PERSONAL FINANCE 6.3 PROTECTING YOUR CREDIT & 6.4 MANAGING YOUR DEBTS

Consumer Credit Reporting Reform Act

Law that places the burden of proof for accurate credit information on the credit bureau rather than on you. If a creditor or the credit bureau verifies incorrect data, you can sue for damages.

Federal Trade Commission (FTC) recommends taking these three actions immediately if your identity has been stolen

*Contact the Credit Bureaus *Contact your creditors *File a police report

Fair Credit Reporting Act

States that you may sue any credit bureau or creditor that violates the rules regarding access to your credit records or that fails to correct errors in your credit file.

Bankruptcy

A legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts. This may also include a plan for the debtor to repay creditors on an installment basis. This is a last resort as it severely damages your credit rating.

Chapter 7

A straight bankruptcy in which many, but not all, debts are forgiven. Most of the debtor's assets are sold to pay off creditors.

U.S. Secret Service

Has jurisdiction over financial fraud cases.

Other Counseling Services available

Non-profit credit counseling from universities, credit unions, military bases and federal housing authorities. These organizations usually charge little to nothing for their assistance. Listings of these services may be available at a local bank or consumer protection office.

30 days

The amount of time in which a creditor must acknowledge a consumer's written communication that an error appears on the billing statement.

Two billing periods but not longer than 90 days

The amount of time in which a creditor must either adjust a consumer's account or tell him or her why the bill is correct following communication of an error by the consumer.

Notification in writing

The correct type of communication that a consumer needs to make to a creditor if he or she feels that there is an error on their billing statement.

Cosigning

Agreeing to be responsible for loan payments for someone if they fail to make them.

Actions to protect yourself from credit card theft or loss

*Be sure that your card is returned to you after you make a purchase. *Keep a record of your credit card number separate from your credit card. *Notify the credit card company immediately if your card is lost or stolen.

Options for consumers having trouble paying bills and in need of help

*Contact your creditors and try to work out a repayment plan. *Contact a non-profit financial counseling program such as the Consumer Credit Counseling Service, which operates nationwide.

Steps to protect your credit information on the Internet

*Use a secure browser. *Keep records of your online transactions. *Review your monthly bank and credit card statements. *Read the privacy and security policies of Web sites you visit. *Keep your personal information private. *Never give your password to anyone online. *Do not download files sent to you by strangers.

Warning signs that you are in financial trouble

*You make only the minimum payment on credit cards. *You are having trouble making even the minimum monthly payment on your bills. *The total balance on your credit cards increases every month. *You miss loan payments or often pay late. *You use savings to pay for necessities such as food and utilities. *You receive second or third payment due notices from creditors. *You borrow money to pay off old debts. *You exceed the credit limits on your credit cards. *You have been denied credit because of a bad credit report.

Fair Debt Collection Practices Act (FDCPA)

Law that prohibits certain practices by debt collectors--businesses that collect debts for creditors.

Chapter 13

Bankruptcy in which a debtor with a regular income proposes a plan to the court for using future earnings or assets to eliminate his or her debts over a specific period of time. The debtor normally keeps all or most of his or her property.

Fair Credit Billing Act

States that if you purchase a defective item and the store will not accept a return, you may tell your credit card company to stop payment because you made a sincere attempt to resolve the problem.

Consumer Credit Protection Act

States that the maximum amount that you must pay if someone uses your card illegally is $50. If you notify the company before the card is used illegally, you have no obligation to pay at all. However, many credit card companies do not require the cardholder to pay even the maximum amount if the card is used.

Truth in Lending and Consumer Leasing Acts

States that you can sue a creditor if the creditor fails to disclose information as required or gives inaccurate information. You can sue for any money loss you suffer. You can also sue a creditor that does not follow rules regarding credit cards. This act also allows for class-action lawsuits, legal action on behalf of all of the people who have suffered the same injustice.

Fair Credit Opportunity Act

States that you may sue a creditor that fails to follow the rules that apply to correcting any billing errors for actual damages plus twice the amount of any finance charges. The creditor will automatically give up the amount owed on the item in question and any finance charges on it, up to a combined total of $50.

Equal Credit Opportunity Act (ECOA)

States that you may sue for actual damages up to $10,000 if you can prove that a creditor has discriminated against you for any reason prohibited.