Credit Repair Kit

7/17/2019 Credit Repair Kit

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FINANCIAL MANAGEMENT

WORKBOOK

fromCCRREEDDIITT IINNFFOO CCEENNTTEERR

www.creditinfocenter.com

In Association with:

BOLEMANLegal Solutions for Financial Problems

Boleman Law Firm, P.C.2201 West Broad Street, Suite 205

Richmond, Virginia 23230(804) 355-2057

www.bolemanlaw.com



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BEFORE YOU BEGIN…

People experience financial distress for many reasons. Sometimes, things happen thatno amount of planning could have helped; sometimes, things could have been improvedwith better planning and better money management skills. Regardless of your current

situation, you can always benefit from increased information, knowledge andunderstanding of your finances.

This workbook is based around proven keys that form the foundation for goodfinancial planning. The keys are highlighted throughout the book andsummarized at the end. If you follow them, chances are high that your financialsituation will improve.

Keep in mind that it probably took a while for your financial problems to mount up, so itmay take some time to undo them. There is no quick fix. But with some concentrationand effort, you can get back on solid financial footing faster than you think.

Keep this workbook for future reference. Use it for yourself and your family, and sharethe information with others who can benefit from it.

Okay. Let’s get started!

Published by:Techartist Publishing

7904 East Chaparral RoadSuite 110-604

Scottsdale, Arizona 85250www.web-nation.com 877-WE-DO-WEB (877-933-6932)

Content borrowed gratefully and liberally with the permission of Alison Scott

Community Outreach Coordinator – Boleman Law

BOLEMANLegal Solutions for Financial Problems

Boleman Law Firm, P.C.2201 West Broad Street, Suite 205

Richmond, Virginia 23230(804) 355-2057

www.bolemanlaw.com



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UNIT 1: MONEY THOUGHTS

Money

Money means different things to different people, and each of us have our own

reactions to and thoughts about what it is and what it means. For some people, moneymeans happiness; for others, money means power; for others, money means security;for others it means anxiety.

Some people do just fine on very little money, while others never seem to have enough.Many rich people are unhappy, and lots of people with limited wealth are very content.Money can be used to acquire and do many things – and yet, there are a lot of thingsmoney cannot buy or accomplish.

Money, in and of itself, is neither good nor bad. It is merely one of the many tools andresources available to us. It is up to you to determine the role that money plays in your

life and how you use it.

Assignment: Sharpen that pencil and take a few moments to determine whatmoney really means to you. Here are a few questions to get you started:

What Do You Think about Money? 1. How did you learn to handle money?

From whom did you learn?

2. What did you not learn about money thatyou wished you would have?

3. What is important to you that can be

bought with money?

4. What is important to you that cannot be bought with money?



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5. A common saying is “The best things in life are free.” Name some of them.

6. People often talk about wanting to “Keep up with the Jones.” Why do we try?

What do we care about that the Jones’ do? Should we?

7. More than most cultures in the world, American society is focused on theimportance of material wealth and on buying things (consumerism). Whatproblems does consumerism cause for people in managing their money? Howhas it influenced you?

8. Who or what influences you the most when it comes to spending money? Arethese influences positive or negative? What would you like to change aboutthese effects on you?

9. How much control do you feel you have over your financial situation? Why?

10. If you feel you do not have much control over your financial situation, how mightyou get more control?

11. Are there some things you already know that you want to do differently in thefuture as far as how you spend money? Name several of them.

AFTER ALL, IT IS YOUR MONEY AND YOUR LIFE!

KEY #1:GET TO KNOW HOW YOU HANDLE MONEY AND WHY.

AWARENESS CAN LEAD TO CHANGE –IF YOU WANT IT TO.



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UNIT 2: PLANNING AND GOAL SETTING

In a survey a few years ago, it was discovered that:37% of people don’t have any goals at all;50% have goals, but only short-term ones;

10% have clear goals, but only 3% write down their goals.Of that 3%, however, 95% accomplish most or all of their goals!

Goal Setting

1. In general, what are the benefits of goal setting?

2. Does it make a difference if you write down your goals? Why or why not?

Needs versus Wants

Before you start setting goals, it will help if you decide exactly what you need and what you want from life – both “material” and “non-material.” Let’s dealwith the material things first:

1. What five material things do you (or people in general) NEED TOSURVIVE at a minimal level?a. ______________________________b. ______________________________c. ______________________________d. ______________________________e. ______________________________

Goal setting is not only effective – it is vitally important. Ifyou don’t already do it, it’s not too late to start. Settinggoals will give your life more direction and purpose.

Accomplishing those goals will bring you satisfaction!



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2. Now, what else do you WANT?

a. _____________________ f. ____________________b. _____________________ g. ____________________c. _____________________ h. ____________________

d. _____________________ i. ____________________e. _____________________ j. ____________________

Do you need more space to write down more items? What does that tell you about yourwants?

3. What is the difference between what you need and what you want in terms of:

a. Clothes?

b. Food?c. Housing?d. Vehicle?e. Entertainmentf. Other categories?

Remember : There’s a difference between needs and wants. Financial problems are usually caused by the wants, not the needs. If you can’tsleep at night because you’re worried about how you will pay for yourwants – what good are they?

ValuesGoals are also influenced by our values. Values are the source of the “non-material”things we need and want. Some common values relate to the following broad areas:

Spirituality Career Health PeaceRecognition Friendship Family ChallengePride Love Community Respect

1. Which of these are most important to you? (Indicate the most importantvalues with a star.) What else is important to you that is not on the list?

2. Now, can you buy any or all of the above items with money?



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3. If this were the last year of your life, what five things would you do in the comingyear?a._____________________________

b._____________________________

c._____________________________

d._____________________________

e._____________________________

4. Did money play a role in those five things? Explain.

5. What five things do you want people to remember or know about you?a._____________________________

b._____________________________

c._____________________________

d._____________________________

e._____________________________

6. Does money play a role in those five things? Explain.

Thought: What most people discover is that one can have a good,happy, fulfilling life with the things that really matter without a great dealof money and without going into debt.

Suggestions for Goal-Setting

Now that you have given thought to your needs, wants, and values, the next step iswriting down some of your goals.

Goals should be personal.Goals should be ambitious, but achievable.

Goals should be specific.Goals should be measurable.

Goals should be kept where you will see them.



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Traditional strategic planning processes can be adapted to goal setting:

1. Define long-term goals – where you want to be, what kind of life you want;2. Assess your current situation – its strengths and weaknesses;3. Set short term goals – to take you from where you are to where you want to be;4. Prioritize actions and strategies;5. Begin to take action(s);6. Establish checkpoints to measure your progress;7. Evaluate how things are going; and8. Modify your plan if necessary.

Thought: If you do not begin to focus on your long-term goals now, itwill be next to impossible to achieve them.

Turn the page for some forms that can help you get started with goal setting. Once youget in the habit and find it works, you will develop your own system. Of course, goal-setting works for other areas of your life, too, not just for finances.

Remember: Post your goals where you will see them (on the bathroom mirror or therefrigerator or in your daily calendar). It’s easier to keep them in mind ifyou see them every day.

When you have definite goals, share them with people you can trust. Theycan help you achieve them.

And once you reach your initial goals, set new ones!

Thought: If you don’t need or want much, then you don’t need muchmoney. That gives you a lot of freedom! “Less” may be “more” in thelong run.

Assignment: Draw a picture (or find a photo or picture in a magazine ornewspaper) that shows some of your goals. Keep these where you cansee them (like the frig door or bathroom mirror). For example, if you wantto save money for you or your kids to go to school, keep a photo of a capand gown at a graduation.



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Your Financial Goals

Where I want to go financially:

Long term goals (2-5 years or more) $ needed By date

1.________________________________ ________ ________

2. ________________________________ ________ ________

3.________________________________ ________ ________

Short term goals (1-2 years) $ needed By date

1.________________________________ ________ ________

2. ________________________________ ________ ________

3.________________________________ ________ ________

How to get there: Having a goal is a good start, but action is needed to makesomething happen!

Goal Action to be taken By date

1._______________________ ____________________________ _______ ____________________________

2. _______________________ ____________________________ _______ ____________________________

3. _______________________ ____________________________ _______ ____________________________

4. _______________________ ____________________________ _______ ____________________________



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Obstacles

Often the first thing people do after they write down their goals is think of all the reasonsthey won’t be able to achieve them. So, let’s do that. Write one of your goals in theblank space below. Then, list the reasons you have not achieved this goal and/or the

obstacles you see in achieving it in the future.

1. Goal: _____________________________________________________BUT . . . _______________________________________________

_______________________________________________ _______________________________________________

2. Now, list three possible solutions to just ONE of the obstacles you listed..

a.

b.

c.

3. If you can’t come up with solutions, try this: Pretend this is the list of a closefriend. Now, what would you tell your friend to do in order to achieve their goal?

Thought: Everyone experiences obstacles in reaching their goals. Whenfaced with an obstacle, you have two choices: let it stop you, orovercome it. Those who are successful in life persevere and find a wayaround, over, under or through the obstacles that face them.

KEY #2:DETERMINE YOUR GOALS, WRITE THEM DOWN,and DEVELOP A PLAN OF ACTION TO ACHIEVE THEM.



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UNIT 3: HOW TO CREATE YOUR OWN FINANCIAL PLANS

Now that you have an idea of what your goals are, the next step is seeing how they fitwith your finances to form a financial plan. First, you need to assess your current

monetary situation. Second, you need to compare it with where you want to be. Third,you need to work with your action plan to move toward your ultimate financial goals.This will involve some trial and error and is an ongoing process. Patience anddetermination will get you there!

Benefits of a Financial Plan

A financial plan is probably necessary, at least for a while. Such a plan provides formalgoal setting and action steps for you to follow in your management of money.Furthermore,

1. IT HELPS YOU MAKE DECISIONS ABOUT HOW YOU USE YOUR MONEY.

2. IT MAKES YOU AWARE OF WHERE YOUR MONEY IS GOING.

3. IT PROVIDES A WAY TO SAVE FOR SPECIFIC ITEMS.

4. IT HELPS YOU LIVE WITHIN YOUR INCOME – OR TO DECIDE IF YOUNEED TO CHANGE YOUR LIFESTYLE OR YOUR INCOME (If you’re havingmoney problems, there are options: spend less, earn more, or both!)

5. IT HELPS YOU DECIDE WHERE TO CUT SPENDING IF NECESSARY.

6. IT PROVIDES DOCUMENTATION AND RECORDKEEPING FUNCTIONS.

7. IT ALLOWS YOU TO SPEND MONEY WITHOUT GUILT.

8. IT IS A LEARNING EXPERIENCE. IT ALLOWS YOU TO SEE HOW YOUCOULD LIVE DIFFERENTLY.

9. IT IS A COMMUNICATION TOOL BETWEEN YOU AND OTHERS WITHWHOM YOU SHARE FINANCIAL BENEFITS AND BURDENS.

10. IT GIVES YOU A WAY TO ASSESS YOUR PROGRESS.



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Spending Plans (often called Budgets)

A Spending Plan (budget) is simply the documentation for your financial plan. It includeskeeping track of how much you spend and how you spend it. It also gives you a set oflimits to aim for in future money management. Keep in mind budgets are flexible and

changeable, depending on your goals and circumstances.

Three broad types of income and expenses form a budget: fixed, variable, and periodic.

Fixed: Expenses and income that are regular in time and amount are fixed . Itemslike your rent or mortgage, your car payment and your paycheck are usually fixed items.These are easily planned for, and hence, there are few surprises here. These items arenot easy to change, and as a result, they form the “core” of your budget.

Variable: Expenses and income that change, and over which you have control,are variable. What you spend on entertainment or food, and any income you pick up

from odd jobs are variable items. This is where you have a lot of choice – and whereyou can plug a lot of leaks in your financial plumbing.

Periodic: Expenses and income that come up from time-to-time but which maynot be predictable or controllable in certain respects are periodic . Your car’stransmission going out would be a periodic expense; a cash birthday gift is an exampleof periodic income.

In dealing with budgets, there are two very important principles:

1. If you are serious about getting a handle on your finances, you MUSTWRITE DOWN EVERY SINGLE PENNY YOU SPEND, EVERY SINGLE DAYFOR A MONTH.

If you don’t do this, you are kidding yourself about where your money is going.Furthermore, when you are standing in front of the vending machine deciding whichcandy bar to buy, if you know you have to admit spending your money this way, youmay decide not to buy it! A written record will also give you something to work with andevaluate in terms of deciding what changes need to be made.

HINT: If a month seems too long, start by keeping track of what you spend in a singleday. When you have accomplished that, keep track of what you spend in a week. Then,move up to keeping track of your monthly spending.

2. EXPECT THE UNEXPECTED.

If you don’t have an unexpected expense this month, you’ll probably have two the nextmonth. These expenses usually are not unpredictable. If you have a 10-year-old waterheater with a 5-year guarantee, the fact that it went out this week is really not a surprise.The way you deal with these periodic expenses is covered under the topic of Savings.



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Thought: Don’t deny yourself so much that you rebel and sabotage your

plan. Treat yourself now and then – just don’t go overboard. An icecream cone, a picnic in a park, a walk by a harbor or a lake can be morefun than an expensive dinner.

Choices

The topic of “choices” is a big one. Your values, goals, Spending Plans (budgeting),needs and wants are all personal choice. The fact is, most people are in the situationthey’re in as a result of choices they made in the past. The good news is that if youdon’t like the situation you’re in, you can change it through your future choices. Thereally good news is that you have lots of opportunities to change the choices that effectyour financial situation if you want to.

1. How do CHOICES made in the following areas affect your finances?

Give at least one specific example of a choice you made for eachcategory.

a. general lifestyle or standard of livingb. familyc. careerd. educatione. healthf. other

Give three examples of ways you can make new choices to improve your financialsituation.

Thought: Pay attention to all choices you make! It’s not just the big ones;the little ones really add up too!

Savings

A lot of things have changed in this country in the past decade or so. One apparentchange is that people don’t save as much money as they once did. This is related, ofcourse, to the trends of increased consumerism, easy credit and instant gratification.The result is that many people are living on the edge all of the time and they havenothing put aside to take care of those “unexpected” expenses or events.



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Develop the habit of saving money on a regular basis. Even if you can’t save very muchat first, get into the routine of savings. You can increase the amounts over time. Theimportant thing here is to LEARN TO SAVE.

Saving is not:

♦ a punishment♦ a hardship♦ an impossibility

Saving is:

♦ a cushion that protects you from those unexpected events♦ what allows you to sleep at night when the brakes need to be fixed♦ what can give you the confidence to make that change in your life

♦ a means to greater financial security♦ a way to experience greater freedom in your life

The same compounding of interest that hurts you in credit transactions helps you insavings. If you save just $3.00 a day (which really is that Starbucks coffee, bottle of popor candy bar), you will save over $1,000 in a year. If this money is put in an interest-bearing account at a bank, you will have even more money than that!

The following thoughts about savings may be helpful. While some are obvious, puttingthem into practice is more difficult, particularly when others are not practicing the habitof savings.

♦ You have to spend less than you make.♦ You don’t have to spend it just because you have it.♦ Living at a little lower standard of living today will allow you to save

for those things that will improve your standard of living tomorrow.

A final idea: Too many people say, “Oh yeah, savings is a good idea. I’ll put what’s leftat the end of the month into savings.” Then, of course, there’s never anything left at theend of the month!

PUT ASIDE SAVINGS FOR YOURSELF FIRST, AND LEARN TO LIVE ON THE REST!

Assignment: Get a jar. (Decorate it if you like). At the end of each day,put some money in the jar, even if it is only the coins in your pocket. Do

this for a week. How much money is in the jar? How do you feel abouthaving this money there?



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Thought: PROMISE YOURSELF YOU WILL START SAVING MONEY…RIGHTNOW! Most people are in financial trouble because they did not havesufficient savings to cover unexpected expenses.

National Percentages

You may want to look at the following national averages of spending to see where youstand in relation to others. There may be some variation in certain categories,depending on what part of the country you live in or depending on any uniquecircumstances in your household. Nevertheless, it’s a guideline that may show youwhere you might be spending too much of your income in a certain area.

▪ Housing = 25%▪ Transportation = 19%▪ Personal Business = 15%

▪ Food = 14%▪ Utilities = 7%▪ Clothing/Entertainment = 5%▪ Alcohol/Tobacco = 2%▪ Education/Reading = 1%

Note that most people spend the greatest amount of their income on housing. Homeownership is also a reason many people report as the cause of their financial problems.Being able to afford a house is not just making the monthly payments – it’s also beingable to afford the maintenance, repairs, potential increase in taxes and insurancepremiums that come with home ownership.

Transportation is the next major expense. More than just the cost of the car, the recenttrend toward bigger, less fuel-efficient vehicles effects transportation costs. Remember,the real purpose of a vehicle is to get you from Point A to Point B.

Habit

Habit – not logic, not practicality, not good money management techniques –determines how most of us spend money. “But we always do that on the weekend.” “Butmy family always celebrates the holiday that way.” Realize that you don’t always have todo anything a certain way! You can choose to change a habit with a little concentrationand effort.

1. What are some habits that cause you to spend unnecessary money?

2. What will it take for you to change those habits?



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Your Personal Spending Plan

The forms on the following pages will help you start tracking your money and puttingtogether a financial plan. If these precise forms don’t work for you, tinker with them tocreate forms that work better for you. For a while, you probably need to stick with a

regular method of budgeting. Then it will become a new habit.

There are several key terms you need to know to complete these forms:

Gross Income: money you earn before taxes and other items are deductedInstallments: payments made on a monthly basis to purchase an itemNet Income: money you receive after taxes and other deductions

Thought: IT’S NOT HOW MUCH YOU MAKE THAT MATTERS – IT’S HOWYOU MANAGE WHAT YOU MAKE.



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Daily Variable Expenses Tracking Sheet – By Week

Assignment: Make four copies of this page. Track every cent you spend for fourweeks in a row!

ITEM Mon. Tues. Wed. Thurs. Fri. Sat. Sun. TotalGasoline

Car Maintenance

Home Maintenance

Groceries

Cleaning Supplies

Clothing

Medical Expenses

Child CareMeals Out

Laundry/Dry Cleaning

Gifts

Entertainment (movie rentals;pay per view)Charitable Contributions

Cigarettes/Tobacco/Alcohol

Personal Grooming

Travel/Vacation

Education/Tuition/Books

Bank Service ChargesHobbies/Club Dues

Books/Newspapers/Magazines

Miscellaneous



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Fixed Income Tracking SheetsUse one of the following three sheets that best suits your pay schedule.

Monthly Income SheetMONTHLY GROSS INCOME $AMOUNT COMMENTS

SalaryCommissionOther IncomeTotal Income

WITHHOLDINGIncome Tax

FICA (Soc. Sec.)Taxes

Unemployment InsuranceHealth Insurance

Life Insurance

ContributionsOtherTotal Withholding

MONTHLY TOTALTotal Income

- (Withholding)= Spendable Money

(Net Income)

Bi-Monthly (Paid Twice a Month) Income SheetBi-MONTHLY GROSS INCOME $AMOUNT COMMENTS





Life Insurance

ContributionsOther

Total Withholding

Bi-MONTHLY TOTALTotal Income


(Net Income)



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Weekly Income SheetWEEKLY GROSS INCOME $AMOUNT COMMENTS





Life InsuranceContributions

OtherTotal Withholding

WEEKLY TOTALTotal Income


(Net Income)



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MONTHLY EXPENSE SHEETMONTHLY EXPENSES $ AMOUNT COMMENTS

Rent/Mortgage

Gas

Electricity

WaterPhone/Cell phone

Garbage

Cable TV

Child Care

Internet

Other

INSURANCE

Car

Health [if not included

under Income Sheet]House

Life [if not included underIncome Sheet]

Other Insurance[if not included under

Income Sheet]

INSTALLMENT

Car

Credit Cards

Other Loans

SAVINGS

TOTAL MONTHLYEXPENSES



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● accomplish more● get the first shot at a good job● receive the benefit of the doubt● are more enjoyable to be around● have more fun● bounce back more easily from a “bad break”● have better luck● are often in the right place at the right time● see solutions instead of problems

To a great extent, what we think and what we believe determines what happens to us. Ifyou want to have more money, you have to believe you can do that job with a highersalary. If you think you are only “worth” what you make now, you will never even applyfor the higher-level position, let alone do well in an interview!

Few of us use even a small portion of our potential. Stretch yourself a bit and see whathappens. Maybe you should go back to school. Maybe you should try a different career.Maybe you are scared to take a risk and try something new.

IT’S HARD WORK TO BE HAPPY – BUT IT’S WELL WORTH IT.

Goals – Again!

Goals play a role in getting what you want because they strongly influence you on asubconscious level. They are also closely related to attitude. Once you know what youwant, you will talk to people you may not have spoken to before; you will have differentconversations than you would have had before; you will see articles you never wouldhave read before; and you will hear comments you otherwise would not have heard.This is why it is so important to have goals. Set aside time to review your goals everymonth or two and see if you’re on track, and to see if your money behavior needsrevising.

KEY #3:FIGURE OUT WHERE YOUR MONEY GOES, MAKE A SPENDING

PLAN (budget) and STICK TO IT.

Attitude Counts: Think Positivel

One of the factors that separate those who do well inlife from those who do not is attitude! People with apositive attitude:



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UNIT 4: SALES, ADS, SCAMS & OTHER MONEY TRAPS

If It Sounds Too Good to Be True…

Marketing experts are paid tremendous amounts of money to figure out what makes

people buy a certain product, spend more money in a store or sign up for a subscription.Most of us are amateurs going up against the pros – and guess who usually wins?

Start paying attention to the techniques and promotional activities that encouragepeople to spend more than what they had originally planned – and often more than theycan really afford. They range from common “sales talk” to illegal home improvementfraud. Once you are aware of the ways you can be manipulated, it will be easier to resistsuch efforts. With television, radio, on-line shopping and telephone solicitations,marketers are reaching into our homes more than ever before. Unlike the past, whenconsumers frequented stores for everything they needed, stores now come directly toyou. You do not even need to leave the house.

Emotions and Money

A strong tie exists between emotion and money, and marketers know that. Researchshows that people spend unnecessary money in response to certain emotions. If yourecognize any of these emotions as a factor in your spending, then money may not bethe problem. If you learn how to handle that emotion in a better way, it will help solveyour financial problems, too.

Depression – When people are depressed, they often spend money on things to makethemselves feel better. Unfortunately, this improvement is a temporary feeling. Soonafter spending, they’ll usually feel even worse. The next time you feel you are shoppingbecause you are depressed, call a friend (preferably not long distance!), get someexercise or do whatever (other than shopping or spending money) energizes you.

Anger – When people get angry, it’s common to spend money to work off the negativeemotion. Next time you get angry, clean out a closet, meditate, go for a run, swim, or

walk. Do something to make yourself feel better (something that doesn’t cost a lot ofmoney or compromise/sabotage your money plans).

Assignment: Other emotions often relate to wasteful or unnecessaryspending. On the next page, jot down a few notes about how these emotionsaffect your use of money – and come up with ways to deal effectively withwhichever of these difficult emotional states may be affecting you andsabotaging your financial plans.

Assignment: Find an advertisement in a magazine or newspaper that youthink is trying more than usual to manipulate you and other readers. Cut itout and put it on your refrigerator or mirror with a big X through it!



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Jealousy - Joy –Fear - Boredom –Competitiveness - Grief –

Anxiety - Success –

Thought: Sometimes emotions can be so overwhelming, professionalassistance may be helpful. There are people who can help if you need it.

Ways that We May Be Tempted to Spend Money We Can’t Afford

Read through the list below and circle the ones that cause you the most trouble:

Sales: Sales are not bargains unless you need the item.

Coupons: If you buy something you would not normally buy, then it is an unnecessaryexpense. Even with the coupon, name brands may cost more than generic or storebrands at regular price.

1-800 numbers, 24 hours a day, 7 days a week: These are not for your convenience –they are to give you more opportunities to spend your money.

Buy One Now, Get One at Reduced Price: Do you really need two? Or even one?

You Will Look Younger, Healthier and Happier: These products appeal to ourvulnerabilities and rarely provide solutions. They are just expensive!

Gadgets: Do you need it? (Fancy choppers, slicers and dicers do no more than a knifecan do – at a lot higher cost!) How many do you have already? Do you use them? Howmuch time will it take to use? To maintain?

Advertising Techniques: Free samples, appealing to your desire for popularity orsecurity, or to help your children, or improve health, or calm fears… These are allestablished advertising techniques. Some advertisers prey off your fears and concerns.Be aware of what they are trying to do and remind yourself to stick to your list andbudget. Catchy songs and slogans are effective also. Notice how many toy ads areshown during cartoons and to promote popular children’s movies.

Television Shopping Channels: Like the 1-800 numbers, the convenience combinedwith the sales pitch makes these hard to resist. Many of us are lonely and the phonemakes us feel connected. If you can’t delete the station from your service, use yourwillpower to watch something else. Better yet, do something besides watch TV!



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High Pressure Salespeople: Salespeople receive a lot of training in how to overcomeobjections to buying. They push until you agree to the deal. They keep you on thephone. Know your limits and stick to them. If you are susceptible to sales pressure,don’t carry your checkbook or credit card with you. That way you can’t buy until you’vehad a chance to calm down and think.

The Fine Print: Be sure you understand the details of any contract. If you do not knowwhat something means, ask someone who is on your side (not the salesperson) toexplain it to you.

Product Placement: Have you ever noticed how the cheaper brands are way up there orway down there? And how the essential foods are at the back of the store? Ever noticehow many little items are placed right near the cash register? Candy, gum, gadgets…They are placed there to tempt you to pick them up on the way out of the store, not foryour coincidence!

Smells, Sounds and Colors: Popcorn in a movie theater and soothing music in arestaurant can influence you to spend more money than you had planned.

Buy Now, Pay Later: The problem is that later you haven’t saved up the money youpromised yourself you would to pay the item off before the high interest kicks in. And,now you’re bored with the item, it’s outdated, or it’s already broken.

Payday Loans: Payday loans charge a very high rate of interest due to their structureand should be avoided! They are a cash “advance” on your paycheck, and are usedby people who need quick cash. The problem is that people usually don’t have themoney available on payday, and end up taking out additional loans. These can easilyadd up to 400% or more Annual Percentage Rate (APR) interest.● You write a check dated two weeks from now for $256. In return, you get $200

cash today – and plan to have the money to pay the amount of the check nextpayday. Therefore, you are paying $56 in fees and interest. That’s 728% APR!

Rent-to-Own: Rent-to-Own schemes are bad deals as well. It is usually far better tosave up the money to buy the item a few months from now rather than renting it nowand paying for the item over many, many months.● You rent a $300 TV, paying $16 a week for a year (a total of $832). Therefore,

the interest and charges total $532, or over 250% APR! Wait 4-5 months, put the$16/week in a savings account and buy it for the $300 purchase price instead.

Home Equity Loans: These loans are popular because money can be borrowed againstthe equity in a house, and the interest paid on the loan is normally tax-deductible. Whilethis can be a valid method of “using” the equity you have in your home, the danger isthat if the loan is not paid as agreed, the creditor can take the house. People commonlyuse the money to pay off credit card debt (which is unsecured). So, you end upconverting unsecured debt to secured debt. Don’t borrow more than you need, and besure you can repay as scheduled.



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Pawnshops: Pawnshops give loans in exchange for keeping an item of personalproperty such as a guitar, bicycle, computer or lawnmower. If the loan is not paid ontime, the property can be sold. Rates and fees are usually high at pawnshops – and yourisk losing your property.

Lotteries: You know what the odds are of winning, don’t you? Money spent on lotterytickets is like throwing money in the wastebasket.

Hidden Charges: Are batteries included? Is there an additional fee for options orservices that you thought were included? Is there a late termination charge? Read theagreement carefully, ask around, and talk to someone who already has the product orservice.

Consolidation Loans: These loans lump a number of payments together (usually with anew creditor) so that just one payment a month is made. Sometimes, this new amount

has a lower overall interest rate. Consolidation only works if you make the payment asagreed, and more importantly, if you don’t incur additional debt. Make sure the lowerrate is not just for the introductory period. Also, look at the fees charged to consolidate.Moreover, always look at the length of the repayment loan. You may be paying for manyyears.

1. If you circled any of the above items as problematic for you, jot downa few things you are going to do in the future to avoid those problems.

2. What’s the worst purchase you ever made? How could you avoid this mistakein the future?

Thought: The list of “dangerous” techniques and swindles is endless. It isup to you to pay attention. Learn about anything you are tempted toinvest in or spend money on before you make the commitment.



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Hints to Help Avoid Impulse Buying

80% of items bought on impulse are unnecessary expenses and a waste of money. Ifyou are prone to impulse buying, consider the following to avoid overspending:

1. Why did you buy the last item “on impulse”? Take some time and answerhonestly. (Examples: Perhaps you were depressed, perhaps you didn’twant a friend to think you couldn’t afford it.)

2. Before buying that next item, go away and think about it. If you truly want ittwo (ten?) days later, and you can afford it, then go buy it.

3. Don’t spend “spare” time in shopping malls or stores. Avoid these“slippery” places. Instead, go to the library, take a walk, balance yourcheckbook (!), get some exercise or pursue a hobby.

4. Don’t buy it on sale unless you would have bought it at full price.5. Don’t carry much cash. Cash “spends” easier than a check.6. Don’t go shopping when tired (or hungry, if shopping for food).

Other Smart Ideas to Cut Shopping Costs

1. Comparison shop – for everything from food to insurance.2. Buy generic or store brands.3. Buy on sale (but see #4 above).4. Plan ahead.5. Buy in quantity if possible.6. Don’t pay for convenience; make it yourself.7. Consider repairing an old one rather than buying a new one: for everything

from remodeling your current house to fixing the washing machine.8. Buy it used: items found at garage sales or used cars are often good

bargains.9. Consider alternatives to expensive gifts – services, homemade items, etc.10. Simplify your life.11. Use baking soda, vinegar, and bleach mixtures instead of “specialty”

cleaners.12. For everything you do, first ask yourself, “Can I do the same thing

cheaper?”13. Pay bills online or in person when possible to save postage – which can

add up. Better yet, sign up for Automatic Payment plans (monthly bills aredirectly deducted from your checking or savings account) where possible.

14. Save on utility bills. Insulate your home. Wait as long as possible to turnon air conditioning or heating. Keep thermostat high in summer, low inwinter. Use cold water to wash laundry when possible.

15. Save on phone bills. Don’t make long distance calls unless absolutelynecessary. Consider a cell phone instead of a traditional phone. Callduring off-peak times. Call your phone company every six months to makesure you are getting the best rates.



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16. Use free recreation facilities and cultural offerings – the beach, museums,public parks.

17. Instead of renting a VCR or DVD video from the store, see if your locallibrary (or one of its branches) has it. It can be requested, sent to thelibrary of your choice, and you get to keep it for a week. The local library

also has computers, which you can use to obtain Internet access. Anddon’t forget about the books, magazines and newspapers!

Assignment: What can you add to either of the above lists? Chat with a friend,brainstorming other ways to save money, and write them below. Be creative!

How to Combat Sales Techniques and Other Influences

♦ Have clear goalsThe clearer your goals are, the easier it is to say “no” to items you don’t reallyneed or want. Keep visual reminders of your goals in view.

♦ Be assertiveSalespeople and individuals that are close to you know how to “push yourbuttons” to get what they want. Practice saying “NO” over and over until it iscomfortable for you. Remember that you need to protect yourself. Others don’tnecessarily have your best interests at heart.

♦ CompromiseIf people with whom you have close relationships – spouse, children, etc. –disagree on expenditures, maybe a compromise is in order. To your partner:“Yes, we could buy a new DVD Player, but instead of buying one at the store

where they cost the most and where we have to pay taxes, let’s watch the wantads and go to garage sales to find one.” Or, to the kids: “I think shoes should costa maximum of $30.00 – I’ll pay that much, and you have to pay the rest out ofyour allowance or salary if you want the designer brand.”



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♦ Analyze

Think through the purchase, particularly if it’s on credit. Some good questions toask yourself:

Do I need it? What is the finance charge?What is the interest rate? What is the total purchase price?Will I use it? Do I have time for it?Can I maintain it? Where will I put it?Will I become bored with it? Can I wait longer before I buy it?

KEY #4:IT IS YOUR MONEY! THE ONLY POWER THAT OTHER INFLUENCES

HAVE ON YOU IS THE POWER THAT YOU GIVE THEM.



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UNIT 5: CREDIT USAGE

Many people who find themselves in debt decide they are never going to use creditagain – after all, that’s what got them into trouble in the first place! However, thepracticality is that credit is increasingly important in this society – as a method of

payment as well as a means to facilitate activities such as renting a car. Therefore,learning how to use credit wisely is important.

To begin, you need to appreciate the differences between credit cards, debit cards andstored value cards.

● Credit Card: You borrow money when you use a credit card and if you do notrepay the borrowed amount in full when required, you are charged interest on the

unpaid debt. You must make at least a minimum payment if you cannot pay infull. There are penalties added for late payments. Credit cards have a maximumamount that can be charged on the card and that differs from person to person.

● Debit Card: This is a convenient way for you to withdrawn your own money atlocations across the world using a special PIN number. Some places charge youa fee to withdraw your own funds, in addition to what your own bank may chargeyou. The debit card can also be used to pay for items purchased in a store orsupermarket. Purchases are sometimes charged a fee at some merchants, sopay attention.

● Stored Value Card: This is a convenient way to pay for items (transportation;phone). It works by requiring a customer to pay in advance for the desiredservice. The amount paid is coded into the card and each time the card is used,the balance is reduced. If you lose a stored value card, you are out of luck sinceanyone who finds it can use it.

Credit Rules

1. Taking out a loan (which is what a credit card offers) should be a last resort.If you don’t have the cash, then you can’t afford it.

2. Loans should only be used for needs, not wants

3. Never use credit for a short-term item. Use it only for something with a usefullife beyond the payoff on the loan. A home and a car are examples of itemsfor which credit borrowing is acceptable. Furniture is not essential, nor is

jewelry, nor are gadgets.



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4. Determine the cost of the credit. Look at the amount of interest you will be

paying and compare that to the purchase price if bought only with cash.Interest shows up as a percentage: 5%, 14% and 21%. The higher thenumber, the greater the cost to you. Credit-related charges (late fees; penalty

fees) may make the total purchase price extremely high. Is that how youreally want to use your money? The money goes to the lender, not you!

5. Pay off loans as quickly as possible. The longer you borrow, the more youpay in interest.

EXAMPLE

You want to buy an MP3 player that costs $169.00. The salesperson says,“It’s just $15/month for one year with a $30.00 down payment”

Sound good? (After all, that’s only $.50 a day!!)

But how much will the MP3 player really cost you?? The answer is $210.00!!

To figure this out, here’s what you do:

a. Count the number of payments (12) and multiply that by the amount of eachpayment ($15):

12 x $15 = $180.00

b. Add the down payment ($30) to that:

$180.00 + $30.00 = $210.00($210 is what you will pay for the MP3 player!)

c. The total finance charge is determined by subtracting what you will pay in totalfrom the cash price of the item:

$210 - $169 = $41.00

d. Total interest paid: $41.00. That’s over 24% interest!

Is this a good deal? Before answering, you may want to look at the followinginformation.



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Interest Rates

Interest rates DO make a difference. Lenders who offer “easy credit’ or who aim atborrowers with poor credit histories make up for taking that risk somehow. Theynormally do it by charging a higher purchase price for the item and/or by charging very

high interest rates.

Compare the following examples:

Loan Amount Loan Term Interest Rate Monthly Pmt. Total Interest TOTAL COST$15,000 5 years 5% $283 $ 1,984 $16,984$15,000 5 years 10% $319 $ 4,122 $19,122$15,000 5 years 15% $357 $ 6,411 $21,411$15,000 5 years 20% $397 $ 8,845 $23,845$15,000 5 years 25% $440 $11,416 $26,416

Thought: If you borrow $15,000 at 25% interest, your interest paymentsover five years ($11,416) are almost as much as the loan itself.

Loan Amount Loan Term Interest Rate Monthly Pmt. Total Interest TOTAL COST$50,000 10 years 5% $ 530 $13,639 $ 63,639$50,000 10 years 10% $ 661 $29,290 $ 79,290$50,000 10 years 15% $ 807 $46,801 $ 96,801$50,000 10 years 20% $ 966 $65,953 $110,953$50,000 10 years 25% $1,137 $86,490 $136,490

Thought: If you borrow at 25% rather than 5%, you end up paying $86,490in interest rather than $13,639. That is a huge difference.

Length of the Loan

The time period over which you pay off a loan also makes a difference. The quicker youpay off a loan, the less you pay in interest.

Loan Amount Loan Term Interest Rate Interest Paid TOTAL COST$80,000 30 years 7% $111,607 $191,607$80,000 15 years 7% $ 49,431 $129,431

$15,000 3 years 10% $ 2,424 $ 17,424$15,000 5 years 10% $ 4,122 $ 19,122



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Another way to pay off a loan quicker is to make additional principal payments eachmonth. Compare the numbers below with the loans in the box on the previous page.

LoanAmount

Term/InterestRate

AdditionalPayment

Interest Paid TOTALCOST

$80,000 30 years, 7% $50/month $81,864 $161,864$15,000 5 years, 10% $10/month $ 3,953 $ 18,953

Thought: Creditors must tell you what the Annual Percentage Rate (APR)

of the loan will be, and give you the total interest and total cost of the itemif bought on credit. Demand this information BEFORE you sign anything.If they do not provide it to you, you may have rights against them.

Compare what one creditor offers with what another creditor offers. That way,you can find the better deal.

Problem to Solve

Suppose you need to borrow $6,000 to purchase a used car. Look at thesedeals. Consider which is best. Can you explain why you would choose one over

the other? What factors might affect your decision?

Lender’s Name APR Length of Loan Monthly Payment Abby’s 14% 3 years $205.07Bob’s 14% 4 years $163.96Carla’s 15% 4 years $166.98

Credit Cards and Minimum Payments

One of the common traps people fall into is making only the minimum payment onrevolving charge cards. This may be easier to handle in the short run, but it will cost a

lot more money in the long run. Plus, it will take longer to pay off the debt. The bestthing to do is pay off the total balance every month. If that is truly impossible, make thelargest payment you can afford to make. And if you are not paying the balance off everymonth, do not continue to charge purchases – you can’t afford them.

Thought: If you make only minimum payments and continue to borrow,you get deeper and deeper into debt.



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If you make only the minimum payment due each month, look at how much it costsyou and how long it will take to pay off the account (figures are rounded):

AmountBorrowed

Interest Rate(APR)

Minimum MonthlyPayment

Total RepaymentTime

Total DollarsPaid

$1,000 19% $20.00 14 years $ 2,700

$3,000 19% $60.00 36 years $ 12,300

And that’s if you make no further charges to the account! Imagine how bad it gets whenthe charges continue to grow each month.

Types of Loans

Long Term Loans: Loans that are to be repaid over many months or years are long term in nature. Mortgages and car loans are common examples. Loans for very expensivehousehold items such as appliances and furniture can also fall into this category.

Short Term Loans: Loans that are paid within a few weeks or months are consideredshort term loans. A loan to cover dental work that you will pay off from your next twopaychecks is a short term loan.

Secured Loans: Secured loans have “collateral” backing them up. Collateral is usuallyan item of personal property (or with a mortgage, real property like a house or a mobilehome). With a secured loan, the creditor can take back (repossess) and sell thecollateral if the loan is not paid as promised. Car loans are usually secured loans.

Unsecured Loans: Unsecured loans have no collateral behind them and are given in

return for the promise of the debtor to pay back the money in the manner agreed. Creditcards are usually unsecured loans. The interest rates are usually higher on unsecureddebt as the lender is taking more risk; they have no specific collateral to repossess.

Revolving Credit: These accounts allow you to make charges up to a pre-set limit. Youonly pay interest on the amount you have borrowed. Credit cards are an example ofrevolving credit .

KEY #5:CREDIT IS EXPENSIVE. USE IT RARELY, CAREFULLY AND

KNOWLEDGEABLY.



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UNIT 6: UNDERSTANDING CREDIT REPORTS AND SCORING

Credit Reporting

Virtually everyone over the age of 18 has a credit report . Your credit report is a

summary of past financial behavior, particularly your history of payments on contractsand credit-related transactions. Lenders look at your credit report to determine whetheror not to give you a loan, and if you do get a loan, what interest rate your loan will have.Credit reports contain a credit score but it is not generally printed so consumers (asopposed to creditors) can see it. But unless you’ve been living in a cave all your life, youprobably are at least somewhat aware of these facts.

However, your credit affects so much more than just the interest rates on your creditcards. Many property owners will pull a credit report and use it to decide whether or notthey will rent to a person. Insurance companies, potential employers and otherbusinesses are increasingly using credit report and the credit scores calculated from

your report to make decisions on any number of transactions. Therefore, it is importantfor you to know what information is contained in your credit report. Be sure everythingon the report is related to you. Identity theft is a big concern these days.

Your Credit ScoreCredit scoring is a method lenders use to decide whether or not you meet their criteriafor a loan. It is a statistical calculation used by creditors to evaluate your credit-worthiness, based on your past credit history and other factors. In a sense, this score islike a financial report card. The actual formula is not publicly available.

Credit scoring takes into account approximately 25 different variables about your lifeand finances. Among other things, a credit score looks at whether you own or rent, howlong you have lived at your present address, whether you maintain bank accounts(checking and savings), your employment history, the number and nature of credit cardsyou have, your repayment history, the amount of unused credit available, balancesmaintained on open accounts and number of credit inquiries. Recently, people havebeen able to receive their actual credit scores based on the scoring system employedby a company called Fair Isaacs. Your credit score (known as a FICO Score) is anumber ranging between 300 – 900. (This number range can vary from creditor tocreditor.) The higher the number, the better the score. This number, and the explanationaccompanying it, tells you a great deal about how creditors view you.

Credit scores are available for a small fee. Once you know why your score is what it is,you may be able to take steps to remedy some aspects of your life. Then, you can getyour credit score again to see if there is improvement. Some organizations offer it forfree but be careful because this often requires signing up for some expensivemonitoring service. Your credit score is available on the Internet. One good place toorder it is www.myfico.com.



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Now that you have a better understanding of the types of information on credit reports, itwould be a good thing to request a copy of your credit report from each of the threemajor credit reporting agencies (or Bureaus): Equifax, Experian and TransUnion. Asstated before, as many as 1 in 4 credit reports contain a serious error which coulddisqualify a consumer from buying a home, opening a bank account or getting a job. It

has also been stated that as many as 80% of all credit reports contain some type oferror, so chances are good that your reports may need some correction.

Free ReportsWith the new amendment to the Fair Credit Reporting Act (FCRA), all consumers cannow get one free credit report a year from each of the three major credit bureaus. It’simportant to note that you will not get your credit score with these free reports.

Assignment: It’s time to request copies of your credit reports.

Call 877-322-8228 or visit www.annualcreditreport.com. This central site allowsyou to request your free reports, once every 12 months, from each of thenationwide consumer credit reporting companies.

When you order, you will need to provide your name, address, Social Security number,and date of birth to verify your identity.

Once your credit reports are in hand, you’ll be ready for the next Unit which explainshow to decipher them.

Thought: It’s a good idea to pull your credit report more than once ayear, especially if you are working on fixing errors, so you can see theresults of your efforts. There will be a small fee for the second set ofreports. There is also a fee to have your credit score included.

KEY #6:

LEARN HOW THE FINANCIAL WORLD VIEWS YOU BASED ONYOUR CREDIT REPORT.



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UNIT 7: HOW TO READ YOUR CREDIT REPORT

In this section we will learn how to read your credit report and understand theinformation it contains. Along the way, you will have the opportunity to write things downthat look questionable or things which need to be fixed in order to lessen the chances of

identity theft.

Credit reports contain a lot of information, including:

- Name – past, present and any aliases - Address – past and present- Phone number - Social Security Number- Birth date - Work history- Creditors - Payment history- Dates and types of loans - Marital status- Credit limits, highest amount used - Current balances- Disputed items - Number of active accounts

- Accounts sent for collection - Comments or explanations- Credit report Inquiries - Judgments, bankruptcies

It is important to note which credit bureau contains what information. If you dispute theinformation with the bureaus, you will have to write a separate letter to each one. We’veprovided spaces for each credit bureau in each category, so you can list the informationseparately for each bureau. Even if the three bureaus contain identical information, writeit down for each bureau. For example, if Experian and TransUnion each list the samevariation of your name, write the variation under both the Experian and TransUnionboxes.

Assignment: If your credit reports included your credit scores, write them in thefollowing boxes.

Experian Score Equifax Score TransUnion Score

Incorrect Personal Information

Name – More than One Spelling of Your Name?

The first thing you should notice on your report is your name. Often you will haveseveral variations, nicknames, misspellings and perhaps your maiden name.

In order to protect yourself from identity theft and to get erroneous negative informationremoved from your report you really should only have one version of your name,address and social security number on your report. Sometimes credit files get



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accidentally merged based on similar names or past addresses so you want only oneversion of your name and address on your credit report.

Assignment: Write any multiple versions of your name in the spaces below.

Experian

Equifax

TransUnion

Address – More than One?

You should really dispute everything except your current address, even if the oldaddresses are correct. Any address other than your current one increases the chancethat information that is not yours will appear on your credit report. This is especiallyimportant if you live in an apartment or rental house. It is not uncommon for your creditfile to get mixed up with someone else who has had your address in the past or rented

the property after you.

Assignment: Write any multiple versions of your address in the spaces thatfollow.



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Experian

Equifax

TransUnion

Social Security Number – More than One?

This one should be pretty obvious – since your ID is your Social Security Number, anyvariations should be disputed to prevent erroneous information from getting on yourcredit report.

Assignment: Write any multiple versions of your Social Security Number in thespaces provided below.

Experian

Equifax

TransUnion



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Thought: Identity theft is rampant. In addition, credit bureaus oftenmistakenly merge your file with others because of erroneous personalinformation. You can reduce your chances of this happening by makingsure your personal information is correct.

Overall Credit Report Information

In most cases, a credit report provides a summary of all accounts you’ve had over thelast seven years on the front page (or on the left side if you are looking at your report onthe Internet). The summary should tally accounts by type, used credit, and total amountowed.

Assignment: Write your account summaries from your credit report in thefollowing chart. If your report doesn’t include summary information, tally eachtype from the detailed listings on your reports.

Number of Accounts

Experian Equifax TransUnionTotal number ofcredit card accounts

Total number ofmortgages (includingequity lines of credit)Total number of autoloans

Percentage of Maximum Limits on Credit CardsYou won’t find this information on your credit report, but it’s important to know themaximum limits on your credit cards because it is used to calculate your credit score.

First, we’ll be looking at “High Limit” numbers on your credit report for credit cards only .Then we’ll look at your credit card “Balances.” This exercise involves using a calculator,but don’t panic. We’ll walk you through it. Here’s an example account:

VISA Acct Number: 4017XXXXXXXXXXXX Acct Type: Revolving or Option Acct Status: Open

Monthly Payment: $29Date Open: May, 1999Balance: $968Terms: N/AHigh Balance: $1,033Limit: $1,000Past Due: $0Remarks: CREDIT CARD



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Assignment: Identify, add together and write down the Total of Limits for all ofyour credit card accounts. Use a calculator.Hint: The card “Limit” in the example above is $1,000. Don’t let the High Balance

of $1,033 confuse you. This consumer exceeded their limit at some point.

Total of Limits: $_______________________

Assignment: Identify, add together and write down the Total of Balances for allof your credit card accounts. Use a calculator.Hint: Don’t let the High Balance confuse you. You want the Balance (which isthe current balance on the card), not the High Balance (which is the highest

balance you’ve had during the time you’ve used the card).

Total of Balances: $____________________

Now you can calculate how much of your available credit you are using.

Assignment: Using a calculator, plug the numbers above into the followingformula:

(Total of Balances ÷ Total of Limits) X 100 = __________%

If this number is over 25%, you are being docked points on your credit score. Payingdown your credit card balances will help your credit score tremendously.

To target the accounts that are doing you the most damage, calculate the percentage ofthe limits that are being utilized for each card individually. In other words, calculate:

(Balance of Account ÷ Limit of Account) X 100 = ___________%

In the VISA example provided earlier, the consumer is using 96.8% of the credit card’savailable credit! ($968 Balance ÷ $1,000 Limit x 100 = 96.8% of available credit.) That’sway too high!

Thought: Concentrate on paying down accounts that use the highest percentage of available credit first. You may see dramatic improvementsin your credit score!



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Negative InformationNegative information is any listing on your credit report which highlights problems youmay have had paying your bills on time in the past. These include: late pays, chargeoffs, collections, judgments and bankruptcies.

Assignment: Make a copy of your credit report. On the copy, as you read eachitem, label each as either “good” or “bad.” You can use a yellow highlighter forgood entries and a blue one for bad ones, if you like. If you’re not sure if

something is negative, list it anyway.

Public records

Note any public record information appearing on your credit report. Public records arebankruptcies, tax liens, judgments and child support delinquencies. This informationappears at either the beginning of your credit report or at the very end.

Assignment: Write down any public records appearing on your credit report inthe spaces that follow.

Experian

Equifax

TransUnion



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Repossessions or ForeclosuresIt’s easy to identify these types of accounts on your credit report since they will have thewords “repossession” or “foreclosure” listed next to them. They may also have the word“skipped” in them.

Assignment: Write down any repossessions or foreclosures appearing on yourcredit reports in the spaces below.

Experian

Equifax

TransUnion

Late Pays

Late pays are only reported by original creditors (mortgage companies, auto financecompanies, banks, utilities and credit card companies). Note any accounts indicatingthat you have paid late in the last seven years. Note the account number and thenumber of times and the length of time you were late.

You will see 1x30, 2x60, 3x90, etc., listed beside an account. In some cases, you willsee a two-year history which looks something like this:

Jun 2002 Dec 2002 Jun 2003 Dec 2003 Jun 20041 1 1 1 1 1 1 1 2 2 3 1 1 1 1 1 1 1 2 2 1 1 1 1 1 1 1 1 1

The example above shows current payments (the 1s) from Jun 2002 to Jan 2003, thentwo 30-day late payments (the 2s) and one 60-day late (the 3) early in 2003. Two more30-day lates happened in Dec 2003 and Jan 2004.



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Or like this:

Jun 2002 Dec 2002 Jun 2003 Dec 2003 Jun 2004C C C C C C 30 C 60 60 90 C C C C C C C - - - - C C C C C C

The above example shows current payments (the Cs) from Jun 2002 to Nov 2002 andthen a 30-day late payment in December 2002 (30), followed by two 60 days+ late inFebruary and March 2003 (the 60s), then one 90-days+ late in April 2003 (90).Payments were then current until Nov 2003. There was no activity (or the financecompany did not report data) from December 2003 through March 2004 (the –s).

Assignment: Now that you know what to look for, write down any accountswith late pays appearing on your credit reports in the spaces below.

Experian

Equifax

TransUnion



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Thought: Sometimes you can identify negative accounts from creditcard companies by the words: “account closed by credit grantor.”

Collection Accounts?

Note any collection accounts appearing on your report. Companies having collectionaccounts do not include credit card companies, mortgage companies, financecompanies or utilities, even if the notation says “account placed for collection.” Typically,accounts with late pays or charge offs and collection accounts are placed at the very topof your credit file.

Assignment: Write down any collection accounts appearing on your creditreports in the spaces below.

Experian

Equifax

TransUnion



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Inquiries

Inquiries occur anytime a company pulls your credit report. The only time someone isallowed to pull your credit report is for a firm offer of credit, insurance purposes,employment or court orders.

Thought: Inquiries can do more damage to your credit score than youthink. In addition, excessive inquiries can also indicate identity theft.

You will see a section of your credit report saying something like “the followingcompanies have requested your information.” Go through each one of these on yourreport and draw a line through any from:

• Companies with whom you have an account,• Employment, or

• Companies with names you recognize with whom you applied for a credit card, job, mortgage or auto loan.

Assignment: Write down any inquires appearing on your credit report (that youHAVE NOT already lined out) in the spaces below.

Experian

Equifax



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TransUnion

KEY #7:IN ORDER TO PROTECT YOUR CREDIT, YOU NEED TO

UNDERSTAND WHAT MAY BE BRINGING DOWNYOUR CREDIT SCORES!



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UNIT 8: HOW TO REPAIR YOUR CREDIT REPORT

As stated in Unit 6, a recent study indicated that as many as one in four credit reportscontain a serious error which could disqualify a consumer from buying a home,opening a bank account or getting a job. Therefore, as we discussed in the last unit, you

should obtain a copy of your credit report from each of the three credit reportingagencies at least once a year . By law, errors must be fixed without charge if younotify the credit reporting agency. The errors may be affecting your credit.

The basic strategy for repairing your credit:

1. Get your credit report.2. Analyze your report.3. Make a list of all items you consider to be questionable or negative. Clearly

identify each item in your report that you dispute.4. Write a dispute letter to the credit bureaus.

5. Send the letter to the credit bureaus. Make sure you send it registered or certifiedmail.6. Document your efforts. Record when you sent your letters, and the results.7. Wait for the bureaus to investigate your claims.8. Analyze the results.9. Was the item deleted or changed to your satisfaction? You may continue steps 1,

2 and 3 above until you feel the dispute is settled satisfactorily. Remember, thereis no charge for a reinvestigation. If you don’t get the results you want, disputethe listing again.

Unit 6 explained how to pull your credit report (step 1 above) and Unit 7 helped you to

analyze your report and find all negative and questionable items (steps 2 & 3 above).Since you already did this, the rest is pretty straightforward.

Items you will need for your credit repair process:

1. This workbook (or a spiral-bound notebook if you prefer)2. A file folder3. Pens4. Money for postage5. Copies of your credit report

Thought: The credit repair process can seem intimidating.However, it only requires one or two hours a month, a smallmonetary investment (for postage), and patience. Think

positively!



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Dispute Information with the Credit Bureaus

It is your legal right to dispute anything on your credit report. Let’s look at our typicalaccount listing again.

VISA

Acct Number: 4017XXXXXXXXXXXX Acct Type: Revolving or Option Acct Status: OpenMonthly Payment: $29Date Open: May, 1999Balance: $968Terms: N/AHigh Balance: $1,033Limit: $1,000Past Due: $0Remarks: CREDIT CARD

Jun 2002 Dec 2002 Jun 2003 Dec 2003 Jun 2004C C C C C C 30 C 60 60 90 C C C C C C C - - - - C C C C C C

There are many things about this listing that you can say are incorrect:

1. Not mine2. Wrong amount3. Wrong account number4. Wrong original creditor5. Wrong Charge-off Date6. Wrong Date of Last Activity7. Wrong Balance8. Wrong Credit limit

9. Wrong Status (there are about 20)10. Wrong High Credit (the highest balance you have had on this account)

Usually if anything about the account can’t be verified, the credit bureau will remove theentire account, which can sometimes work to your advantage.

The next thing you want to do is to write a dispute letter and list all of the informationyou have found on your credit report that you wish to challenge, and clearly define thereason you are challenging the information. Write one for each credit bureau, and makesure that you send them certified mail, return receipt requested . You can also dodisputes on-line or via the telephone. If you do your disputes over the phone or the

Internet, you will receive a confirmation number. Sending your disputes via the mail ismore expensive, but it gets more of your information into the right hands, plus you willhave proof when you sent in your dispute.

If you don’t know which information you should challenge, go back to the informationyou entered in Unit 7 and select the items you have identified as being negative.



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Here are all the things worth disputing:

1. Multiple versions of your name. You should shoot for just one, your full legalname. Other than your Social Security Number, sharing the same name assomeone else can cause your file to be merged with his or hers.

2. Multiple addresses – dispute any former addresses. There are many cases ofconsumers having their credit files merged with someone else by accident, justbecause they shared the same address.

3. Multiple employers – File merging because of shared previous employers arerare, but if your name is similar to someone else who also works for a formercompany of yours, your files could be merged. You want to list your currentemployer ONLY.

4. Multiple versions of your Social Security Number. This one should be obvious.Only one Social Security Number should appear on your credit report.

5. Judgments6. Bankruptcies

7. Tax Liens8. Child Support Payments9. Late Pays10. Collection accounts11. Inquiries

Thought: You need to write a separate letter to each credit bureau. Youdo NOT need to write separate letters for each item, as long as eachitem and the reason for each dispute is clearly defined.

A good example of a dispute letter can be found in Appendix A.

Keep a Log of Your DisputesThis may be the most important part of your workbook. You need to keep track of all ofyour correspondence and the sequence of events. If you ever get sued or need to go tocourt, you will be glad you have this information at your fingertips.

What to Expect After Submitting a DisputeUnder the Fair Credit Reporting Act (FCRA), the credit bureaus have 30 days to finish

their investigations, and they will notify you of the results in writing when they havecompleted them. If you tell them you have found the information on your free creditreport, then legally, they have 45 days to investigate. You really cannot do anythingmore than wait for them to finish once you have started the dispute process. Along withthe results, you may receive an updated credit report, but don’t count on this happening.

For each one of your disputes, a result will be listed. The investigation result will be oneof three things:



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1. Item verified2. Item updated3. Item removed

Most likely, you will receive your results in a timely manner, often before the 30-daydeadline, but if you do not hear back from the credit bureaus in 30 days (or 45days), then they are in violation of the FCRA and you have a nice little crowbar touse against them. Technically you can sue them for noncompliance with the law. Toremind them that they are out of compliance, you can insist on a follow-up letter.Demand nothing less than complete removal of the listing, per the law, or tell them youintend to sue. (There is a sample “intent to sue” letter in Appendix A.) You can alsoreport them to the Federal Trade Commission at www.ftc.gov.

Thought: Don’t let the credit bureaus off the hook. They have a duty, prescribed by law, to make sure your disputes are addressed and theirinvestigations are handled in a timely fashion.

Re-disputing Items on Your Credit Report

You know the old saying, "If at first you don't succeed, try, try, again…" Take this sameattitude when disputing items on your credit report.

Chances are that your listing will come back as “verified” for reasons we will discuss a

little later. But that doesn’t mean you’re done. You will need to change the reason forthe investigation so the credit bureau will have something new to investigate. The orderof the reasons should be:

• Not mine• Wrong amount• Wrong account number• Wrong original creditor• Wrong Charge-off Date• Wrong Date of Last Activity• Wrong Balance

• Wrong Credit limit• Wrong Status (there are about 20)• Wrong High Credit (the highest balance you have had on this account)

You can dispute the same account again and again, as long as you provide newinformation for the bureau to use in its investigation or a new reason for the dispute. It’sa good rule of thumb to wait 60 days before resubmitting a dispute on the same item.



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We’ve provided numerous spaces on the following pages for you to record your multipledisputes. Record the date, time and tracking information of each dispute. If you disputedvia the phone or the Internet, be sure to record the tracking information. You should alsowrite down each bureau’s results in the tables below. You can make copies of thepages if you need to do more than three rounds of disputes.

Assignment: Fill in the blanks about your disputes to Experian, Equifax andTransUnion. If you are disputing via mail, you won’t need the Phone DisputeConfirmation Number and Online Confirmation number blanks.

First Dispute with Equifax

Date Letter Sent:REGISTERED MAIL Type:

Registered Mail Tracking No:Phone Dispute Confirmation Number:Online Dispute Confirmation Number:Date Response Received:

Accounts Deleted or Corrected to Positive Information:

Accounts or Negative Information Verified:



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Second Round Dispute Information to Equifax

Date Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:

Phone Dispute Confirmation Number:Online Dispute Confirmation Number:Date Response Received:



Third Round Dispute Information to Equifax

Date Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:Phone Dispute Confirmation Number:Online Dispute Confirmation Number:Date Response Received:




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First Dispute with Experian

Date Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:Phone Dispute Confirmation Number:

Online Dispute Confirmation Number:Date Response Received:





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Second Round Dispute Information to Experian





Third Round Dispute Information to ExperianDate Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:Phone Dispute Confirmation Number:Online Dispute Confirmation Number:Date Response Received:




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First Dispute with TransUnion


Registered Mail Tracking No:Phone Dispute Confirmation Number:Online Dispute Confirmation Number:Date Response Received:





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Second Round Dispute Information to TransUnion





Third Round Dispute Information to TransUnionDate Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:Phone Dispute Confirmation Number:Online Dispute Confirmation Number:Date Response Received:




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Reminder – Document Everything!This may be the most important part of your workbook. You need to keep

track of all of your correspondence and the sequence of events. If youever get sued or need to go to court, you will be glad you have thisinformation at your fingertips.

KEY #8:PATIENCE AND PERSISTANCE

ARE THE KEYS TO SUCCESSFUL CREDIT REPAIR.



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UNIT 9: ACCOUNT REINSERTION

Okay. You’ve worked hard and gotten a few items off of your credit report. However,you’ve just noticed that one or more of these were placed back on your report. This iscalled reinsertion. You should always check to see that previously removed items are

not reinserted. If they were, and the credit bureau did not notify you in writing that theywere reinserting the item within five days of doing it, they have violated the FCRA. Thisis where recording the results of your credit repair efforts start paying large dividends.

Why would the credit bureaus reinsert a deleted listing? Creditors send the credithistories of all their clients to the bureaus each month, sometimes multiple times amonth. If the deleted account was not flagged correctly in the credit bureau’s database,it can sneak back on. Again, the credit bureaus have a responsibility to safeguard thepublic’s credit information under the law. Make sure they are honoring thisresponsibility.

Since reinsertions are a violation of the FCRA (unless they notify you in writing withinfive days), you can use this information to either have the credit bureaus remove theinformation or remove the information AND sue them for damages. Violations of theFCRA are serious and are subject to a $1,000 fine.

Thought: Credit bureaus are not government agencies. They are for- profit corporations that make millions in profit each year, and can affordto spend money on software and quality assurance measures to ensurethat your credit information is correct.

How to Check for Reinserted Items

1. Get the latest version of your credit report.2. Review your list of items (in the last unit) which were removed from your credit

reports as a result of a credit dispute.3. Are any of these items back on your credit report? 4. If there are any, write them down in the spaces below.

Assignment: On the following page, list any items you suspect were reinsertedafter deletion by the credit bureaus.



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Equifax - Any Accounts Reinserted?

Experian - Any Accounts Reinserted?

TransUnion - Any Accounts Reinserted?

Assignment: If you found any reinserted items on your credit report, it’s time toimmediately fire off a letter to the offending credit bureau demanding the removalof the item. Include a copy of the information sent to you by the bureau, provingthat they indeed did remove the item(s) from your credit report. A good sample

letter for this is included in Appendix A.

KEY #9:DON’T LET YOUR GUARD DOWN.

WATCH FOR REAPPEARING ITEMS ON YOUR CREDIT REPORT.



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UNIT 10: DISPUTES WITH ORIGINAL CREDITORS(aka INFORMATION FURNISHERS)

Challenging Incorrect InformationIt all starts back with the original creditor , otherwise known as the information furnisher .

After all, they are the source of the information on your credit report and, by law, mustreport it correctly. According to the new FACTA laws (which revised the FCRA inDecember 2003), the consumer may now contact the information furnisher directly andchallenge information the original creditor is reporting. Recent case law has setprecedent for a number of years, but case law is always subject to interpretation, andthe new laws do not require a judge (or anyone else) to interpret previous casedecisions. The revised FCRA spells out in no uncertain terms that the original creditorcan be held liable for not correcting incorrect or unproven information. You must,however, dispute account information with the credit bureaus first, or the section of theFCRA regarding this does not apply.

This is worth repeating! In order to challenge the original creditor youmust first dispute the listing with the credit bureaus! If you do not dothis, the provision of the FCRA which covers your rights in contactingthe information furnisher does not apply.

If the original creditors are sloppy with their recordkeeping, or cannot provide clearevidence that you were late or if the account is even yours, they must remove it. Youcan see how powerful this can be. Under the FCRA, they have 30 days to complete aninvestigation of your dispute, just like the credit bureaus.

A good dispute letter to send original creditors (or information furnishers) is included in Appendix A.

Thought – You may also use this method with a collection agency,since they are also an information furnisher to the credit bureaus.

Assignment: Turn the page and fill in the blanks about your investigation

request to an information furnisher. If you have more than one request, you mayalso use the log forms provided in Appendix B.



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Request for Investigation with Information Furnisher

Name of Company:

Type of Account (collection, credit card, auto loan, mortgage, etc):


Registered Mail Tracking No:

Date Response Received:

Account Number:

Account Deleted or Corrected to Positive Information: Yes [ ] No [ ]

If the answer is no, make a phone call to ask how information was verified.

Date of Follow-up Call:

To Whom Did You Speak?

Notes on Conversation:

Were you notified of any negative information added to your credit report?The revised FCRA under the FACT Act, as part of its identity theft provisions, also made

it law to notify consumers the first time negative information is placed on your creditreport. This law took effect on July 1, 2004. Please note: they do not need to send you aseparate letter; verbiage on your monthly statement is enough.

Reminder – Document Everything!Keep track of all of your correspondence and the sequence of events. Youwill be glad you have this information at your fingertips if you ever need togo to court.

KEY #10:CREDIT BUREAUS AREN’T THE ONLY KEEPERS OF YOUR CREDIT.



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UNIT 11: DEALING WITH COLLECTION AGENCIES

How does an account go to collection? It's obvious, isn't it? You haven't paid your bills.

It's not a rule set in stone but, typically, credit card debts may be turned over to a

collection agency 180 days after the debt is owed. In the case of medical collections,some hospitals - especially for people who don't have any insurance - turn medical billsover for collections immediately.

Credit card companies typically package up whole portfolios of bad debt and sell themas securities on Wall Street. The debts are purchased by collection agencies, who are

junk debt buyers (JDBs), for pennies on the dollar. These JDBs then try to collect onthese debts. In the majority of cases (over 95% of the time), the JDBs do not receiveany kind of paperwork from the original creditors regarding the debts.

It’s important to realize that you really have no fiduciary relationship with these JDBs.

(Yeah, we’ve thrown another legal term at you. All fiduciary means is that you have nocontractual relationship with them, you’ve never borrowed money from them and havereceived no goods or services from them for which you need to give them money.) Thisis an important distinction. If a collection agency does take you to court, they really haveno legal basis on which to stand and it’s easy to beat them.

Thought: The most important thing when dealing with a collectionagency is to get the collection off your credit report. Collections are areal credit score killer.

Removing Collections from Your Credit Report

There are five main methods to do this:

1. Check the statute of limitationsEvery state in the US has laws specifying how long a creditor has to sue you over adebt. If this time period has passed, the creditor may not take you to court to sue you forthis debt. This protection is absolute.

To calculate the statute of limitations:

1. Take the date you last made a payment and add six months.2. Find the most current list of statutes for your state at:

www.creditinfocenter.com/rebuild/statuteLimitations.shtml 3. Add the number of years of the statute of limitations in your state.



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For example: Let’s say that the last payment you made on a credit card was on Jan 15,2001. The statute of limitations for credit cards (usually regarded as open accounts) inyour state is six years.

The date at which you are “safe” from having a creditor sue you over this debt is:

Jan 15, 2001 + 6 months = July 15, 20016 years + July 15, 2001 = July 15, 2007

Therefore, a creditor cannot sue you for this debt after July 15, 2007.

Okay, so the statute of limitations has passed on a debt. Now what? Well, if a collectionagency is reporting this account on your credit report, they are misrepresenting thestatus of this debt as “collectable” when it is not. Many collection agencies have beentaken to court by the FTC and by state attorneys general for pursuing consumers fordebts past the statute of limitations. Under the FDCPA, this is illegal, and you could

definitely sue the collection agency for misrepresentation. A threatening letter to write acollection agency regarding the statute of limitations is included in Appendix A.

Please note that the statute of limitations has nothing to do with how long negativeitems can appear on your credit report per the FCRA. Negative items stay on for sevenyears (except bankruptcies and some tax liens). If you dispute a debt based on thestatue of limitations with the credit bureaus, you will get nowhere. You need to apply pressure to the collection agency, not to the credit bureau.

2. Is the collection agency licensed to collect in your state? Appendix C lists the collection licensing rules for each state. If your state requires that acollection agency be licensed in your state (the one in which you live) and they are not,you can threaten to turn them over to your state attorney general who will most certainlybe interested in hearing about it.

To find out if a collection agency is licensed visit:www.registeredagentinfo.com

All you need to do is write the collection agency a letter telling them you know of theirillegal activities and if they don’t remove the listing from your credit report, you will notifythe authorities. A sample letter to an unlicensed collection agency is included in

Appendix A.

3. Debt validationThis is the gold standard of dealing with a collection agency. It basically challenges acollection agency’s right to collect the debt. Under the Fair Debt Collection Practices Act(FDCPA), if you request a debt validation from a collection agency, they must stopcollection practices until they can provide it.



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What constitutes debt validation?

1. A letter of sale or assignment from the original creditor2. A copy of a statement from the original creditor3. A copy of the signed contract between you and the original creditor

As we explained before, most collection agencies do not have any kind ofdocumentation on these debts. Most of the time, when asked to provide debt validation,a collection agency will either not respond or provide a computer printout on theirletterhead of the debt they say you owe them. This is not debt validation, and if youwanted to, you could take them to court over the fact that they don’t have any proof thatthey are entitled to collect your debt.

Here is the procedure:1. Send a letter requesting validation to the collection agency. (Sample letters are

included in Appendix A.) If you don't know the address, one of these online

resources should help you find it:www.residentagentinfo.com www.bbb.org

2. Wait 30 days.3. If they haven't sent you satisfactory proof, as outlined above, send a copy of the

receipt for your registered mail, a copy of the first letter you sent and a statementthat they have not complied with the FDCPA and are now in violation of the act.(Use the follow-up letter in Appendix A as a template.) Tell them they need toimmediately remove the collection listing from your credit report or you are goingto file a lawsuit because they are in violation of the FDCPA, section 809 (b).

4. Wait 15-20 days. They will either remove it or not respond.5. If they do provide complete debt validation per the requirements stated above,check to see if licensing is required in your state. If you believe they are notlicensed and licensing is required in your state, write them another letter and tellthem they are in violation of your state's collection laws and are subject toprosecution and fines. (You'll have to cite your state's fines and procedures here.This is a last ditch effort, but has worked in some cases.)

6. Typically, your work will stop here, as most collection agencies will bow down toyour demands and send you a letter agreeing to remove the listing. Now all youneed to do is send a copy of the letter to all three credit reporting agencies.

If the collection agency did not agree to remove the listing, then you need to move on tothe next steps:

7. File a lawsuit in small claims court against the collection agency on the basis ofviolating the FDCPA.

8. Have the papers served to the collection agency. (You can find a paper server onthe Internet at www.guaranteedsubpoena.com/rules.htm for about $25.)



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In the meantime, in a parallel effort with your lawsuit against the collection agency:

9. Dispute the collection if it appears on your credit report.10. If the credit bureaus come back to you and say the collection is "verified," you

have just been provided proof of a violation by the collection agency. Since theyare not allowed to pursue collection activities after you request debt validation,they cannot report the collection on your credit report. In the opinion of theFederal Trade Commission, reporting a collection on a credit report is collectionactivity. Continue on with your dispute with the credit bureau by requestingmethod of verification of the credit investigation, etc.

11. If the credit bureaus are refusing to work with you, then it’s time to sue them aswell. File a suit on the credit bureaus in small claims court on the basis ofviolations of the FDCPA or FCRA. Credit bureaus are usually eager to stay out ofcourt, so if you have them on anything, they will usually call to settle with you.

Thought – Many people mistakenly assume that the collection agency isrequired to respond to your debt validation request within 30 days aftermaking the request. In fact, under the FDCPA, the collection agency isnot required to give ANY response, however, if they do not respond,they cannot continue collection activities.

Assignment: Fill in the blanks below about your debt validation request to acollection agency. If you have more than one request, use the Debt ValidationLog provided in Appendix B.

Request for Debt Validation with Collection Agency

Name of Company:Original Creditor Name:Date Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:Date Response Received:

Account Number:

Account Validated: Yes [ ] No [ ]



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List of Validation Information (list documents sent as validation):

Date 15-day Follow-up Letter Sent:REGISTERED MAIL Type:Registered Mail Tracking No:To Whom Did You Speak?

Did the collection agency call you or contact you after first letter sent? Yes [ ] No [ ]

Reminder – Document Everything!We can’t say it enough! Keep track of all of your correspondence and thesequence of events. If you ever get sued or need to go to court, you will beglad you have this information at your fingertips.

4. Dispute with the information furnisherIn the last section, we went over how you can request an investigation from the originalcreditor, and noted how you can use this technique not just on credit card companies,but also collection agencies. This technique works wonders. Unlike the debt validationmethod, the collection agency MUST RESPOND TO YOUR REQUEST FOR ANINVESTIGATION. Moreover, since most of them will not be able to prove that they have

any relationship to you at all, you could very easily take them to court for reportingnegative information without proof.

5. Pay for deleteIf you have some cash, this is the easiest technique to use to clean collections off yourcredit report. The concept is simple: you agree to pay them the entire amount, nettingthem a handsome profit, and you get the account deleted from your credit report, nettingyou a handsome increase in your credit score. If the amount is $500 or less, I alwaysadvise that you do a pay for delete with the collection agency. If it's over $500, I stillthink this is an excellent technique. For debts over $500, I suggest paying a maximumof 25% of the total.

As we mentioned, most bad-debt collection companies pay literally pennies on thedollar for the debts they are trying to collect so paying them 25% still makes them a



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handsome profit. The amount that companies pay for bad debt depends on the type ofaccount and its age:

• Debts that have recently been charged off: 6 to 7 cents on the dollar.• Accounts that are slightly older and on which a collection agency or two has

already tried to collect: 1.5 cents to 2 cents on the dollar.• Years-old, out-of-statute debts: A penny or less.

The technique for you to use:

1. Write the collection agency and offer to pay the amount in full (or whatever youwould like to offer them) in return for removing the collection account.

2. Attach a settlement offer. (A sample template for both the letter and settlementoffer are included in Appendix A.)

3. Wait until you receive a signed, written acceptance of your offer from thecollection agency before sending in your payment.

4. Once you have a written, signed agreement (a fax is fine), send the collectionagency a money order or cashier's check for the amount you agreed to pay them.

Remember – Never send a collection agency ANY money without awritten agreement. And always send your payment in the form of amoney order or cashier’s check.

KEY #11:DON’T BE INTIMIDATED BY COLLECTION AGENCIES.

THERE ARE EASY WAYS TO DEAL WITH THEM.



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UNIT 12: I’VE BEEN SUED BY A CREDITOR!

Consequences of JudgmentsNo matter how many times it’s happened before, it always causes a cold lump to form inthe pit of your stomach when you open your mail and discover that a complaint has

been filed against you in court by one of your creditors. The situation seems hopeless: ifyou didn’t have enough money to pay the creditor in the first place, where on earth willyou find the money to hire a lawyer to fight the lawsuit? Your first instinct is to throw thecomplaint away and pretend it never happened. After all, you think, I don’t have themoney to pay, so how can a legal judgment hurt me?

Many people faced with substantial debt feel this way, but disregarding a complaint isthe worst thing you can do. Let’s consider the consequences: if you do not respondwithin the time specified by your state, the creditor will receive a default judgment. Thatmeans that they win the lawsuit due to your inaction and a public record will be madewhich states that you owe the amount of money requested by the creditor. If the creditor

claimed that you owe more than you really do, or calculated the interest incorrectly,there’s little you can do about it once it has been reduced to a judgment.

There’s a second problem. Once a judgment has been filed, it will be reflected on yourcredit report and will negatively affect your credit rating for seven years after the

judgment has been granted. If the creditor has already reported your lack of payments,and perhaps also sent the debt to a collection company, the judgment will be the thirdtime that your credit has been negatively impacted for the same debt. Avoiding a

judgment will prevent your credit from being lowered further.

Finally, in many states, a judgment will allow your creditor to garnish your wages, your

bank accounts, or in some places even prevent the sale of your real estate without firstpaying the amount due. If you are already having a hard time making ends meet, thelast thing you need is to have part of your paycheck taken by the creditor before youeven see it, or having what little money is in your bank account taken, causing checks tobounce.

FIGHT BACK! – Did you know that most lawsuits filed againstconsumers for unpaid debts can be easily beaten? The word you shouldlatch onto in that last sentence is EASILY.

Think positively! Most collection agencies have no documentationproving you owe the debt and many of the complaints are filed in apaperwork-mill situation. When this happens, attention to proper

procedure is not paid and you can have the complaint dismissed or thrown out on atechnicality if you answer the summons/complaint properly. You can beat them bymerely answering the complaint via the mail. You do not even have to physically shownup in court.



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Thought – If you can afford an attorney to handle your lawsuit, youshould always hire one. The steps to defend yourself will often beminimal as the lawsuit can be easily beaten, and costs should be low. Inaddition, most places have a legal aid society that will represent youafter receiving proof that you don’t have sufficient funds to hire a

lawyer. If you cannot afford an attorney, though, you can handle the paperworkyourself. Many people have successfully beaten lawsuits without the aid of anattorney.

Steps in a Lawsuit A lawsuit begins with the filing of a Complaint . A Complaint is a document filed with thecourt by the plaintiff, which sets forth (or “pleads”) the facts upon which the plaintiff’sclaim is based and the legal theories (you failed to pay a debt, received goods andservices, etc.) upon which he or she intends to rely to support his or her claim fordamages.

Once a Complaint is filed with the court, it must be served upon the defendant (you).The defendant then has two choices on how to proceed:

1. Answer the Complaint An Answer to a complaint is a document that either admits or denies eachspecific allegation of fact in the plaintiff's Complaint. It also sets forth the legaldefenses that the defendant intends to assert to the plaintiff's claim. Once an

Answer is filed, the court must make a ruling, or determine if the Complaint hasany merits to proceed further.

Or

2. Do Nothing (BAD IDEA!) If the defendant does nothing, the defendant (you) automatically loses. Thisshould NEVER be the chosen course of action. At the bare minimum, thedefendant should file an Answer – it takes almost no time and can be handled viasnail (regular USPS) mail. Most law firms who file lawsuits against consumers fordebts count on the fact that the consumer will do nothing, even if they have nocase against them.

If a Motion to Dismiss is not filed by the defendant, or if the Motion is denied by the trialcourt, the case usually proceeds to the Fact Discovery Stage, which involves theplaintiff or defendant asking for documentation from each other in the form of discoveryor interrogatories.

The topic of law is very lengthy and because of this, we are prohibited from proceedingany further in this workbook. At the very minimum, though, we want to stress that youshould always file an Answer to a Complaint. In many cases, simply filing an Answercan make the case go away.



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Preventing a Judgment

1. Answer the Complaint! You usually only have 20-25 days in which to answer thecomplaint/summons – so this is something you need to DO IMMEDIATELY, even if youplan to hire an attorney later. Failing to answer the complaint means you automatically

lose the case. If you hire an attorney at a later date, you can always amend youranswer.

Typical Complaint/Summons Format

Most complaints follow the following format:

Complaint number #XXXXXXXCollection Attorney Plaintiff vs. YOU Defendant

Allegation 1: <Gives plaintiff’s name, address>

Allegation 2: <Gives your name and address>Allegation 3: Typically, this next allegation will say something like “Defendantobtained a credit card from Credit card Company X”Allegation 4: Typically, this next allegation will say something like “Defendantused the credit card to obtain goods and services using the card”Allegation 5: Typically, this next allegation will say something like “Defendantracked up charges totally $XX and then refused to pay”

In addition to the complaint, there will usually be a document with proof that thecomplaint was properly served. There could be other documents such as affidavits fromthe collection agency. There might be documents from the original creditor, although

this is extremely rare.

Assignment: Get a plain piece of paper or, better yet, open a new documenton your computer and write an Answer to the Complaint. We’ll walk you througheach step.

At the top of the document, list the complaint number, the case name e.g. “Them vs.You” and title it “Answer to Complaint.”

Responding to the Allegations: In your answer, you would admit allegation 1, that theplaintiff is who they say they are. You would also admit allegation 2: that you (the

defendant) are who they say you are.

We are assuming that allegation 3, that you opened a credit card account with them,has been backed up by zero evidence. For instance, some lawsuits are filed by JunkDebt Buyers acting as collection agencies who don’t even list the account number of theoriginal credit card. They don’t have any statements from the credit card companies,nothing. They’ve provided no proof so you, as a result, have no idea what they aretalking about. The same holds true for allegations 4 and 5.



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Affirmative Defenses: The next thing your answer should contain is affirmativedefenses, legal reasons why the complaint should be thrown out. Some of the bestaffirmative defenses are:

• Failed to state the basis of the lawsuit: They did not cite an actual state law which

was violated.• Debt is time-barred: The statute of limitations has passed.• Statute of frauds: No contract exists as proof.• Failure of Consideration: No exchange of money or goods occurred between the

plaintiff and the defendant.• Lack of Privity: No relationship exists between the collection agency and you.

You never signed a contract or agreement with the collection agency,remember?

So you would write your responses to the allegations listed in the Complaint on theprevious page like this:

Allegation 1: admitAllegation 2: admitAllegation 3: the Defendant is at this time without knowledge or informationsufficient to form a belief as to the truth of the allegation contained therein, and onthat basis generally and specifically denies the allegation contained therein, andleaves the Plaintiff to provide proof. Defendant demands strict proof thereof.Allegation 4: the Defendant is at this time without knowledge or informationsufficient to form a belief as to the truth of the allegation contained therein, and onthat basis generally and specifically denies the allegation contained therein, andleaves the Plaintiff to provide proof. Defendant demands strict proof thereof.

Allegation 5: the Defendant is at this time without knowledge or informationsufficient to form a belief as to the truth of the allegation contained therein, and onthat basis generally and specifically denies the allegation contained therein, andleaves the Plaintiff to provide proof. Defendant demands strict proof thereof.

Now add Affirmative Defenses to your Answer:

As and for a First DefensePlaintiff failed to state a claim upon which relief can be granted. Plaintiff's Complaintand each cause of action therein fail to state facts sufficient to constitute a cause ofaction against the Defendant for which relief can be granted.

As and for a Second DefenseDefendant alleges that this action is time-barred under § O.S. 12-95-2 of the laws ofOklahoma.

As and for a Third DefensePlaintiff's Complaint violates the statute of Frauds as the purported contract oragreement falls within a class of contracts or agreements required to be in writing.



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The purported contract or agreement alleged in the Complaint is not in writing andsigned by the Defendant or by some other person authorized by the Defendant andwho was to answer for the alleged debt, default or miscarriage of another person.

As and for a Fourth Defense

Defendant claims a Failure of Consideration as there has never been any exchangeof any money or item of value between the Plaintiff and the Defendant.

As and for a Fifth DefenseDefendant claims Lack of Privity as Defendant has never entered into anycontractual or debtor/creditor arrangements with the Plaintiff.

See a complete sample Answer to a Complaint/Summons in Appendix A.

File your Answer.

Once you write your Answer to the Complaint, you MUST file your Answer to the courtby deadline. Many times you can file your answer by sending it registered mail to thecourt. In other cases, you may have to physically go down to the court house. Call thecourt house in which the complaint is filed to get specific instructions. You should alsosend a copy of your Answer (registered mail) to the attorney who filed the complaint.

What if the Court Goes Ahead with the Case after You File Your Answer?

Sometimes the court will set a court date, even if your answer was filed correctly and bydeadline. Don’t panic. You can still win. You have two options:

1. You can file a motion to dismiss the plaintiff’s claim.This is a document filed with the court, in which the defendant argues that, even ifthe facts alleged in the Complaint are true, the law that applies to those facts doesn’tallow the plaintiff to recover. A motion to dismiss could be filed when, for example,the facts set forth in the plaintiff’s Complaint make it clear that he or she has waitedtoo long to file the claim, or if there is some other legal reason justifying dismissal. ASample Motion to Dismiss is in Appendix A.

Once a Motion to Dismiss is filed, the court must make a ruling, or determine if themotion has any merits. If the judge decides the reasons for the motion are valid, the

judge will grant the motion. In this happens, the case is dismissed and doesn’tproceed any further at the trial level. The plaintiff can appeal the dismissal to anappeals court, which decides whether the trial court made a mistake in dismissingthe claim. But unless an appeal is filed and the appeals court reverses the decisionof the trial court, the case is over.

2. You can go to the court date and insist that the attorney present properevidence.This is easier than it sounds. One of two things will happen:



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a. The attorney will not show up. This happens a lot. Really! It’s the same as ifyou were fighting a traffic ticket in court. If the cop fails to show up in court onyour traffic court date, you automatically win!

b. If the attorney does show up, you can basically object to every statement that

the attorney makes on the basis of hearsay. This is because the attorney wasnot present during the creation of the debt (they did not witness yourapplication for the card, nor process payments). This is called “lack of intimateknowledge of the creation of the debt.” So whenever the attorney makes anystatement about your debt, you object on the grounds of hearsay.

If the attorney presents documents, you can object to them based on lack ofauthentication (how did they get the document and how does the court knowthe document wasn’t just manufactured?). And of course, you can also claimhearsay. So basically, they will have no evidence.

If the judge asks you if this is your debt, you respond by saying “The Plaintiffhas not provided me with any evidence to show me that this is my debt or thatthe debt has not been paid. If they can provide evidence, I will be happy topay the debt.”

Really, a collection agency and their attorney have no way to win if you object to allevidence based on hearsay. All evidence they have IS hearsay.

If You Lose the Case (or if a Judgment Has Already Been Filed against You)If a judgment has already been filed in a lawsuit against you, don’t despair, but do try toget it paid off as quickly as you can. The faster you pay it off, the better it will look onyour credit report.

Once it has been paid, make sure that a Satisfaction of Judgment is filed in your case. ASatisfaction of Judgment, just like it sounds, is a document that states that you havepaid off the debt reflected by the judgment. It’s important to have a Satisfaction ofJudgment because once a judgment has appeared on your credit report, it will not beremoved. It can, however, be improved through a Satisfaction of Judgment proving thatyou no longer owe the money. Then, just chalk the whole experience up as an importantlesson in your financial education.

KEY #12: DON’T BE INTIMIDATED BY LAWSUITS.

A ONE-PAGE LETTER CAN GET A CASE DISMISSED.



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UNIT 13: IS BANKRUPTCY THE SOLUTION?

It happens to the best of us so don’t feel embarrassed. In the majority of cases, abankruptcy is beyond the control of the debtor. The most common reasons forconsumer bankruptcy are:

Unemployment; Excessive medical expenses; Seriously over-extended credit; Personally guaranteeing business loans or credit cards; and Marital problems.

A fundamental goal of the federal bankruptcy laws enacted by Congress is to givedebtors a financial "fresh start" from burdensome debts. The Supreme Court made thispoint about the purpose of the bankruptcy law in a 1934 decision:

[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clearfield for future effort, unhampered by the pressure and discouragement ofpreexisting debt.

You are not alone in having financial difficulties. Hundreds of thousands of people filebankruptcy each year. That being said, even with a very high debt load, most of thetime, bankruptcy may not be the solution to your problems.

Alternatives to Bankruptcy

There are many factors to consider before choosing this drastic step, and it is drastic.Here are some alternatives to bankruptcy that you may not have considered.

1. If your credit isn't in terrible shape, can you reduce your other expenses whileyou pay the debt off? Perhaps some fairly painless changes to your lifestyle canbring your bills in line with your income. Review the early units of this workbook

for budgeting options and savings ideas that may help. If this won’t work for you,some hard choices may be required.

2. If you are willing to negotiate with your creditors’ customer service people youcan try and settle your debts yourself for less than you owe, sometimes withoutdamaging your credit rating. Here is our online resource with more information:

www.creditinfocenter.com/debt/settle_debts.shtml

Remember , nothing will destroy your creditfaster than a bankruptcy. Make sure that this is

really the only choice available to you.



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3. If your credit is already hosed and the suggestions above won't make a dent in

your debt, consider going through Consumer Credit Counseling Services(CCCS). Check your Yellow Pages or go to www.NFCC.org to find an office nearyou. CCCS will give you a plan for paying off your debts as if you were in a

Chapter 13 bankruptcy without ever filing a bankruptcy. You can read more aboutCCCS here:www.creditinfocenter.com/debt/cccs.shtml

4. Don't pay your bills. This may sound immoral or illegal, but there are no debtor'sprisons in the US, and besides, you can’t get blood out of a turnip. Here aresome reasons to consider this option:

• If you don't have any assets such as a home or a 401K, creditors are lesslikely to go after you.

• Your credit will be in much better shape than if you had filed a bankruptcy.

• If you had filed bankruptcy, you still wouldn't be paying back the debts, right?

If you do decide to just let your bills go, please take the following advice:

• If you DO have a mortgage, and you don't want to file a bankruptcy, by allmeans make sure you make your mortgage payments on time.

• You must be prepared for the credit card companies to hound you mercilesslyuntil the debts are charged off. Change your phone number.

• Collection agencies take over accounts which have been charged off by creditcard companies. Once collection agencies get the account you may bebesieged by letters and calls. To counter these activities, follow the debt

validation advice outlined in Unit 11. You may also legally prevent furthercontact from the collection agency by sending a Cease and Desist letter tothe collection agency. An example letter is included in Appendix A.

Is Bankruptcy the Answer?

Likely Warning Signs Interpretation

Behind on your mortgage payment and seeno way to catch up

Resorted to payday loans trying to catch up

Using credit cards to pay off other creditcards

Missed several car payments

Collectors are calling you at home and work

You cannot make your minimum monthlycredit card payment

You likely are in trouble if

you have one sign from the

column to the left.

Start looking for a good

lawyer if you have at leasttwo signs.

Get to a bankruptcy expertas fast as possible if you

have three signs or more.



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Definite Warnings Interpretation

Received official notice of:

• Foreclosure

• Wage garnishment

• Repossession of your car orfurniture or appliances

Get to a bankruptcy expert

as fast as possible if youhave even one sign from the

section to the left

Do You Need a Lawyer?Bankruptcy is a long and complicated process. If you don’t follow all the rules and steps,you could find yourself in worse shape than when you started. It’s not impossible to do ityourself, but we always recommend that you consult with a lawyer.

What Happens in a Bankruptcy?

Chapter 7 bankruptcy is a liquidation proceeding. The debtor turns over all non-exemptproperty to the bankruptcy trustee who then converts it to cash for distribution to thecreditors. The debtor receives a discharge of all dischargeable debts. To find out whichproperty is exempt (meaning which property you can keep), you can ask your lawyer orrefer to this webpage:

www.creditinfocenter.com/bankruptcy/bkProperty.shtml

The Difference between Chapter 13 and Chapter 7

In a Chapter 13 bankruptcy, you are in a court-overseen program to pay back yourdebts.

In a Chapter 7 bankruptcy, your debts are discharged. You can only receive a Chapter 7discharge once every eight years. Other rules may apply if you previously received adischarge in a Chapter 13 case.

You must prove to the court that your finances qualify for a Chapter 7 bankruptcythrough a series of Means Tests. We can give you a rough idea of your qualifications,but even if you pass the tests on the following pages, you may still not qualify when youfile your “real” paperwork . We suggest you talk to an attorney.



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MEANS TEST # 1 (Median Income):Is your family earning above the average income for your state?

Assignment: Look up the maximum income in the table on this website:www.usdoj.gov/ust/eo/bapcpa/20080317/bci_data/median_income_table.htm

Compare your income with the maximum income you find.

Does your family income exceed the maximum listed in the median income table?

Yes [ ] No [ ]

If the answer is "No" move on to the next Means Test!If the answer is “Yes” you do not qualify for a Chapter 7 bankruptcy.

MEANS TEST #2 (Disposable Income):Would your income minus living expenses be enough to pay $10,000 toward your debt

over five years? The amount of your income you would have to put toward the $10,000is calculated by the US Bankruptcy court as follows from IRS standards.

Step 1. Food, Clothing and Other Item expenses:

Assignment: Look up the food and clothing expense allowance for your familyin the table on this webpage:

www.usdoj.gov/ust/eo/bapcpa/20080317/bci_data/national_expense_standards.htm Write the amount below.

Food, Clothing and Other Item expense allowances for your family: $______________

Step 2. Out of pocket healthcare expenses:

Assignment: Look up the out-of-pocket healthcare expense allowances foryour family from the table on this webpage:www.usdoj.gov/ust/eo/bapcpa/20080317/bci_data/national_oop_healthcare.htm Write the amount below.

Out-of-pocket healthcare expense allowances for your family: $__________________

Step 3. Housing/utility expenses for your area:

Assignment: Look up the housing and utility expense allowances in your statein the table toward the bottom of this webpage:www.usdoj.gov/ust/eo/bapcpa/20080317/meanstesting.htm Write the amount below.

Housing and utility expense allowance for your family: $__________________



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Step 4. Transportation Costs in your area:

Assignment: Look up the transportation costs expense allowance in your statein the table toward the bottom of this webpage:

www.usdoj.gov/ust/eo/bapcpa/20080317/meanstesting.htm Write the amount below.

Transportation expense allowances for your family: $__________________

Step 5. Calculate your total monthly expense allowance:

Assignment: Add the allowable expenses you looked up in Steps 1-4.

__________ + _____________ + ____________ + ____________ = ____________Food Health Housing Transportation Total

Step 6. According to the Bankruptcy Court, you need to calculate if your leftover incomeover five years is greater than or equal to $10,000.

Assignment: Calculate your leftover income using the formula below.

(_____________ ÷ / 12 ) = ____________ - ______________ = $______________Gross Income Total Allowable Expenses Leftover Income

(Last year’s tax return) = Monthly Income (from Step 5 above)

Assignment: Now calculate the amount of leftover income you would have ifyou put that amount aside each month for five years.

________________________ X 60 months = _________________________Leftover Income 5 years of Leftover Income

(from Step 6 above)

Is 5 years of Leftover Income equal to or greater than $10,000?

Yes [ ] No [ ]

If the answer is "No" move on to the next Means Test!If the answer is “Yes” you do not qualify for a Chapter 7 bankruptcy.



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MEANS TEST #3: (Can You Repay $6,000 or 25% of Your Debt?)

Step 1: Calculate your Total Debt.

Assignment: Get out your latest statements and put them in a pile. Add the

totals up with a calculator to find the total amount of debt you would beincluding in your bankruptcy. Write the total below.

$ ________________________Total Debt

Step 2: Calculate 25%.

Assignment: Do the math.

_____________ ÷ 4 = ____________________Total Debt 25% of Total Debt

Step 3: Is your 5 year’s worth of Leftover Income more than $6,000?

Assignment:

$6,000 - ____________________________ = $__________________5 years of leftover income Total

(from Means Test #2, step 6)

Is the total above greater than $6,000? Yes [ ] No [ ]

If the answer is “No” you qualify for Chapter 7 bankruptcy.If the answer is “Yes” you still may qualify but you have to pass one more test.

Assignment: Is 5 years of Leftover Income (from Means Test #2, step 6) greaterthan 25% of Total Debt (this means test, step 2)? Yes [ ] No [ ]

If the answer is "Yes" you can file Chapter 7.If the answer is "No" Chapter 7 cannot be filed but Chapter 13 may be filed.

You’ve earned a rest after all those calculations, so there’ll be no more assignments, just a little more reading to give you the rest of the information you may need.



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Debt Counseling ProgramsIn a Chapter 7 bankruptcy, debtors must complete two mandatory programs: creditcounseling before filing the initial bankruptcy paperwork and an additional debtcounseling program before the discharge of bankruptcy. Only approved agencies cancertify that you took the required classes.

To find an approved counseling organization, you can visit this webpage:

www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm

The Costs As of June 2008, the courts must charge a $245 case filing fee, a $39 miscellaneousadministrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to theclerk of the court upon filing. With the court's permission, however, individual debtorsmay pay in installments. The number of installments is limited to four, and the debtormust make the final installment no later than 120 days after filing the petition. The

debtor may also pay the $39 administrative fee and the $15 trustee surcharge ininstallments.

If the debtor's income is less than 150% of the poverty level (as defined in theBankruptcy Code), and the debtor is unable to pay the Chapter 7 fees even ininstallments, the court may waive the requirement that the fees be paid. 28 U.S.C. §1930(f).

How Long Does the Process Take?Generally, from the time of filing, a Chapter 7 bankruptcy takes about four months fromfiling to the actual discharging of debts, at which time you are done with the process. AChapter 13 bankruptcy takes from three to five years during which time the debtor paysback the debts owed through a court-supervised program.

Documentation Requirements A Chapter 7 case begins with the debtor filing a petition with the bankruptcy courtserving the area where the individual lives or where the business debtor is organized orhas its principal place of business or principal assets.

In addition to the petition, the debtor must also file with the court:1. schedules of assets and liabilities;2. a schedule of current income and expenditures;3. a statement of financial affairs;4. a schedule of real estate and equipment leases;5. Any uncompleted contracts in which you would receive a fee when completed;

and6. Licenses to intellectual property.



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Debtors must also provide the assigned case trustee with a copy of the tax return ortranscripts for the most recent tax year as well as tax returns filed during the case(including tax returns for prior years that had not been filed when the case began).

Individual debtors with primarily consumer debts have additional document filing

requirements. They must file:1. a certificate of credit counseling and a copy of any debt repayment plandeveloped through credit counseling;

2. evidence of payment from employers, if any, received 60 days before filing;3. a statement of monthly net income and any anticipated increase in income or

expenses after filing; and4. a record of any interest the debtor has in federal or state qualified education or

tuition accounts.

Bankruptcy Forms OnlineYou can find all of the forms you need online at the US Bankruptcy Court’s website:

www.uscourts.gov/bankruptcycourts.html

KEY #13:BANKRUPTCY IS NOT THE END OF THE WORLD,

BUT IT SHOULD BE YOUR LAST RESORT.



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UNIT 14: RESOURCES

There are so many additional resources available on the topics covered in thisworkbook that a complete list is impossible. Here’s a basic start:

Public libraries increasingly offer not only books, but also videotapes and Internetaccess.

Agencies of many types can offer financial services to specific groups, such as theelderly or single parents, in addition to those that serve the general public. Ask aroundfor those who offer advice, free seminars, and other information on moneymanagement. Some are run by the federal or state government. Others are private.

Professional organizations that specialize in bankruptcy and consumer finance mayhave websites with specific information for the general public. Since these groups caterto professionals, the information they provide is usually quite reliable.

The Internet has many websites devoted to money management information. Many ofthese offer free “financial calculators” that will enable you to determine monthlypayments on loans or figure out whether it’s best to rent or own. New sites areappearing daily. For those who cannot afford an in-home computer, computers may beavailable at public schools, libraries or colleges. Some favorites:

www.creditinfocenter.com – easy to use, easy to understand website which providesa host of information on credit issues and more.

www.ftc.gov – Federal Trade Commissionwww.fairisaac.com – Fair Isaac Credit Scoring

www.pueblo.gsa.gov – a government online guide to all consumer affairswww.jumpstart.org – JUMPSTART Coalition for Personal Financial Literacywww.consumerfed.org – Consumer Federation of Americawww.abiworld.org - American Bankruptcy Institute

For-profit businesses such as insurance companies, banks, stockbrokers and financialplanners often offer free information via seminars, printed materials and over theInternet. Check them out, but be careful not to get trapped into buying something youcan’t afford by initially free “come-ons.”

Books: Welsh, Kristy, Good Credit is Sexy: How to Make Your Credit As Attractive As

Possible, Fourth Edition, Techartist Publishing, 2008.

KEY #14:FIND AND USE ALL AVAILABLE SOURCES OF INFORMATION.



1

ALL THE KEYS TO FINANCIAL MANAGEMENT

KEY #1:GET TO KNOW HOW YOU HANDLE MONEY AND WHY.

AWARENESS CAN LEAD TO CHANGE – IF YOU WANT IT TO.

KEY #2:DETERMINE YOUR GOALS, WRITE THEM DOWN, AND

DEVELOP A PLAN OF ACTION TO ACHIEVE THEM.

KEY #3:FIGURE OUT WHERE YOUR MONEY GOES, MAKE A SPENDING

PLAN (budget) and STICK TO IT.

KEY #4:IT’S YOUR MONEY! THE ONLY POWER THAT OTHER

INFLUENCES HAVE ON YOU IS THE POWER YOU GIVE THEM.

KEY #5:CREDIT IS EXPENSIVE. USE IT RARELY, CAREFULLY AND

KNOWLEDGEABLY.

KEY #6:LEARN HOW THE FINANCIAL WORLD VIEWS YOU BASED ON

YOUR CREDIT REPORT.

KEY #7:IN ORDER TO PROTECT YOUR CREDIT,

YOU NEED TO UNDERSTAND WHAT MAY BE BRINGING DOWNYOUR CREDIT SCORES!

KEY #8:PATIENCE AND PERSISTANCE

ARE THE KEYS TO SUCCESSFUL CREDIT REPAIR.



2

KEY #9:DON’T LET YOUR GUARD DOWN.

WATCH FOR REAPPEARING ITEMS ON YOUR CREDIT REPORT.

KEY #10:CREDIT BUREAUS

AREN’T THE ONLY KEEPERS OF YOUR CREDIT.

KEY #11:DON’T BE INTIMIDATED BY COLLECTION AGENCIES.

THERE ARE EASY WAYS TO DEAL WITH THEM.

KEY #12: DON’T BE INTIMIDATED BY LAWSUITS.

A ONE-PAGE LETTER CAN GET A CASE DISMISSED.

KEY #13:BANKRUPTCY IS NOT THE END OF THE WORLD,

BUT IT SHOULD BE YOUR LAST RESORT.

KEY #14:FIND AND USE ALL AVAILABLE SOURCES OF INFORMATION.



APPENDIX A: SAMPLE LETTERS

With all letters you send, include copies of proof (cancelled checks showing timely payments, paid off accounts, loans) that demonstrate that the information in incorrect.

Keep copies of everything!Send letters return-receipt registered mail

and file those receipts with your letters when they come back to you.



1

Requesting the Removal of Inaccurate Information

Your Name123 Your Street Address

Your City, ST 01234(Current address for the last 5 years)SSN XXX-XX-XXXXDOB: 1/1/00

Credit BureauCredit Bureau AddressSome City, Any State 56789

Date:

To Whom it May Concern:

Dear Credit Bureau:

This letter is a formal complaint that you are reporting inaccurate credit information on my credit report.

I am very distressed that you have included the information noted below in my credit profile due to its damagingeffects on my good credit standing. As you no doubt are aware, credit reporting laws ensure that bureaus report onlyaccurate credit information. No doubt the inclusion of this inaccurate information is a mistake on either your or thereporting creditor's part. Because of the mistakes on my credit report, I have been wrongfully denied credit recentlyfor a <insert credit type for which you were denied here>, which was highly embarrassing and has negativelyimpacted my lifestyle.

(Optional) With the proof I'm attaching to this letter, I'm sure you'll agree that the inaccurate information is harmful tome and, thus, needs to be removed ASAP.

The following information, therefore, needs to be verified and deleted from the report as soon as possible:

CREDITOR AGENCY, acct. XXXX-XXX-XXXX-XXXX

Sincerely,

Your SignatureYour Nameenclosure



2

Follow-Up after Initial Contact with the Bureau Contact

Your Name123 Your Street AddressYour City, ST 01234

SSN


Date:

RE: Dispute Letter of <Date you sent in first or previous requests>

Dear Credit Bureau:

This letter is formal notice that you have failed to respond to my dispute letter of <date>. I sent the initial letterregistered mail and have enclosed a copy of the return receipt that you signed on <date>.

As you are well aware, federal law requires you to respond within 30 days. It has now been over that period sinceyour receipt of my letter. As you no doubt are aware, failure to comply with federal regulations by credit reportingagencies is a serious violation of the Fair Credit Reporting Act and may be investigated by the FTC. Obviously, I ammaintaining detailed records of all my correspondence with you.

I am aware that you may have misplaced my letters or have failed to respond to my letter because of an oversightdue to the high volume of the requests you receive daily. If this is the case, I'm sure you'll want to handle this matteras soon as possible. For this purpose, I have included a copy of my original request, the dated receipt of yourreception of the original letter, and a copy of the proof verifying the incorrectness of the credit item you havemistakenly placed on my records.

The following information, therefore, needs to be verified and deleted from my credit report as soon as possible:

CREDITOR AGENCY, acct. XXXX-XXXX-XXXX-XXXX

Sincerely,

Your SignatureYour Name

enclosure



3

Notice of Intent to File a Lawsuit - Credit BureausYour Name123 Your Street AddressYour City, ST 01234

<Credit Bureau Address><Latest Experian Address> Anytown USA

Date: April 22, 2008.

Re: Acct # XXXX-XXXX-XXXX-XXXX

To Whom It May Concern:

I have disputed my account XXXX_XXXXX_XXXXX with you on March 18, 2008, and sent my dispute certified mail.I’ve included the receipt in this letter showing that you received the letter on March 21, 2008. It has now been morethan 30 days. Under the Fair Credit Reporting Act (FCRA), you have only 30 days to complete your investigation.Since I have not heard back from you, you are now out of compliance with the FCRA.

I’m sure we would both like to handle this outside of court, so all I ask is that you remove this listing. If you refuse, Iwill be forced to take legal action.

Best Regards,

<Your Name>



4

Requesting the Removal of InquiriesPrepare letters to each inquiring creditor asking them to remove their inquiry. The Fair Credit Reporting Act allows

only authorized inquiries to appear on the consumer credit report. You must challenge whether the inquiring creditorhad proper authorization to pull your credit file. Keep a copy for your files and send the letter registered mail.



Date:

Re: Unauthorized Credit Inquiry

Dear American BestGuess,

I recently received a copy of my credit report. The credit report showed a credit inquiry by your company that I do notrecall authorizing. I understand that you shouldn't be allowed to put an inquiry on my file unless I have authorized it.Please have this inquiry removed from my credit file because it is making it very difficult for me to acquire credit.

I have sent this letter certified mail because I need your prompt response to this issue. Please be so kind as toforward me documentation that you have had the unauthorized inquiry removed.

If you find that I am remiss, and you do have my authorization to inquire into my credit report, then please send meproof of this.

Thanking you in advance,

Your Name



5

Notification to Collection Agency:

The Statute of Limitations on a Debt has Passed


ABC Collections123 NotOnYourLife AveChicago, IL

Date



I was recently made aware of a debt which is claimed to be in collection by your firm.

I’m sure you are aware of the provisions in the Fair Debt Collection Practices Act (FDCPA), and I am requestingvalidation of this debt. I am requesting proof that I am indeed the party you are asking to pay this debt, and there issome contractual obligation which is binding on me to pay this debt. I request that your firm not contact me on thetelephone and restrict your contact with us to writing, and only when you can provide adequate validation of thisalleged debt.

The statute of limitations on this debt has passed. I’m sure you are aware of the provisions in the Fair DebtCollection Practices Act (FDCPA). However, I would like to point out that your firm has violated provisions of theFDCPA in the following respects:

15 USC 1692e(2)(A). falsely representing the legal status of the alleged debt.

The statute of limitations on the original alleged debt, as reported on my credit report, would have already havepassed, therefore making the status uncollectible.

I’m sure your legal staff will agree that non-compliance with this request could put your company in serious legaltrouble with the FTC and other state or federal agencies. Under the FCRA and the FDCPA, each violation is subjectto a $1000 fine, payable to me.

Your Name



6

Notification to Collection Agency: Unlawfully Collecting in Your State



Date



I was recently made aware of a debt which is claimed to be in collection by your firm. Under section XXXX-XXX of<your state> civil code, all collection agencies must be licensed and bonded. I checked and your firm is not registeredas a collection agency with the state.

Please cease and desist all collection activities, including reporting this account on my credit report or I will be forcedto take legal action. I am notifying our state attorney general’s office that you are practicing illegally in this state.

Your Name



7

Cease and Desist Letter to Collection Agency

Cheatem Collections123 Fagetaboutit Ave

Chicago, IL

17 April 2000

RE: Account XXXX-XXXX-XXXX-XXXX

Dear Sir or Madam:

I request that you CEASE and DESIST in your efforts to collect on theabove referenced account (See letter attached). It is my personalpolicy not to deal with collection agencies and I will only deal withthe original creditor of this account.

You are hereby instructed to cease collection efforts immediately orface legal sanctions under applicable Federal and State law.

GIVE THIS LETTER THE IMMEDIATE ATTENTION IT DESERVES.

Cordially,

Scott Free



8

Pay for Delete Debt Settlement OfferYour Name123 Your Street AddressYour City, ST 01234


Date



I am willing to pay your company the full amount of $XXX (XXX dollars and XX/100) as payment in full for thesatisfaction of this account. Upon receipt of payment, I ask that you agree to remove this account from my creditreports (Experian, TransUnion, Equifax) or change the status of my account from Collection to Pays As Agreed.Furthermore, I ask that you also agree, that once paid in full, this account is not to be resold/transferred to any othercollection agency.

If you concur with these terms, please acknowledge with your signature and return a copy of this letter to me withinfifteen (15) days of the receipt of this letter. No payment will be made without written confirmation. Any and allcorrespondence to me is to be sent to the address noted in this letter.

Upon receipt of this signed acknowledgment, I will immediately mail you the full amount of $XX.XX (ninety ninedollars and XX/100) that is owed on this account in the form of a money order by certified mail via USPS. Once youhave received my payment, please send me a letter that states to the effect that this outstanding collection accounthas been settled and paid in full.

Collection Service Name:

Authorized Signature:

Date:

Sincerely,

Your name

Page 1 of 2



9

OFFER TO SETTLE

ABC Collections Inc, referred to as COLLECTION AGENCY and John Q. Consumer, referred to as CONSUMER,agree to resolve the matter of the alleged debt, originally held by the ______________________ Company hereafter

referred to as the CLIENT. COLLECTION AGENCY, hereby agrees to settle this alleged debt claimed byCOLLECTION AGENCY on the following terms and conditions:

The COLLECTION AGENCY certifies that it is legally authorized to act in behalf of its CLIENT and that anyagreement that the COLLECTION AGENCY makes on behalf of Client is legally binding on the Client.

The COLLECTION AGENCY and the CONSUMER agree that the alleged debt is $500.00 five hundred & 00/100dollars). The parties agree that the COLLECTION AGENCY shall accept the sum of $400 (four hundred dollars &no/100 dollars) as full payment on the alleged debt. The acceptance of the payment will serve as a completedischarge of all monies due, and the COLLECTION AGENCY agrees to consider the debt paid in full and agrees tonot take further action to collect on the alleged debt. The payment shall be made in the form of a cashier’s check.

Upon payment of the $400, the COLLECTION AGENCY agrees to remove any listing or information that the CLIENTmay have placed on the CONSUMER’S credit report. The COLLECTION AGENCY agrees to never at any time inthe future place any information on the CONSUMERS credit report.

The CONSUMER feels that the negative information on CONSUMER’s credit report is damaging and while the exactestimation of the damage is not currently known, the CONSUMER estimates it to be $10,000. Should theCOLLECTION AGENCY fail to remove the listing or reinsert it at a later date, the COLLECTION AGENCY agrees toaward liquidated damages of $10,000 to CONSUMER.

This compromise is expressly conditioned upon the payment being received by <date>. If the CONSUMER fails topay the compromised amount by <date>, the original amount owed by the CONSUMER will be reinstated in full, andimmediately due.

The person signing this agreement, __________________________________, hereby declares that he/she isauthorized to act as an agent of the COLLECTION AGENCY.

This Agreement shall be binding upon and inure to the benefit of the parties, their successors, and assignees.

Dated:

Signature:

Legal Representative of ABC Collections Inc.

Signature:

John Q. ConsumerCONSUMER

Page 2 of 2



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Reinsertion of Listing by a Credit Bureau

March 10, 2008

Experian

P.O. Box 9595 Allen, Texas 75013

Re: Account(s): #XXXX-XXXX-XXXMy Social Security number is:123-45-6789My date of Birth is 1900-01-01

Dear Sir or Madam;

I disputed the referenced accounts above on March 2003. The credit report of May 19, 2003 and your report<dated>shows that these items were deleted from the credit file. Now I notice these items have been reinserted on my creditreport.

In accordance with the requirements of the FCRA as shown below, I am hereby requesting your complete compliancewith any and all of the provisions:

FCRA § 611, Procedure in case of disputed accuracy [15 U.S.C. § 1681i]

Requirements relating to reinsertion of previously deleted material.

Certification of accuracy of information. If any information is deleted from a consumer's file pursuant tosubparagraph (A), the information may not be reinserted in the file by the consumer reporting agency unlessthe person who furnishes the information certifies the information is complete and accurate.

If any information that has been deleted from a consumer's file pursuant to subparagraph (A) is reinserted inthe file, the consumer reporting agency shall notify the consumer of the reinsertion in writing not later than 5business days after the reinsertion or, if authorized by the consumer for that purpose, by any other meansavailable to the agency. Additional information. As part of, or in addition to, the notice under clause (ii), aconsumer reporting agency shall provide to a consumer in writing no later than 5 business days after thereinsertion date.

(I) a statement that the disputed information has been reinserted;

(II) the business name and address of any furnisher of information contacted and the telephone numberof such furnisher, if reasonably available, or of any furnisher of information that contacted the consumerreporting agency, in connection with the reinsertion of such information; and

(III) a notice that the consumer has the right to add a statement to the consumer's file disputing theaccuracy or completeness of the disputed information.

I received no such notification. This is a serious violation of the FCRA, and I reserve the right to pursue furtheraction. Your agency may avoid such action by immediately deleting this listing from my credit report.

Thank you,

Your Name



11

Request for Investigation with Information Furnisher

<Your Name><my address>

<your credit card company name><Company address>

<Date>

Re: Acct #XXX-XXX-XXXXXXX


I recently pulled my credit report from Experian and TransUnion and, to my amazement, saw that you recently havedecided to report me 30 days late on this account in Nov 2007. I immediately disputed this information with Experianand TransUnion and the results of the investigation came back "verified." Not only was I never late on this account,but according to the Fair Credit Reporting Act (FCRA), as the information furnisher, you are required to notify me ofthe insertion of negative listings.

Since I have disputed the lates with the credit bureaus, and you obviously "verified" them, I am very curious as towhat kind of "records" you may have for this alleged account. Under the FCRA, you are required to conduct aninvestigation on this account if I request it. I therefore am submitting my written request to you to conduct aninvestigation. Per the FCRA, you have 30 days to conduct this investigation and respond to my request. If you do notrespond within this time period, per the FCRA, you must remove this negative information.

Sincerely,<Your name>



12

Debt Validation Request to a Collection Agency



Date:



I am continually being called on the telephone by your firm over an alleged $9000 debt.I’m sure you are aware of the provisions in the Fair Debt Collection Practices Act (FDCPA), and I am requestingvalidation of this debt. I am requesting proof that I am indeed the party you are asking to pay this debt, and there issome contractual obligation which is binding on me to pay this debt. I request that you stop contacting us on the

telephone and restrict your contact with us to writing, and only when you can provide adequate validation of thisalleged debt. To refresh your memory on what constitutes legal validation, I am giving a list of the requireddocumentation:

• Complete payment history, the requirement of which has been established via Spears v Brennan 745 N.E.2d862; 2001 Ind. App. LEXIS 509 and

• Agreement that bears the signature of the alleged debtor wherein he agreed to pay the original creditor.• Letter of sale or assignment from the original creditor to your company. (Agreement with your client that

grants you the authority to collect on this alleged debt.)• Intimate knowledge of the creation of the debt by you, the collection agency

I’m sure you know, under FDCPA Section 809 (b), you are not allowed to pursue collection activity until the debt isvalidated. You should be made aware that in TWYLA BOATLEY, Plaintiff, vs. DIEM CORPORATION, No. CIV 03-0762 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA, 2004, the courts ruled that reporting

a collection account indeed is considered collection activity.

This is my second request for debt validation – my first request, sent within 30 days of receipt of your initial contact,has gone unanswered.

In addition, according to the information given to us by your firm, the date of last activity by the original creditor is Julyof 1999. The Statute of Limitations on this alleged debt, even should it be ours, is 5 years in the state of Illinois.

I’m sure you are aware of the provisions in the Fair Debt Collection Practices Act (FDCPA). However, I would like topoint out that your firm has violated provisions of the FDCPA in the following respects:

(a) by using deceptive or misleading representation for collection of the alleged debt and therefore violating15 USC 1692e.

and

(b) by falsely representing the legal status of the alleged debt and therefore violating 15 USC 1692e(2)(A).

I’m sure your legal staff will agree that non-compliance with this request could put your company in serious legaltrouble with the FTC and other state or federal agencies. Under the FCRA and the FDCPA, each violation is subjectto a $1000 fine, payable to me.

Your Name



13

Answer to a Summons

CACV OF COLORADO LLC LLC.Plaintiff

Vs.

xxxxxxxxxxxxxxxxDefendant

Defendant’s Answer to Complaint # XXXXX, County of XXXXX, State of XXXXX

Defendant answers the complaint by stating and showing that:

1. ADMITS the allegations of paragraph 2.

2. DENIES having information and knowledge sufficient to form a belief as to the truth of the allegations at paragraph1. Defendant demands strict proof of the allegation.

3. DENIES having information and knowledge sufficient to form a belief as to the truth of so much of paragraph 3 asalleges CACV purchased credit card accounts from Fleet Bank and DENIES the remaining allegations of paragraph3.

4. DENIES the allegations of paragraphs 4, 5, 6, 7, 8. Defendant demands strict proof of the allegation.

5. DENIES every other allegation not previously admitted, denied or controverted.

AS AND FOR AFFIRMATIVE DEFENSES

6. Plaintiff fails to state a cause of action against the defendant.

7. Plaintiff, as the defendant is informed and believes, lacks the legal standing to bring and maintain this action.

8. The action is barred by the Statute of Frauds.

9. The action is barred by the Statute of Limitations.

10. The court would unjustly enrich the plaintiff by granting the relief sought herein.

WHEREFORE, the defendant asks the Court prayer for relief:

a. dismissing the complaint herein with prejudice.b. such other and different relief as the Court finds proper.



14

Motion to Dismiss Summary Judgment

IN THE SUPERIOR COURT OF THE STATE OF <YOUR STATE>IN AND FOR THE COUNTY OF <YOUR COUNTY>

<Collection Agency> )Plaintiff ) Case No._____________________

Vs. )) MOTION FOR DISMISSAL OF

Joseph Consumer ) SUMMARY JUDGMENTDefendant(s) )

Comes now the Defendant, XXXXXXX, and files this REPLY AND OPPOSITION TO PLANTIFF’S MOTION FORSUMMARY JUDGEMENT in response to Motion For Summary Judgment And Supplement filed herein by Plaintiff,<Your Plaintiff>, Inc., as follows:

1. The Motion For Summary Judgment filed by the Plaintiff is insufficient as a matter of law.

A party moving for summary judgment has the responsibility of informing the court of the basis for its motion, andidentifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file with theaffidavits, if any, which it believes demonstrates the absence of a genuine issue of material fact.

Plaintiff has failed to discharge this responsibility in the Motion for Summary Judgment and Supplemental Motion filedwith the Court. The Motion does not set forth the True facts upon which Plaintiff seeks a summary judgment. Ratherthe Motion states only “That there is no genuine issue as to any material fact and that Plaintiff is entitled to a judgment as a matter of law with regard to all Counts.” Motion for Summary Judgment should be denied.

2. Defendant received the Plaintiff's Summons on <Date upon which You received Summons>. Defendant answeredthe request on <Date which you answered Summons>.

3. Trial was set for <Date on which trail was set for>.

4. Motion for discovery was filed on <date the motion was filed>. Documents requested from plaintiff included anydocumentation of relationship between plaintiff and RSC, the alleged original plaintiff, any payment history, and anybreakdown of the sum requested by plaintiff. Defendant cannot make a legitimate defense on claims by the Plaintiffthat are incorrect, untrue, and undocumented.

[The appeals court overturned the default summary in Spears vs. BrennanCourt of Appeals, 745 N.E.2d 862; 2001 Ind. App. LEXIS 509; because the collection agency lawyer did not meet therules of the FDCPA 15 U.S.C. § 1692g(b) Validation of Debts.]

5. The Plaintiff has failed to provide any contract, an agreement bearing the signature of the Defendant or anyitemized statements or billing of said debts which would constitute intimate knowledge of the creation of the debt.Even if such documents were available, a purchasing/assignee’s plaintiff would be unable to swear to the authenticityof the originating or source documents of a credit transaction because they do not have personal knowledge of theevents which transpired at that period of time in the life of the credit agreement. The original cardholder agreement,

any correspondence, and monthly statements issued by the original credit grantor are not admissible as thepurchasing plaintiff's business records, as the purchasing plaintiff has no personal knowledge of how those recordswere created or maintained.

6. Defendant alleges that this action is time-barred under § 735 ILCS 5/13-204- 735 ILCS 5/13-206 under Illinois’scivil code (statute of limitations for open accounts is 5 years). Per the Plaintiff’s own summons, date of last paymentwas 10/07/2000. Date of summons was 10/31/2005.

7. Plaintiff failed to state a claim upon which relief can be granted. Plaintiff's Complaint and each cause of actiontherein fails to state facts sufficient to constitute a cause of action against the Defendant for which relief can begranted.



15

8. Plaintiff has failed to provide a detailed list of the debts to the Defendant in the initial debt collection notice asrequire by the FDCPA and as evidence by case law. Coppola v. Arrow Financial Services, 302CV577, 2002 WL32173704(D.Conn., Oct. 29, 2002) – Information relating to the purchase of a bad debt is not proprietary orburdensome. Debtor must phrase their request clearly to obtain: The source of a debt and the amount a bad debtbuyer paid for plaintiff’s debt, how amount sought was calculated, where in issue a list of reports to credit bureaus,and documents conferring authority on defendant to collect debt.

WHEREFORE, Defendant, XXXXXXXXXX, respectfully submits that the Court should deny the Plaintiff's Motion andSupplemental Motion for Summary Judgment, filed herein by National Check Bureau and prays for Dismissal of thecomplaint by the Plaintiff for damages of $983.73 and any further relief this court deems just and proper.

Defendant's motion for dismissal of summary judgment submitted this ___________ day of Dec 9, 2007.



APPENDIX B: LOGS

Use these logs to keep track of all of your correspondence and phone callsand the sequence of events. If you ever get sued or need to go to court,

you will be glad you have this information at your fingertips.

There are two copies of each log.

We can’t say it enough: Document everything!



Credit Bureau Dispute Log – Names

Date Verified By Credit BureauName NegativeMark after

January2004?

Did you receivenotification

that a negativemark wasbeing insertedinto your

report?

Date you senta Request for

Verification

&

Mail TrackingNumber

TransUnion Equifax Exper



Credit Bureau Dispute Log – Names

Date Verified By Credit BureauName NegativeMark after

January2004?



report?

Date you senta Request for

Verification

&

Mail TrackingNumber




Original Creditor Response Tracking

Date Verified By Credit BureauName NegativeMark

afterJanuary2004?



report?

Date yourRequest for

Investigationwas sent

&

Mail TrackingNumber




Original Creditor Response Tracking

Date Verified By Credit BureauName NegativeMark

afterJanuary2004?



report?

Date yourRequest for

Investigationwas sent

&

Mail TrackingNumber




Collection Agency Response

Tracking Debt Validation

Date Verified By Credit BureauName Date Requestfor DebtValidation wassent&Mail TrackingNumber

TransUnion Equifax Experian

Date rewas recCollect



Collection Agency Response

Tracking Debt Validation

Date Verified By Credit BureauName Date Requestfor DebtValidation wassent&Mail TrackingNumber

TransUnion Equifax Experian

Date rewas recCollect



Collection Agency Telephone Log

(Tracking Calls to You)

Name Date

&time of call

Notes on Call



Collection Agency Telephone Log

(Tracking Calls to You)

Name Date

&time of call

Notes on Call



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APPENDIX C:

LICENSING REQUIREMENTS FOR COLLECTION AGENCIES

State Collection Agency Bond & License AL Bond: NoLicense: YesFee: $25 - Population under 20,000; $100 - Population over 20,000Exemption for out-of-state collectors: Business License not required for out-of-state agency.

AR Bond: $5,000 to $25,000License: YesFee: $125 - $5 each employee

AK Bond: $5,000License: YesFee: $100 – Application; $200 - Agency Biennially

AZ Bond: $10,000 minimum (based on gross income)License: YesFee: $1,500 Application Fee; $600 Annual Fee; $23 per Officers/Managers

CA No license or bond required.CO Bond: $12,000 - 20,000

License: YesFee: Determined by collection agency boardExemption for out-of-state collectors: Out of state collectors are exempt if [1] collecting only by interstate means(phone, fax, mail); [2] have no Colorado client; and [3] are regulated and licensed in the state in which they reside.

CT Bond:$5000License: YesFee: $200 Yearly; $50 Investigation

DE Bond: NoLicense: Merc. LicenseFee: $50 Yearly

DC Bond: NoLicense: NoFee: No

FL Bond: Yes - $50,000 (Commercial)License: YesFee: $200 – Registration; $50 – Investigation; $200 - RenewalExemption for out-of-state collectors: Registration is required for out-of-state collectors if [1] soliciting accounts; [2] if

client (creditor, its affiliate or subsidiary) has an office in Florida.GA Bond: No

License: NoFee: No

HI Collection agency bond & licensesBond: $25,000 / $15,000 each branchLicense or registration: Required to solicit/collect

ID Bond: $5,000 initialLicense: YesFee: $100 -permit fee; $50 - renewalExemption for out-of-state collectors: Out-of-state collectors may qualify for a special license if [1] only collecting forclient; and [2] are licensed and bonded by any state

IA Bond: NoLicense: NoFee: No

IL Bond: $25,000

License: YesFee: $750 – Original; $750 - RenewalExemption for out-of-state collectors: Out-of-state collectors may be exempt if [1] not soliciting accounts in Illinois; [2]their state of residence has laws which provide similar reciprocity (allow out-of-state agencies to collect only); and [3]the state in which the non-Illinois agency resides extends the same privileges to out-of-state agencies.



2

IN Bond: $5,000 each officeLicense: YesFee: $100 plus $5 per annum, each unlicensed employee;$30 branch office; $80 - RenewalExemption for out-of-state collectors: Out-of-state collectors are exempt from licensing if [1] collecting for a non-residentcreditor; and [2] collection activities limited to interstate communications (phone, fax, mail).

KS Bond: NoLicense: NoFee: No

KY Bond: NoLicense: NoFee: No

LA Bond: Yes - $10,000License: YesFee: $200 Initial; $200 Investigation; $200 Renewal; $100 Branch; $100 Branch Renewal

ME Bond: $25,000 to $50,000License: YesFee: $400 YearlyExemption for out-of-state collectors: Contact state authority. Licensing authority is allowing some exemptions to out-of-state agencies that collect for non-resident creditors and are not soliciting.

MD Bond: $5,000License: YesFee: $200 each office

MA Bond: $10,000 - $25,000License: YesFee: Determined by commissioner

MI (RETAIL ONLY)Bond: $5,000 - $50,000License: YesFee: $150 – Investigation; $225 – Initial; $125 - AnnuallyExemption for out-of-state collectors: Out-of-state collectors are exempt if [1] collecting by interstate means; and [2]have no clients in the state of Michigan.

MN Bond: $5,000 to $20,000License: YesFee: $1,000 – Initial; $400 – Annual; $10 - Per Collector

MS Bond: NoLicense: City-BusinessFee: $15-$50

MO Bond: No

License: NoFee: NoMT Bond: No

License: NoFee: NoCaveats: Foreign corporations should register with MT Sec. of State prior to any suit in MT Courts or risk dismissal. Attorney fees only if provided by a signed written agreement.

NC Bond: $5,000 to $50,000License: YesFee: $500Exemption for out-of-state collectors: Contact state authorities. Unofficially, licensing authorities may allow out-of-stateagencies to bypass requirements if they do not solicit in state and/or work for in-state clients.

ND Bond: $20,000License: YesFee: $200Exemption for out-of-state collectors: Out-of-state collectors may be exempt if [1] collecting only; [2] their office islocated in a state that has a reciprocal law; and [3] the state has "enacted similar legislation".

NE Bond: Based on Lic. Solic. Less Than 5 = $5,000; 5-15=$10,000; 16-Up=$15,000License: YesFee: (not to exceed) $250 – Investigation; $200 – Original; $100 – Renewal; $50 - Investigation Branch Office; $35 -Original Branch OfficeExemption for out-of-state collectors: Out-of-state collectors are exempt if [1] communicating by interstate means(phone, fax, mail); and [2] are "regulated" by the laws of another state.

NH Bond: NoLicense: NoFee: No



3

NJ Bond: $5,000 SuretyLicense: NoFee: No

NM Bond: $5,000 minimum - based on volumeLicense: YesFee: $500 - original collection agency or branch; $300 - renewal collection agency or branch; $100 - examination feefor manager's license ; $50 - manager renewalExemption for out-of-state collectors: Out-of-state agency is exempt if [1] collecting by interstate means (phone, fax,mail); and [2] debt was incurred outside the state of New Mexico.

NV Bond: $25,000 to $50,000License: YesFee: $250 - App. Survey; $300 – Original; $200 - RenewalExemption for out-of-state collectors: Out-of-state collectors are exempt if [1] collecting by interstate means (phone, fax,mail); and [2] collecting for an out-of-state client.

NY Bond: NoLicense: NoFee: NoBuffalo: $5,000 Bond - $50 feeNYC: License - $150 - 2 yr. fee

OH Bond: NoLicense: NoFee: No

OK Bond: No

License: NoFee: No

OR Bond: NoLicense: Registration onlyFee: Established by directorExemption for out-of-state collectors: Contact state authorities. Out-of-state agencies may be exempt if [1] collecting forout-of-state client; [2] the debt was incurred by an Oregonian outside the state; and [3] the state where the collectionagency is headquartered has a registration program comparable to Oregon's law.

PA Bond: NoLicense: NoFee: No

RI Bond: NoLicense: NoFee: No

SC Bond: NoLicense: Yes - all business

Fee: NoExemption for out-of-state collectors: License required for in-state agency only.SD Bond: No

License: NoFee: No

TN Bond: $15,000 1-4 employees; $20,000 5-9 employees; $25,000 10 or moreLicense: YesFee: $600 – Original; $350 – Renewal; $25 - Each SolicitorExemption for out-of-state collectors: Contact state licensing authority. Out-of-state agencies may be exempt if they [1]maintain office in another state; [2] resides in a state that provides reciprocity; and [3] comply with provisions oflicensing.

TX Bond: YesLicense: NoFee: No Always consult counsel to charge interest - Texas has very onerous usury laws & penalties.

UT Bond: $10,000License: Yes

Fee: Varies by City and County.VA Bond:$5,000

License: Depends on LocalityFee: No

VT Bond: NoLicense: NoFee: No



4

WA Bond: $6,000 general, $4,000 specialtyLicense: YesFee: $100 – Investigation; $100 – Original; $100 – Renewable; $50 - Branch OfficeExemption for out-of-state collectors: Contact state authorities. Out-of-state agencies may qualify for lesser licensingfees. Out-of-state collectors are no longer required to have resident office and in-state trust accounts if they don't havein-state client. Bond is not required if held in home state.

WV COLLECTION AGENCY BOND & LICENSEBond: $5,000License: Yes - Franchise Reg. Cert.Fee: $15 AnnualExemption for out-of-state collectors: Contact state authorities. Some out-of-state agencies may be exempt if they areonly collecting for out-of-state clients.

WI Bond: $15,000 min.License: YesFee: $1,000 – Investigation; $200 - AnnualExemption for out-of-state collectors: Out-of-state agencies do not need to be licensed if [1] collecting by interstatemeans (phone, fax, mail); and [2] collecting for an out-of-state client.

WY Bond: $10,000License: YesFee: $200 – Original; $100 – Renewal; $100 - BranchExemption for out-of-state collectors: Out-of-state agencies may bypass licensing if they are not [1] soliciting clients inWyoming; or [2] collecting for Wyoming creditors.

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