarely effective. These are nothing more than form letters and… quite frankly (more bad news) the Credit Bureaus and Creditors will laugh at you if you try to use them.

While I agree with the Federal Trade Commission (FTC) that “Anything a Credit Repair Clinic can do for you legally, you can do for yourself at little or not cost”… the key element you need for success is the latest inside techniques and procedures to get the results you want. These involve strategies known as “Proof of Contract”, “Constructive Notice”, “Challenge of Procedure” or “Restrictive Endorsement” and many others.

All these terms may “sound” impressive but they are really quite simple. In the end, it is nothing more than a method of communication, which exercises your consumer protection rights, gets the results you want and raises your credit score. Even more impressive, once you learn how simple it can be by doing it for yourself, you will find there is a fortune to be made doing it for others! Either way, it all starts by requesting a free copy of your credit report by calling the Annual Credit Report Service at 1-877-322-8228.

How to protect yourself from Identity Theft

How to Make Yourself Virtually Identity Theft PROOF in 60 Minutes or Less

Copyright 2007 Jay Peters

The FBI has called it “The fastest growing crime in America.” Close to 10 million Americans every year are victimized by it and the costs are estimated at 50 billion dollars annually. Many criminals get off easy while the victims spend years working to restore their damaged credit reports and reputations. Worse yet, there seems to be no end in sight.

“The popularity of the crime is simply growing faster than the solutions to stop it,” many experts conclude. The task of recovery is so time consuming and tedious, multiple states have resorted to creating “Identity Theft Passports” for victims in an attempt to ease the pain for them as they endure the lengthy and frustrating clean up process.

By the end of this article I will share with you the secrets of making yourself virtually identity theft proof in 60 minutes or less (for free). I use the term “secrets” because less than 1% of the country is aware of these techniques (let alone practicing them).

If Americans took these preventative steps up to 99% of all identity theft would be eliminated. However, “why” this beneficial approach is not being made common knowledge in the mainstream media is something I will not disclose in this article (more on that another time). For the moment I believe the biggest crime one can commit is to not share this information with their friends and family (by the end of this article you will understand why).

Unlike other authors covering this subject I will not insult your intelligence by sharing common sense tips like “Don’t carry your SSN Card or ATM PIN# in your wallet or purse” or “Keep all data sensitive documents like credit card and bank statements locked up in your home or office”. This is elementary advice at best. The key to protecting yourself from identity theft is to look at what the masses are doing and then do the opposite (to say the least).

Almost 70% of Americans are now shredding all their mail and documents and many are even subscribing to credit monitoring services or buying identity theft insurance in an attempt to protect them from becoming victims. While this is better than doing nothing it’s a far cry from TRUE security.

Study The Past To Predict The Future

Contrary to popular belief statistics show the majority of identity theft does NOT result from the Internet as most consumers have been led to believe. In fact, less than 10% of identity theft cases (where data compromise can be determined) originated online. In almost 50% of cases consumers are the ones who detect the breach. In nearly 40% of cases the criminal was someone who was in close contact with the victim (friend, relative, neighbor, coworker, in-home, employee, waiter/waitress or financial institution employee). In then end, nearly one third of identity theft cases come from a stolen wallet/purse, checkbook or credit card.

More interesting, the age of the primary victim has lowered. If you are between the ages of 25 to 34 you are now the largest target for the crime (65+ has become the smallest). The bad news is that while identity theft nationwide is on the decline (8.9 million victims last year down from 9.3 million in 2005) the dollar amount per victim is going up ($6,383 last year, up from $5,885 in 2005) and so are the number of hours victims spend cleaning up the mess (40+ hours last year, up from 28 hours in 2005).

We’ve all heard the saying “An ounce of prevention is worth a pound of cure”. Yet, no one is practicing it in the pandemic of identity theft. Credit monitoring is nice but only 11% of consumers ever catch identity theft through this means. Identity Theft Insurance (according to many experts) is even more of a hoax. A product marketed by playing on the fears of American consumers which does nothing more than assist them in cleaning up the mess only AFTER their identity has been stolen.

A Different Approach

The following is a completely different approach to preventing and protecting yourself from identity theft. It is based on the reality that we live in a world now where there is zero privacy of personal data. Meaning that your name, address, phone number, social security number, date of birth (even your mothers maiden name) can be obtained by ANYONE for a fee.

If you’re one who feels this is paranoid thinking let me tell you about Amy Boyer. In 1999 Miss Boyer had an old high school classmate (Liam Youens) come back into her life many years later. Mr. Youens obtained Amy’s SSN and other personal information after paying Docusearch Inc. $150. After Youens shot Miss Boyer to death he then turned the gun on himself. Today the company tells visitors to its website that “not all searches are available to the public” and some are reserved for the investigative and legal industry. How’s that for homeland security?

With this “different” approach we break down identity theft into two distinct categories. 1.) Basic Identity Theft, and 2.) Credit Hijacking. By definition “Basic Identity Theft” is when the perpetrator steals your identity and then uses it to obtain NEW credit accounts for their personal gain. “Credit Hijacking” falls under a criminal stealing your identity in order to access and use your EXISTING credit accounts. Each type of fraud is different and therefore so is your plan of defense.

BASIC ID THEFT DEFENSE: The best proactive defense against basic identity theft is through the placing of an “Initial Fraud Alert” on all three of your credit reports. This “Initial Fraud Alert” accomplishes three important factors:

1. Your name and personal information can no longer be sold by the credit bureaus to ANY third parties for any marketing purpose (i.e. credit card offers, loan solicitations or credit pre screenings).
2. No one can be approved for credit with your personal information until the creditor personally calls you at the telephone number you list on your consumer credit report. And,
3. Requesting this initial fraud alert entitles you to a free copy of all three of your credit reports (one copy from each of the three major credit reporting agencies). Please be advised that this is an “Initial Fraud Alert” which lasts only 90 days. To extend the fraud alert and obtain the above mentioned benefits for 7 years you will need to write to each credit bureau at the address provided within your initial fraud alert confirmation letter (Note: It is likely credit bureaus will make the extended alert harder to obtain as a great deal of their revenue comes from the third party rental and sale your information).

CREDIT HIJACKING DEFENSE: Most online merchants now utilize a security feature known as “Address Verification Service” or “AVS”. AVS is a security feature for online merchants allowing them to only authorize credit card transactions for merchandise to be shipped to the same address, which appears on the consumers’ credit card billing statement. If the address does not match that of the credit card billing statement the transaction will automatically be declined. In other words, if someone gets your credit card number, expirations date and CVV code (the three digit code on the back of the card) the only way a transaction can be authorized online is if the merchandise if shipped to the SAME address that your credit card billing statement is currently sent to.

This is what makes credit hijacking so dangerous. When a criminal hijacks your credit they call up the banks (posing as you) and change your address on your credit cards with your personal information (i.e. last for of SSN and mothers maiden name) as if you were moving. They then proceed to order thousands of dollars in merchandise (online or over the phone) to be shipped to the “new” address. Because they changed “your address” on your credit cards they will bypass the AVS security from online merchants and the charges will be approved.

The only real defense against credit hijacking is to establish a personal security code with all your bank accounts and credit cards. This is a form of security, which goes beyond your SSN, Zip Code, Date of Birth or Mothers Maiden Name to give you a whole new tier of personal security. This is a unique number or group of letters and numbers, which you create and give to every credit card provider you, have.

For example. The number could be as simple as “JACOB2801″ which is a combination of your best friend as child and the numerical address of the home you lived in growing up. By establishing this auxiliary pass code with all your credit card providers no one will be granted access to your accounts without it providing it to them. Since you are the only one who knows it and it is non public it is truly secure. I have yet to find a credit card company, which will not allow you to create a pass code and added layer of security.

Summary

So now with the initial fraud alert established on your credit reports (and later extended) as well as the personal security code set up with all your bank and credit card accounts, you are virtually identity theft proof in under 60 minutes for free. Sure, someone can always “steal” your identity but the real joke will be on him or her. If they try to open a new credit account anywhere in the country the creditor is going to have to call YOU at the phone number listed on your report in before it can be approved and it’s GAME OVER.

If they try to hijack your credit by changing the address on your credit accounts they will be asked for not only the last four digits of your SSN and mother maiden name, but also your personal security code which they will NOT know and again it’s, GAME OVER.

Please understand that this article deals only with the topic of “financial” identity theft, which is by far the most prevalent today. However, you should be aware you also have the following “5 MAJOR” identities in computers across the nation which are your:

1. Driving Records/History (DMV Databases).
2. Medical Records/History (Medical Information Bureau Database).
3. Social Security Records/History (SSA Database).
4. Insurance Claims/History (C.L.U.E. Database).
5. Criminal, Legal and Public Record databases from birth records and real estate deeds to corporations, trusts and court cases.

Yes, we are in the information age but all information is stored in databases. I think we are now living in the database age.

10 Extra “Financial” Identity Protection Tips

1. Keep a list of all credit card and bank account numbers with bank phone numbers so in case of loss or theft they can be notified immediately.
2. Use only one credit card for personal expenses and one card for business expenses and monitor accounts online weekly.
3. Always send or receive mail only through secure and locked mail boxes.
4. Never give out any sensitive information (SSN, Acct #, Pin #, Password Etc) via an email solicitation. Always type in and visit the website directly.
5. Limit the information on your checks to your first initial, last name and address (nothing more).
6. On all credit cards instead of signing your name write “Check ID!”
7. Never use a debit card or Visa/Master Check card, as recovering fraudulently accessed funds from these accounts can be extremely difficult.
8. Store all credit cards, bank statements and passports etc in a secure and locked place.
9. Never give out your Social Security Number, Drivers License Number or Date Of Birth unless they have just cause and really need it.
10. For details about establishing and initial fraud alert on your credit reports visit: www.experian.com, www.equifax.com, www.transunion.com

This FREE Report was made possible by:

The Bronson Barber Real Estate TEAM
www.bronsonbarber.com
(801) 712-1607

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The Biggest Mistake I Made When Starting Out In Real Estate

When I was new to the real estate business I of course made mistakes.  Everyone does.  Although I often make little mistakes, nothing compares to this major one I was making over and over again.

 

The biggest mistake that I made was not figuring out how to bring in money for the short term that would keep me going for the long term.  I’m sure that everyone knows how expensive starting a real estate business can be.  Not only do you have to have money to get into the business you have to have money to carry you for months (sometimes) before you get any business.

 

Most of the time that leaves very little money to start growing a business.  When I was new in the business I didn’t have a clue about advertising and marketing.  I ended up throwing thousands of dollars down for magazine ads that never returned any business.  I quickly realized that I wasn’t going to last long if I continued to throw away money on bad advertisements.

 

Luckily for me I got a couple of deals done right away that kept me in business and out of the poor house.  After that big mistake of advertising I knew that I would have to come up with a better solution if I was to stay in the business and also to be able to grow my business. 

 

I looked outside the real estate industry for ideas and inspiration to discover what I was missing for success in real estate.  What I discovered was what I now call my FUEL.  FUEL is what drives my business to the destination that I want.  What is my destination?  Financial freedom. Being able to work with whomever I want to work with and do what I want to do.  FUEL will get you there faster than you could ever dream.  You will not have to face the same fate that a lot of real estate professionals do with going out of business before they ever get started.

 

Now you have two choices to make one you continue to struggle to build your business or two you invest in yourself and educate yourself on what you need to do Today to start growing your business.   www.fuelyourpipeline.com

Are You Afraid Of Failure?

As business owners it is always hard to accept when we have failed at something.  When we have experienced failure, fear starts to roll in and try to discourage us from getting back up.

What do we need to do as business owners?  We first need to understand how to be accountable for our own actions and not try to blame anyone but ourselves.  We are ultimately responsible for all our actions and that is it.

You need to prepare for failure now, because it will come.  Failure is a part of doing business and also growing a business and as soon as we recognize that then fear will never enter our minds and poison us by not letting us continue on.

Once we have taken responsibility for ourselves and prepared for failure, it will be a lot easier to deal with when it happens.  It makes getting back up less of a challenge for us.

Once we get back up we need to understand and search why we failed.  This will help us from making the same mistake and failing again. After we have found out what was in our way from achieving success, we need to be creative, break through, go around, under, over or avoid altogether the roadblock that is keeping us from our success.

I know that inside each of us is the power to overcome all our failures and become successful.

What is keeping you from success?

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