Government Debt Relief Programs

Debt Relief Guide

Advice from a seasoned professional on surviving the recession

Everyone has bills, be they Donald Trump or Donald Duck. Fortunately, the same rules apply to one and all so, this guide will be useful to everyone. While the rules are quite basic, they have never been spelled out clearly and in one place ' until now. This guide will help you understand these rules and give you a few shortcuts and tricks to conserve your money. This guide is also a great reference: It answers many questions you or your friends may have concerning finances and the law relating to them. For instance, if the interest rate on your credit card just jumped from 9.9% to 23.9%, read the section 2.4 Compare credit card offers. If you plan to buy a car, read the automobile section 3.1 Are new cars worth the price? Above all, read section 10.1 Complaining to the Federal Government and 10.8 Contact your legislator because one of the most overlooked options of citizens is the ease to speak your mind to your congressional representatives.

DEBT RELIEF GUIDE:

Advice and Guide from a seasoned professional on surviving the recession

by

Edmund Dechant
Attorney at Law
P.O. Box 1708
Santa Rosa, CA 95402

copyright 2008 Edmund Dechant

This publication is not a substitute for personalized advice from a knowledgeable lawyer and should not be used as such. If you desire the help of a trained professional, consult an attorney licensed to practice law in the State in which you reside.

IntroductionRoad Map

I. What Are You Worth?1.0 Check your finances
1.1 Gather all financial documents
1.2 Calculate your net income and monthly expenses
1.2.1 Income worksheet
1.2.2 Expense worksheet
1.3 List your assets
1.3.1 Asset worksheet
1.4 List your debts
1.4.1 Debt worksheet
1.5 Separate secured debts
1.5.1 Assets to keep worksheet
1.5.2 Assets to let go worksheet
1.6 Are your assets exempt (and what does this term mean)?
1.7 Are you solvent?
1.7.1 Solvency worksheet

II. Bills2.0 Credit Cards
2.1 Interest rates
2.2 Are Credit card contracts deceptive?
2.3 Blocks
2.4 Compare credit card offers
2.5 Federal Oversight
3.0 Vehicles
3.1 Are new cars worth the price?
3.2 Automobile Financing
3.3 Co-signers
3.4 Economical Use
3.5 Repossession
4.0 Real Estate
4.1 Applying for a mortgage
4.1.1 Mortgage Fraud
4.1.1.1 Property Flipping
4.1.1.2 Silent Second
4.1.1.3 Nominee Loans/Straw Buyers
4.1.1.4 Fictitious/Stolen Identity
4.1.1.5 Inflated Appraisals
4.1.1.6 Foreclosure Schemes
4.1.1.7 Equity Skimming
4.1.1.8 Air Loans
4.1.2 Deceptive Mortgage Advertisements
4.1.2.1 What the ads say
4.1.2.2 What the ads don't say
4.2 Get credit report to fix errors
4.3 Using a second mortgage to pay off credit cards
4.4 Foreclosures, Short Sales and Deeds in Lieu
4.5 The tax consequences of either a foreclosure or a short sale
4.6 The Second Mortgage (a case history)
4.7 The Refinance (a case history)
4.8 The "2 and 28" Mortgage (a case history)
4.9 The Short Sale (a case history)
5.0 Scammed
5.1 The Nigerian Letter (a case history)
5.2 The Contractor (a case history)
5.3 Affinity Scams
5.4 The Inheritance (a case history)
5.5 The Lottery
5.6 Gift Cards
5.7 Funerals
5.8 Spam
5.9 Do-not-call list
5.10 Federal scams: the stealth tax on the poor
5.10.1 How does deficit spending effect Social Security payments
5.11 Identity Theft
5.11.1 Investigating ID Theft
5.11.2 The Identity Theft Affidavit
5.11.3 The difference between a fraud alert and a credit freeze
5.11.4 The Identity Theft Report
5.11.5 Creating an Identity Theft Report may require two steps:
6.0 Student Loans
6.1 Finding Student Loans
6.2 America's new Indentured Servants
6.3 Eliminating Student Loans
7.0 Medical
III. Bill Collectors
8.0 When the bill collector calls
8.1 What the bill collector must tell you
8.2 What the bill collector can't say
8.3 What you should say and do when the bill calls
9.0 In Court
9.1 Should you hire an attorney?
9.2 Answer or Response to Complaint
9.3 Proof of Service
9.4 The consequences of a judgment
9.5 Wage garnishment
9.6 Claim of exemption when wages or other assets are attached

IV. Solutions 10.1 Complaining to the Federal Government
10.2 Filing a complaint in Small Claims Court
10.3 Doing Nothing
10.4 Settling your credit card debt
10.5 The Payout (a case history)
10.6 Should you consider a debt consolidator?
10.7 Should you file a Bankruptcy?
10.8 Contact your legislator
10.8.1 It's only fair
10.9 Just Vote!
10.10 "Working America"
11.0 Lower your expenses
11.1 Food
11.1.1 Square foot gardening
11.1.2 Vegetarian Diet
11.1.3 Solar Cooking
11.1.4 Is bottled water worth the price?
11.1.5 Eat Less!
11.2 Transportation
11.2.1 The half mile solution
11.2.2 When you buy your next vehicle, bone up on the facts.
11.2.3 Support our troops.
11.3 Utilities
11.3.1 Reduce your carbon footprint
11.3.2 The clothes line
11.4 Plastic
11.5 AC/DC
11.6 Relocate
V. Bankruptcy
12.0 Bankruptcy Reviewed
12.1 Benefits
12.2 Detriments
12.3 Frequently asked question about bankruptcy
12.4 The Daughter (a case history)
12.5 The Boyfriend (a case history)
12.6 The Casino (a case history)
12.7 What does the Bible say?
12.8 The Morals of it all
12.9 Worksheets

VI Appendix
13.5 Form: Proof of Service
13.6 Forms: Sample Settlement Letters to Credit Card Companies

Introduction
Everyone has bills, be they Donald Trump or Donald Duck.
Fortunately, the same rules apply to one and all so, this guide will be useful to everyone. While the rules are quite basic, they have never been spelled out clearly and in one place - until now. This guide will help you understand these rules and give you a few shortcuts and tricks to conserve your money.
This guide is also a great reference. It answers many questions you or your friends may have concerning finances and the law relating to them.
For instance, if the interest rate on your credit card just jumped from 9.9% to 23.9%, read the section 2.4 "Compare credit card offers." If you plan to buy a car, read the automobile section 3.1 "Are new cars worth the price?" Above all, read section 10.8 "Contact your legislator" and 10.1 "Complaining to the Federal Government."
One of the most underrated options of United States citizens is their ability to talk to their representatives in congress. Let them know that you exist, what you want, and how you vote!
First, you should be comforted by the fact that if you never make another payment on your credit cards, or to your bank, or to your finance company, or to your automobile lender, or on your home mortgage, you won't go to jail. And, if you follow my rules, then most likely your car will not be taken, your wages will not be garnished, nor your Social Security payments seized.
Creditors can't put you in jail for your failure to pay your civil debt obligations (failure to pay criminal sanctions such as fines and orders for support can land you in jail). Here, the jail time would be the result of your refusal to obey a court order.
Your creditors are not allowed to take your Social Security or Veteran's benefits. If this happens, I tell you later in this Guide how to get your funds released (However, you should check the section on Student Loans in 6.2 below).
You can stop the creditors harassing you on the telephone by using methods I explain later.
So, relax, sit back, and read the whole guide. You'll find advice that I have given my clients over the past forty years helpful.
Good Luck!

Road Map
To begin, it might be helpful to view this publication as a road map to locate your financial position and plot a route to financial stability. It starts by determining how much you are worth by assessing your financial position, then moves onto how bills accumulate. You are then shown how to deal with the bill collector. Later it discusses the subject of lawsuits. Once you know your financial position and gained insight into dealing with your adversaries, it discusses ways to eliminate or reduce your current debt.
Further along, you'll find an overview of Bankruptcy Laws where I attempt to dispel some of the false assumptions about this subject.
Let's go!

I. WHAT ARE YOU WORTH?
1.0 Check your finances
As a beginning, you must determine where you stand financially.
You should be aware that some of your assets must be viewed differently from others. And you should realize that some of your bills should be treated differently as well.
To marshal your assets and liabilities, I have divided the task into several steps.
1.1 Gather all financial documents
Let's begin by collecting all of your financial documents. These items include all of your credit card statements, your car loan balance, your home mortgage, and all other bills you pay monthly.
1.2 Calculate your net income and monthly expenses.
The first worksheet is to be used to determine your net disposable income. That's the amount of money you have left over each month after you've paid all necessary bills.
Fill out this worksheet using documents you gathered in the last section; remember enter monthly figures only.
1.2.1 Income Worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).
Now that you know what you have available to spend each month, gather data from the documents you have on hand to calculate your monthly expenses as shown on the following worksheet.
Often you are not aware of your day to day spending. How much do you pay for food, for recreation, for utilities? The best way to begin reducing your expenses is to become aware of what they total.
One woman told me that she spent $400 a month on food. When we examined her check register, we found that her monthly food bill was actually $1, 450. Food is expensive; keep track of how much you are spending on it as well as each of the other items you purchase regularly.
After you have assembled at least two months of figures, tally the receipts. Review these totals. Ask yourself if any items on the list seems high. Ask yourself if you could lower your expenditures on those items you can do without. For example, your daily three dollar cup of coffee called a "latt"? You can substitute a cup of java with a big slug of cream for half the price. It's similar to a "latt" and is a lot less expensive. Another expense to examine is the dollar bill tossed into the tip jar at Starbucks when ordering a three dollar drink. Since when does a counter person deserve a 33% tip for doing his job? Surprisingly, many people spend money on bottled water. This expense can be lowered. Read, "Is bottled water worth the cost?" discussed in section 11.3.4 below.
1.2.2 Expense Worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).
Now, you know how much you bring in each month and how much you spend.
If you are carrying a credit card balance each month, you are spending more than you make.
Use this data later to look at some ways to lessen your bills.
1.3 List your assets
Do you have assets? What are they, and how much are they worth? When we search for value in this exercise, we're looking for Fair Market Value (FMV). FMV means the amount of money some stranger in the business of buying this type of property would pay for the asset.
Assets include items of real and personal property.
For the purpose of this exercise, only consider assets which have a FMV.
Some items which may have a FMV include homes, real property, cars, bank deposits, copyrights, retirement benefits, money owed to you, jewelry, stocks and bonds and, if you own a business, assets would include accounts receivables and inventory (an account receivable is a dollar amount you are owed now; not money you will be owed when you finish the job or when you ship the order).
You needn't concern yourself about property which has only sentimental or minimum value because creditors are not interested in it. These items have no FMV and they include the clothes you wear, the dishes you use, and the furniture in your home which isn't an antique or a valuable piece of art.
Again, the value that you are seeking is FMV.
On the issue of finding the FMV of real property, be careful!. It fluctuates. It could have one value today and another tomorrow; it could be the price you paid, but it could be five or six times greater. If you "guess wrong, " there could be dire consequences for you.
Finding the FMV of real property is tricky but not necessarily costly. It can be determined by contacting several real estate agents in the area and asking them to give you an estimate of the value of the real property. You might tell them that you are interested in selling your home or office building and would like to know a suggested listing price (that is the price the agent would place as the selling price of your home or office building). You might also ask the agent what the price would be for a "quick sale." Write this figure down. If several real estate agents give you different values, take an average. But remember, the real estate values go up and down.
If you wish to know the FMV of a car, drive the vehicle to a used car lot and ask the salesman what he'd give you for it in cash. Get him to write down the price on his business card ("so you'll remember"). Go to two other car lots. Repeat the process. Lastly, take an average of the three "offers." Write the figures down. Do not use Kelley Blue Book or Edmunds Auto Broker. These publications don't list the Fair Market Value of your car. You car may be worth more but probably is worth less than those publications indicate.
If you owe money on your car, you will probable be shocked to learn that it is not worth the payoff amount. You shouldn't be surprised since the price for new cars rarely comes near the re-sale value. Of course, most people accept the fact that a car loses ten percent of its value when it's driven off the lot after purchase. Why do you think this happens? It's because the car's price when purchased is padded. Once a buyer has been talked into buying the new car, the buyer is LOCKED into the loan.
A little known law allows the financier of motor vehicles to repossess the vehicle if you become as little as two month delinquent on your payments (the short two-month fuse is because the car depreciates so quickly that the lender needs to act fast to repossess his collateral and wholesale it quickly). But, that's not all. The finance company adds up the amount you owed before repossessing, adds to that figure the fees to repossess and sell, then deducts from that total the money collected at the wholesale auction. You then get a bill for the balance.
For example: you owe $23, 000 on the vehicle. The vehicle is repossessed and stored. The cost of repossession was $800, storage before auction was $400, and the car wholesaled for $10, 500. You now owe the finance company $13, 700. If you don't pony up that amount, you are sued.
Of course without a car, you now can't get to work, and you owe $13, 700 for an asset you no longer possess.
To determine the FMV of jewelry, musical instruments or salable items, take them to a pawn shop and try to sell or pawn them. Look at what the pawn shop is selling similar items for. Remember the pawn shop's prices reflect a profit to the pawn shop: so the amount they are selling a like kind asset for is not what you would be able to get. Be realistic when calculating the value of these items. As opposed to real property, these items may be worth very little.
A word about jewelry: the retail price of jewelry is several times as high as its actual value. A diamond selling for $1, 000 in a jewelry store could be purchased for as little as $100 from a dealer.
For furniture, you could look on ebay or Craigs list to see what your furniture or similar items would fetch. Go to a secondhand store and check the prices there. Most of the time, your household furniture has no value as far as this exercise is concerned.
1.3.1 Asset Worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).
Now you have a list of all of your assets. You should know the FMV of each along with your equity, if any.
Use these totals later in Chapter 12.0 to see how your assets might be handled if you were to file a bankruptcy
1.4 List your debts
Often we don't know how much we owe or to whom. But you can begin to get totals by writing down information you have at hand, such as credit card statements and invoices from other creditors. Next, get a credit report to check for debts you may have forgotten about or your ex-spouse, your child or your parent ran up in your name.
Good news! You can get a free credit report each year either on-line or by mail. Check this report against your list. Each year you are entitled to obtain a free credit report from each of the three reporting agencies.
You can order your free annual credit report online at www.annualcreditreport.com, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. To prevent yourself being tempted by unnecessary offers, make sure you use the site listed above rather than those "listed" on Yahoo or Google.
Fines: include here the money you owe for traffic tickets or for drunk driving violations;
Taxes: include not only your personal income taxes, but also, taxes you owe which might have arisen from the operation of a business. Remember here to include taxes owed for "cancellation of debt" income that are incurred when you settle your credit card debt for less than the full amount or when your real property is foreclosed or disposed of my short sale.
Also, taxes may be owed on real property. But you should treat and list real property taxes under secured debt.
Secured Debts: These are debts that are linked to an asset (property). For example, a home mortgage is linked to the home; a mortgage on an office building is linked to the building; a car loan is linked to the car; a debt owed to the seller of a washer, dryer, TV or home entertainment system is linked to the item purchased.
Unsecured Debts: These are debts that are not linked to real or personal property such as most credit card charges, medical bills, repossession charged on a vehicle, balances due after a foreclosure.
Use the worksheet below to list all of your debts of any kind. Be carful to include under "other debts" debts not specifically named.
1.4.1 Debt Worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).
1.5 Separate secured debts
Separate your secured debts (money owed on your car, home, washer/dryer) into two groups.
The first group includes secured debts linked to assets you want to keep.
1.5.1 Assets to keep worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).
1.5.2 Assets to let go worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).
Again, you should be aware of "cancellation of debt" income. This "income" can arise when a debt you owe is cancelled (however, for cancelled debt on your residence occurring in 2007 or 2008 will not be subject to this penalty)..
Often, this type of "income" is reported to the IRS by a credit card company when you settle a credit card debt for less than the full amount. However, it also occurs when you lose your home in a foreclosure and the FMV of the home at the time of foreclosure is less than the mortgage total. For instance, suppose you purchased your home for $500, 000 with a no-document, no money down, variable rate, interest only mortgage. Two years later, the mortgage payment re-sets to a monthly cost you can't afford. The mortgage on the house is foreclosed at a time that the FMV of the home is $400, 000. You still owed $500, 000 but only $400, 000 of the mortgage is paid off. The tax code says that you have just made $100, 000. You will be expected to pay taxes on that amount at the regular income tax rate unless you file a bankruptcy or prove to the IRS that you are insolvent.
1.6 Are your assets exempt?
"Exemption" is a term used to describe assets that the creditor can't take away from you. Said another way: this property is protected from your creditors.
However, most exemptions are not expressed as "a house" or "a car" but rather are expressed in terms of dollar amounts. For instance, the homestead exemption in California does not exempt your home. It exempts a specific dollar amount in your equity. "Equity" is a term used to describe the money you would put in your pocket when you sold an asset after paying off any creditor who holds a security interest in that asset (referred to as a "security interest"). For instance, if you own a home and the house sells for $500, 000, but has a mortgage or mortgages of $450, 000, your equity is $50, 000. If the house sells for $450, 000, you have no equity. If you have no equity, you have no exemption in the home; or, to put it another way, you have no homestead in this asset.
With motor vehicles, exemptions are likewise expressed in dollar terms. For instance, the law in your state may say that you have an exemption in "a motor vehicle" of $2, 000 or an exemption of $3, 500. If you owned the vehicle free and clear and the car was worth $5, 000, your exemption would only cover part of the car. Theoretically, a creditor could seize the vehicle, sell it and give you the dollar amount of your exemption.
On the other hand, if you are financing the vehicle that is worth $10, 000 and you only owe $8, 000, your equity would be $2, 000. If your equity was within the exemption amount allowed, a creditor would not attempt to seize the vehicle.
Each state has its own set of exemptions and they are hard to calculate.
Remember, this Book is not a substitute for personalized advice from a knowledgeable lawyer and should not be used as such. If you desire the help of a trained professional, consult an attorney licensed to practice law in the state in which you reside.
You can find a list of exemptions for your state by going to google.com and entering into the search field "State Exemptions".
Look at the worksheet in the previous section with regard to exemptions.
1.7 Are you solvent?
"Solvent" describes a person's financial position where his assets exceed his liabilities. However, even if your assets do exceed your liabilities, you are insolvent if you can't pay your debts on time.
It is important therefore to decide which assets you intend to keep and which you will abandon. If you can shed encumbered (secured) assets that you don't want or don't need, you will move from insolvency to solvency. Of course, some assets cannot be discarded without penalty. Abandoning a vehicle that is security for a debt will create a new obligation that survives the surrender of the asset. On the other hand, you may be able to abandon a home or other items of real property without creating a new debt (a deficiency) thereby substituting a lower rent payment for the higher mortgage.
In the exercise above, you have divided your secured assets into those you wish to keep and those you intend to discard. You may find that your financial situation will improve by abandoning some of your secured debt even if you incur a deficiency.
But remember, when you are making these choices, this Guide is not a substitute for personalized advice from a knowledgeable lawyer and should not be used as such. If you desire the help of a trained professional, consult an attorney licensed to practice law in the state in which you reside.
1.7.1 Solvency worksheet (google's knol does not display this worksheet. To view, go to www.billpayersguide.com).

II. Bills
2.0 Credit Cards
2.1 Interest rates
Credit Card interest rates can change according to the fine print in the contract which comes along with the card. You thought you got the money at 3.3% for the length of the loan but you find that your rate has jumped to 29%. What happened?
The Credit Card industry is NOT regulated by the federal government. They do what they want, including unilaterally changing the terms of the agreement. Many of my clients report that notwithstanding paying promptly and unfailingly making the minimum payment on their credit card, their interest rate increased from 9.9% to 29%.
The legal justification of this practice and a discussion of the Credit Card industry is given by Harvard law professor Elizabeth Warren in an interview she gave to PBS. Reading this interview is a must. You can find it at www.pbs.org In the search field, type "Elizabeth Warren." You will find this and many other thoughtful interviews with Professor Warren.
Also read Professor Warren's article "Unsafe At Any Rate" at democracyjournal.org/.
2.2 Are credit card contracts deceptive?
Credit Card contracts are hard to understand even by attorneys. The small print is hard to read, and the contract is subject to being revised repeatedly by the credit card company. This allows the company to change the terms of the contract at any time for any reason. Therefore, these contracts are deceptive because you are led to believe that your interest rate is fixed and the rules will not change if you follow the rules in place when you use the credit.
Yet, the rate can change at the whim of the as indicated in section 2.5 below.
2.3 Blocks
The term "block" in credit card lingo refers to the hold put on a credit card when it is used to reserve a car rental or a hotel room.
The Federal Trade Commission explains it this way: when you use a credit or debit card to check into a hotel or rent a car, the clerk usually contacts the company that issued your card to give an estimated total. If the transaction is approved, your available credit (credit card) or the balance in your bank account (debit card) is reduced by this amount. That's a "block." Some companies also call this placing a "hold" on those amounts.
Here's how it works: Suppose you use a credit or debit card when you check into a $100-a-night hotel for five nights. At least $500 would likely be blocked. In addition, hotels and rental car companies often add anticipated charges for "incidentals" like food, beverages, or gasoline to the blocked amount. These incidental amounts can vary widely among merchants.
If you pay your bill with the same card you used when you checked in, the final charge on your credit card, or final amount on your debit card, probably will replace the block in a day or two. However, if you pay your bill with a different card, or with cash or a check, the company that issued the card you used at check-in might hold the block for up to fifteen days after you've checked out. That's because they weren't notified of the final payment and didn't know you paid another way.
Another transaction which can cause problems is when a card is used for gasoline purchases. For instance, you present the card for a fill-up and purchase only $20 worth of gas. When you present the card, the gas station attendant puts a block on the card for $50 to $100. Even though you pay and leave the gas station, the block remains on your card for two or three days. Again, if you are running close to your limit, you'll be slapped with a $35 charge for being over limit.
For more information on blocking, go to www.ftc.gov and put in the search field "credit card blocking." In the material, the FTC explains how you can minimize the effect of blocks on your card.
2.4 Compare credit card offers
To compare credit card offers, go to www.creditcards.com
2.5 Federal Oversight
Credit Card lending is regulated by the Federal Reserve Board under the Truth in Lending Act and under the Federal Trade Commission Act. However, politics being what they are, the Federal Reserve Board is opposed to putting limits on these lenders. Consequently, the banking industry is making obscene profits on bait and switch operations.
Initially, the card companies offer money at a low rate of interest. The borrower (you) accepts the offer. As an example, you borrow $5, 000 at 4% interest. You minimum monthly payment is $100 per month. After several months, your interest rate increases to 29% and the minimum monthly payment increases to $300.
Is this legal? Apparently.
Reading the entire contract, presented to you in very small print, you will be informed of a concept referred to as "universal default." You have given the credit card company the right to raise the interest rate and minimum monthly payment anytime they wish and for any reason and in some cases, retroactively.
If you become delinquent in the payment of other unrelated bills such as other credit cards, utilities, and/or other creditors who may report you to one of the credit reporting agencies, your credit card company will use this as justification to raise your interest rate..
Several seniors, whose only income was social security, had made their minimum monthly payments on time and for the correct amount. Suddenly, their interest rate increased from 9.9% to 29%. This rate increase raised their minimum monthly payment to a sum neither could afford to pay. At this point, the card companies began to add late fees and over limit fees.
These fees were rolled over each month into the principal balance making the burden on these senior citizens unbearable.
Besides the outrageous business practices of the card companies themselves, several other scams involving credit cards are abundant.
One to watch out for offers the borrower low interest rates and high credit limits for a fee. This type of operation was the subject of a Federal Trade Commission complaint. It alleged that three individuals and their companies falsely claimed that consumers who paid a fee ranging from $159 to $236 would be guaranteed a low-interest rate, high-credit limit, and no-annual-fee MasterCard or Visa card. The Commission charged that since August 1999, the defendants had operated boiler rooms in Toronto, targeting U.S. consumers with no credit or poor credit histories. After paying for the promised cards, however, consumers did not receive them. Instead, they got packages containing coupons and discounts for travel, recreation, automobile services, medical plans, and satellite service.
3.0 Vehicles
Vehicles have always served two purposes: first to provide transportation, and second to assuage the ego.
If you are willing to forget your ego, you will find many used vehicles available at reasonable prices. Prices so reasonable that if the vehicle breaks down, you can simply junk the car and buy a second. This may be asking too much for most of us since our egos are a very powerful force. The problem we face is that new cars are not worth the price, and used cars are, well, used.
3.1 Are new cars worth the price?
After 5 years, the average car is only worth 35% of the original purchase price (if you add to that loss the fact that your money is worth less than it was five years ago, you're losing big time with the purchase of a new car). This means that a car purchased for $25, 000 will only be worth $8, 750 at the end of 5 years. So, besides paying monthly $400 to $500 on a car purchase, you are losing an addition $270 monthly. In fact, a car is a bigger expense than people are comfortable admitting.
I find a sizable number of bankrupts drive new cars. The monthly payments on these new cars sometimes exceed the sum paid for rent or even the home mortgage.
You should remember that the greater the amount you owe on your automobile the greater will be the cost of your insurance. If you own a car outright, you will only be required to carry liability insurance and not be required to carry the far more expensive collision insurance.
You can research the value of a vehicle on web sites such as the Kelley Blue Book, www.kbb.com or Edmunds at www.edmunds.com and the Consumers Report web site, www.consumerreports.org At the Consumer Report web site, you will find a listing of the depreciation for the best and the worst vehicles available.
The Federal Trade Commission offers a guide to buying a car. You can find this information at www.ftc.gov.
Using the navigation bar, go to "consumer protection" then go to "automobiles." There you will find a host of articles relating to motor vehicles.
3.2 Automobile Financing
Automobiles are financed under a unique provision which allows the lender to repossess the collateral (the vehicle) and still demand payment from you for the balance due on the contract after wholesaling the automobile.
The automobile is the only consumer product that may be repossessed and a balance will remain due and payable.
Is this fair?
In contrast, if you buy a TV, a bedroom set, or a washer or dryer and the seller or lender repossesses any of these items, you owe nothing on the balance.
The ability to repossess your means of transportation and still sue you for a balance due is one of the consumer issue you should complain about to your congressman/senator and state representative in an email demanding that legislation be enacted to prohibit deficiencies after repossession of vehicles purchased by consumers. For federal representatives, just click on the rally congress/wiki site below where you merely fill in the text of your message along with your geographical address, and this site will send your message to your elected representative to either the House or the Senate, or both www.rallycongress.com/wiki/
It is easy to send a message to your federal representative, try it. It's good to let our representatives know that you're out there.
3.3 Co-signers
Don't co-sign for someone else's car loan. Many parents co-sign for their children and friends co-sign for others. There are serious consequences to this action. You are more likely to be the victim of a repossession (see 3.5, below) than if you bought the car yourself. And the co-signor may not know that the payments are delinquent until it's too late to prevent a repossession.
This leaves both you and the buyer responsible for the balance plus fees. I have see too many old friends become enemies because of just such an incidence. Sometimes one party has moved away and failed to keep the payments current or failed to keep the insurance current. If the car is damaged when the insurance has lapsed, the balance is owed by you as well as the primary debtor.
Remember this: cars are plentiful. Car dealerships are desperate to sell cars. If your friend can't swing a deal on a car on his own then the car is too expensive for him.
3.4 Economical Use
Do you drive over 55 miles per hour? If you do, you are not using your vehicle economically. Your gas mileage will decrease substantially as you exceed 55 to the point where you will expend 7 to 23 percent more fuel at these higher highway speeds.
Check out the "new" Environmental Protection Agency's miles per gallon estimates at www.fueleconomy.gov This site will give you a good look at the consequences of wasteful gas consumption.
Saving gas by driving slower will not only save you money, it will help the environment, and it will use less foreign oil. The EPA states, "Petroleum imports cost us over $4.4 billion a week-that's money that could be used to fuel our own economy."
Support our troops, drive 55 miles per hour!
3.5 Repossession
When you are two or more payments behind on your vehicle loan, the lender will attempt to pick up the car. The repo-man will come anytime day or night at your home or at work. If you expect a repossession, remove all your personal items from the vehicle because collecting them afterwards from the repossession company can be difficult.
After the car is picked up, you will receive a notice in the mail stating the terms under which you can get the vehicle back. The lender will require you to pay their costs of repossession and storage plus your back due payments. If you chose not to redeem the car, the lender will sell the vehicle at an auction. The vehicle will not be sold at retail which usually results in your owing money on the contract. You will have a period of time to pay this sum called a deficiency before the lender will sue you for the amount. Many bankruptcies are the result of an automobile repossession.
The Federal Trade Commission offers a guide to consider when buying a car. You can find this information at www.ftc.gov Using the navigation bar, go to "consumer protection" then go to "automobiles." There you will find a host of articles relating to motor vehicles.
4.0 Real Estate
4.1 Applying for a mortgage
When you apply for a mortgage, you will be inundated by competing offers.
The following advice is from the Federal Trade Commission for consumers on how these offers may be beneficial and how to stop them.
When a consumer applies for a mortgage, the inquiry that shows up on their credit report may trigger competing offers from other mortgage companies. In the publication, "Shopping for a Mortgage? Your Application May Trigger Competing Offers, " the FTC (www.ftc.gov) explains that unsolicited credit offers are "pre-screened" or "pre-approved." These offers are based on information in a credit report that suggests the consumer meets criteria set by the creditor.
Consumers can benefit from receiving these offers when they are shopping around for credit: pre-screened offers can highlight other available products and make it easier to compare costs while consumers carefully check out the terms and conditions of any offers they are considering.
The alert explains how consumers who do not want to receive these offers can stop many of them by calling 1-888-5-OPTOUT or visiting www.optoutprescreen.com . The FTC also recommends registering on the National Do Not Call Registry to stop phone call solicitations.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov.
The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1, 600 civil and criminal law enforcement agencies in the U.S. and abroad.
4.1.1 Mortgage Fraud
Mortgage fraud results from several types of deceptive behavior which is not limited to the types listed below. The illegal activity involves obtaining real property financing using fraudulent means. In the F.B.I.'s web site, the 2005 details several types of mortgage fraud as are described there and below: www.fbi.gov
4.1.1.1 Property Flipping - Using an appraisal showing the property as having an inflated Fair Market Value, the property is purchased and then quickly sold. What makes this scheme illegal is that the appraisal information is fraudulent. The schemes typically involve one or more of the following: fraudulent appraisals, doctored loan documentation, inflating buyer income, etc. Kickbacks to buyers, investors, property/loan brokers, appraisers, title company employees are common in this scheme. A home worth $20, 000 may be appraised for $80, 000 or higher in this type of scheme. Many of the sub-prime loan defaults have resulted from one or more of these schemes. In some cases, the buyer allows the mortgage orignator to enter a false income figure of the borrower so as to show that the payments can be met. Of course, many of these buyers never thought they would be unable to re-sell the homes but when the Fair Market Value of the home decreased, they were unable to flip the real property.
4.1.1.2 Silent Second - The buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.
4.1.1.3 Nominee Loans/Straw Buyers - The identity of the borrower is concealed through the use of a nominee who allows the borrower to use the nominee's name and credit history to apply for a loan.
4.1.1.4 Fictitious/Stolen Identity - A fictitious/stolen identity may be used on the loan application. The applicant may be involved in an identity theft scheme: the applicant's name, personal identifying information and credit history are used without the true person's knowledge.
4.1.1.5 Inflated Appraisals - An appraiser acts in collusion with a borrower and provides a misleading appraisal report to the lender. The report inaccurately states an inflated property value. Inflated appraisals also are used in property flipping.
4.1.1.6 Foreclosure Schemes - The perpetrator identifies homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure. The fraudster misleads the homeowners into believing that they can save their homes in exchange for a transfer of the deed and up-front fees. The perpetrator profits from these schemes by remortgaging the property or pocketing fees paid by the homeowner.
4.1.1.7 Equity Skimming - An investor may use a straw buyer, false income documents, and false credit reports, to obtain a mortgage loan in the straw buyer's name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments and rents the property until foreclosure takes place several months later.
4.1.1.8 Air Loans - This is a non-existent property loan where there is usually no collateral. An example of an air loan would be where a broker invents a borrower and a property. He then establishes an account for payments, and maintains custodial accounts for escrows. This scam may also have an office with a bank of telephones, each one used as either an employer, an appraiser or a credit agency which is used for verification purposes to set up the loan.
Each of these mortgage fraud schemes are illegal and will result in a jail term or fine if the perpetrator is caught and prosecuted successfully.
4.1.2 Deceptive Mortgage Advertisements: What They Say; What They Leave Out
If you're looking for a mortgage to buy a home or refinance an existing loan, you may see or hear ads with offers of low rates or payments. Whether you see them on the Internet, on television or in the paper, or whether they come by fax or mail, some of these ads look like they're from your mortgage company or a government agency. Regardless of where you see the ads, remember that while the offers are tempting, some are terribly flawed: they don't disclose the true terms of the deal as the law requires.
The Federal Trade Commission, the nation's consumer protection agency, says that when you're shopping for a home loan, it's important to understand all the terms and conditions of a proposed loan. Start with what is in the ad itself. Read what's between the lines as well as what's in front of your eyes.
4.1.2.1 What The Ads Say
To help you recognize an offer that may be less than complete, the FTC wants you to know the buzz words that should trigger follow-up questions, as well as information to insist on after you've read an ad.
A Low "Fixed" Rate: Ads that tout a "fixed" rate may not tell you how long it will be "fixed." The rate may be fixed for an introductory period only, and that can be as short as 30 days. When you shop for a mortgage, you need to know when and how your rate, and payments, can change.
Very Low Rates: Are the ads talking about a "payment" rate or the interest rate? This important detail may be buried in the fine print, if it's there at all. The interest rate is the rate used to calculate the amount of interest you will owe the lender each month. The payment rate is the rate used to calculate the amount of the payment you are obligated to make each month. Some offers advertise a low payment rate without telling you that it applies only during an introductory period. What's more, if the payment rate is less than the interest rate, you won't be covering the interest due. This is called "negative amortization." It means that your loan balance is actually increasing because you're not paying all the interest that comes due, and the lender is adding the unpaid interest to the balance you owe.
Very Low Payment Amounts: Ads quoting a very low payment amount probably aren't telling the whole story. For example, the offer might be for an Interest Only (I/O) loan, where you pay only the amount of interest accrued each month. While the low payment amount may be tempting, eventually, you will have to pay off the principal. Your payment may go up after an introductory period, so that you would be paying down some of the principal - or you may end up owing a "balloon" payment, a lump sum usually due at the end of a loan. You must come up with the money when a balloon payment is due. If you can't, you may need another loan, which, in turn, means new closing costs, and potentially points and fees. And if housing prices are falling, you might not be able to refinance to lower your payments.
Mortgage rates near 30-year lows! Rates as low as 1%! You are paying too much! Who doesn't want to reduce their mortgage payments? Loan amount $300, 000 - pay only $900 per month!: Ads with "teaser" short term rates or payments like these don't often disclose that a rate or payment is for a very short introductory period. If you don't nail down the details in advance about your rates and payments for every month of the life of your loan, expect payment shock when the rate and payment increase dramatically.
Important Notice From Your Mortgage Company. Open Immediately - Important Financial Information Enclosed. Please do not discard - account information enclosed.
Appearances can be deceiving. Mailers that have information about your mortgage and your lender may not be from your lender at all, but rather from another company that wants your business. Companies can legally get your information from public records. Before you respond to any offer, review it carefully to make sure you know who you're dealing with.
You are eligible to take part in an exclusive interest rate reduction program. This financial institution has been licensed to negotiate your existing adjustable mortgage to a new fixed rate mortgage. You must contact us immediately regarding this notice. Some businesses use official-looking stamps, envelopes, forms, and references to make you think their offer is from a government agency or program. If you're concerned about a mailing you've received, contact the government agency mentioned in the letter. If it's a legitimate agency - and not one that just sounds like a government agency - you'll find the phone number in the Blue Pages of your telephone directory.
4.1.2.2 What the Ads Don't Say
The APR: The Annual Percentage Rate is a critical factor in comparing mortgage offers from different lenders. It is the total cost of the credit expressed as a yearly interest rate. This rate is different than the simple interest rate on your loan note, because the APR includes all costs of the credit such as points and processing fees. Knowing the APR makes it easier to compare "apples to apples" when considering mortgage offers. Look for the APR for your loan. The amount may not be in the ad at all; it may be hidden in the fine print, or it may be available deep within a website after multiple clicks.
Important Payment Information: It's hard to know what you don't know, and often, some of the most important information you need isn't in the ad, is hidden in the fine print, or is available only at a website after many clicks. To make an informed judgment about any mortgage offer, you need to know - or ask:
1. What will the monthly payment be for every month of the loan, and could it increase? When could it increase? What would your new payment be? Could your monthly payment increase more than once?
2. Does the monthly payment include an escrow amount to pay for your property taxes and homeowners insurance? Or must you pay these costs on your own? If you have to pay on your own, ask your lender for an estimate so you can budget accordingly.
3. What is the term of the loan (for example, 15 years? 30 years?)? How many payments will you have to make? Would the loan be paid off at the end or would you still owe a "balloon" payment?
4. Will you have to pay prepayment penalties to refinance and pay off the loan early? If so, how much, and when would they apply? If the loan has an introductory or teaser rate, can you refinance, without penalties, before the rate resets and your payment increases?
For More Information, go to www.ftc.gov/credit and click on Mortgages & Real Estate. The Federal Reserve Board also has several helpful publications and a mortgage comparison calculator at www.federalreserve.gov/consumers.htm
4.2 Get Your Credit Report to fix errors
You can order your free annual credit report online at www.annualcreditreport.com, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. To prevent yourself being tempted by unnecessary offers, make sure you use the site listed above rather than those "listed" on Yahoo or Google.
4.3 Should you use a second mortgage to pay off credit cards?
Using a second mortgage to pay off your credit card balances is unwise. Many of my clients have done this and months later file a bankruptcy. If they keep their home at that point, they are stuck with the second mortgage. If they had adjusted their spending habits which they did not do as evidence by the fact that they ran up their credit card balances so quickly, they could have cleared out the debt without being stuck with a second mortgage.
Using credit which is not paid in full each month is flirting with disaster. Slowly, the balance increases. They only long term solution is to reduce spending.
4.4 Foreclosures, Short Sales and Deeds in Lieu
Many individuals hoped for the American Dream: a home of their own. In the early part of this decade, housing prices were rising and interest rates were low. In addition, many financial institutions offered teaser rate loans which failed to reflect the true cost of borrowing.
Many families that jumped on the low interest, rising home price bandwagon are now in serious trouble. Foreclosures are happening. The homeowner is in panic mode. This is when the individual is most vulnerable to making choices without proper information.
If you want to keep your home, don't give up just because you are having a devil of a time making the mortgage payment. Either contact your lender or call the Home-ownership Preservation Foundation, a nonprofit organization based in Minneapolis, MN Call toll-free at 1-888-995-HOPE (4673). The calls are handled 24/7 in both English and Spanish. You can also check their web site, www.995hope.org
One of the problems with foreclosure (other than that you will lose your home and you will have to move) is that there is often money owed later to the mortgage company or to the taxing authorities....unless you discharge the amount owing on the home in bankruptcy or unless the mortgage(s) on your home is non-recourse.
Refinancing can change the mortgage from a "non-recourse" loan to a "recourse" loan.
A recourse loan is one where the lender can come against you if he does not receive a full payoff on the loan. As a result, you are liable for the difference between the fair market value of the home and the amount of your mortgage. If there is a foreclosure and the mortgage company loses money, it will look to you for the difference.
Yet another problem is the tax that may be due.
Tax obligations arise when the fair market value of the home at foreclosure is less than the mortgage, when the foreclosure occurs before 2007 and the real property is not your residence. This tax is on income from the cancellation of your debt. It is referred to as "cancellation of debt" income.
For instance, you purchased a home for $600, 000. The fair market value upon foreclosure is $550, 000. The "cancellation of debt" income is $50, 000 even though you never received any real income. The IRS will expect you to pay tax on $50, 000 at the ordinary income tax rate. This tax will not arise for foreclosures on your residence if they occur in 2007 or 2008.
If you agree to a "short sale, " you are agreeing to allow the house to be sold for less than what is owed on it. If a mortgage hold does not state in writing that they will not hold you responsible for their loss, you will be faced with a demand for the deficiency.
In addition, taxes at the ordinary income tax rate will be due on the difference between what was owed on the home and the amount of the short sale. In other words, you pay taxes on the "short" amount.
I'm not a fan of the short sale. It only aids the mortgage company and your real estate agent. In addition, most short sales are dependent on you moving out sooner than you would have to leave your residence if a foreclosure proceeds.
Many individuals are scared into a short sale because they don't want a "foreclosure" on their credit record. Avoiding this result may not be worth it. A short sale does appear on your credit report and there may be deficiencies resulting from the mortgage holder that does not receive their debt paid in full.
Deeds in lieu is another option to those who face foreclosure. This is a process wherein you give a deed of your interest in the property to the lender instead of (in lieu of) losing the house by foreclosure. Deeds in lieu notations will appear on your credit report as a negative entry. If you give a deed in lieu, make sure you have written evidence that you will not be held accountable for any deficiencies owing on either the first or the second mortgage. But, don't forget the "cancellation of debt" tax obligation which may arise. However, if the real property is your home and a foreclosure occurs during 2007 or 2008, the tax will not apply.
I have worked with homeowners who, knowing that they were going to lose their residence, simply stopped making the mortgage payment. It took seven or eight months before they were forced to leave. During that period of time, the individuals put into savings the amount that they would otherwise pay on the mortgage or for rent. When they finally moved, they had several months' rent in savings.
4.5 The tax consequences of either a foreclosure or a short sale
As mentioned in the section above, there are tax consequences in a foreclosure sale or a short sale unless you discharge your mortgage obligation in a bankruptcy or unless the foreclosure occurs in 2007 or 2008 and the real property secures a mortgage on your residence.
This is due to the change in the tax code for foreclosures occurring in 2007 and 2008 and because debts discharged in a bankruptcy are not considered "debt cancellation" income.
4.6 The Second Mortgage (a case history)
A couple of years ago, Kenny and Doris bought a home $250, 000. They obtained a no money down loan. When the housing market took off, they were able to take out a home equity loan that has now grown to $100, 000. But they did not refinance their first mortgage.
At one point, Kenny and Doris thought that the fair market value of the house was near $400, 000.
Doris has been ill and can't work. And recently, Kenny's company went bankrupt and Kenny lost his job.
They received no offers when they listed the home at $400, 000. The realtor now tells them that they might get $350, 000 if they put about $50, 000 into a kitchen remodel and a second bath.
The payments on the first are six month delinquent with a balance of $230, 000. Since the second mortgage (the home equity loan) is at $100, 000, it appears that the house is worth less than is owed on it.
Kenny and Doris have decided to move out of state and let the home go into foreclosure. Kenny has heard that if the home is taken by foreclosure, no money is owed on the mortgages even though the house sells for less than is owed on it.
In this case, Kenny is wrong. Although the family's obligation on the first mortgage will be extinguished with a non-judicial foreclosure, any sums not paid on the second will remain their debt. In this case, leaving town will probably result in the company that loaned on the home equity coming after them to recoup some or all of the $100, 000.
They have the option of paying the delinquency on the home equity loan or filing bankruptcy
4.7 The Refinance (a case history)
Harry and his wife Sally purchased their home years ago for $75, 000.
Since then they have re-financed several times to obtain money to spend on a variety of purchases. Once they went on a long, dream vacation; another time, they re-modeled their home; they also used re-finance money to purchase a boat. At this time, they owe $400, 000 on their home.
Because they are both now retired and living on Social Security, they find that they can no longer keep current on their mortgage payment. In fact, they face foreclosure. Harry has suggested that they simply walk away from the home and rent. Sally thinks they may be faced with owing the mortgage company if the house is worth less than is owed on it.
Sally is right. If the mortgage company forecloses on this mortgage, they can claim a deficiency since the mortgage has been refinanced.
In this case, a bankruptcy would protect the two from the mortgage company but since they are only receiving Social Security and have no assets to protect, it would be unnecessary to obtain the protection afforded by a bankruptcy.
4.8 The "2 and 28" Mortgage (a case history)
Sam and Sue bought their home with no money down using a newly created mortgage called a 2 and 28. For the first two years, the interest rate on the mortgage was low and the payments did not reduce the principal. These payments equaled $3, 200.00 per month. In addition, they were required to pay property taxes and maintenance on their residence. On the third year, the mortgage rate changed to a variable rate which included principal payments. Their new monthly payments rose to $4, 500. Sam and Sue, who were barely able to make the original payments were overwhelmed with the new amount. They chose to stay in the house not making any payments to the lender until they were evicted. This was a good choice for them because they were able to stay "rent free" for seven months before being evicted. They incurred no deficiency when the home was foreclosed under the deed of trust and they had over $20, 000 saved which helped them in the move to new quarters.
4.9 The Short Sale (a case history)
Billie and Joy Balls were doing fine. They purchased their home seven years ago and refinanced it several times to pay for vacations and home improvements. They had also taken out a home equity loan with a low interest rate. However a few months ago, Billie lost his job when his company decided to save money by off-shoring its production. This left Joy as the only wage earner. Billie's unemployment benefits did not allow the family enough funds to pay the home mortgage. They decided they would have to sell the home.
A friend, a real estate salesman, had put it on the market, but over the last few months it had not been purchased. In fact, several other homes on the block were also on the market. Every time the Balls would lower the price everyone else did also. Now, the asking price was so low that the couple would receive little or nothing from a sale. As a foreclosure approached, their real estate agent suggested they list their home at a very competitive price but one which would not cover the first and the second. He called this a "short sale."
A short sale is one in which the proceeds from the sale does not pay off the full amount of the liens. Of course, the sales agent does receive a commission, but, in fairness, the agent does effect the sale. The agent encouraged the Balls to accept the short sale telling them that this was better than a foreclosure.
He told them that if they had a foreclosure on their record, they would never be able to buy a home again. Although this is false, a more dire consequence awaited the Balls.
After the short sale was completed, they were served with a lawsuit demanding the balance due on the unpaid mortgage amount. You should remember that in many cases the lender who agrees to a short sale does not waive the right to collect the full amount due under the note.
If a potential deficiency is not waived, in writing, as part of the short sale, the lender will be demanding the balance from you.
On another point, a short sale can create "cancellation of debt" income if either of the mortgages not paid were recourse notes and if the foreclosure occurred before 2007 or was not on your residence.. This "income" would be subject to income tax at normal rates.
5.0 Scammed
Bill payers are forced to make financial choices, some of which prove costly. Some very intelligent clients of mine have gotten involved in bizarre and senseless financial transactions which cost them plenty. They failed to anticipate the downside to a pitch which was too good to believe. Others entered into contracts that proved more costly than anticipated..
The following are examples of typical recurring pitfalls.
If you are aware of these dangers before they materialize, maybe you'll not fall prey to them.
5.1 The Nigerian Letter (a case history)
The following is an account of a scam that caught Harry, an intelligent and astute man. Harry was advised to avoid this offer. But, he didn't.
Greed is a great motivator.
One day in the mail, Harry, a successful businessman, received the following letter.
Dear Mr. Harry, Sir.
It has come to my attention through reliable sources that you are a man of honor. And it is only to one who has come so highly recommended that I would have the temerity, nay the boldness, to write you. You see, Mr. Harry, that due to an error in the bank in which I and my father have worked for over 40 years here in Nigeria, a large sum of money has accumulated in the accounts of depositors who have died or who have gone missing. And I will tell you since you are by all accounts an honorable man that this sum is great, probably over $28, 000, 000. This money cannot be withdrawn in our country because such a large sum would be noticed. But if we were to have the assistance of an honorable man, a man whom we could trust, we could transfer the entire sum to your bank by wire transfer. Your services in accepting this money would be compensated handsomely in the sum of 33.3%, or approximately $9, 324, 000, give or take a few dollars. Now dear Mr. Harry, we must know if you are in fact, as has been represented to us, honorable and agreeable to aid us in this endeavor. We must know urgently because an audit has been requested and we must negotiate this transaction soon or the money will be swept up in the audit. Please Mr. Harry, if you are an honorable man, please contact me at Mr. Senjy, c/o the Ramses Hilton, 1115 Corniche El Nile, Cairo, Egypt 12344 (fax number 20-2-5752942) but do not in your introduction mention anything about this venture as it may return to Nigeria via the many routes that spies use. Fax me your fax number to this fax number if you are an honorable man whom we can trust and who is willing to aid us in this venture. 20-2-5752942. Yours most humbly, Mr. Senjy.
Harry responded quickly. Mr. Senjy replied with the following fax.
Dear Mr. Harry. Thank you for your prompt reply. I felt that it was true that you are an honorable man. To proceed with this transfer as soon as possible, please fax me the name of your bank and your account number. Thank you humbly, Mr. Senjy.
Harry quickly faxed the information. Mr. Senjy replied with the following fax.
Dear Mr. Harry. To secure this transfer and to avoid any question at the bank, we need personal information about you. Please fax us your Social Security Number, date of birth, mother's maiden name, current address and current driver's license. We will enter this information into the bank's records so as to appear as though you were a depositor in the bank who has now withdrawn his funds.
Harry faxed the information. Mr. Senjy replied.
Dear Mr. Harry. Something has delayed the transfer. A senior official in the bank has discovered our plan and demands to be in on the deal. If we have to cut him in, the cut will have to be 25% to each of us which would mean that each of us will receive only $7, 000, 000 instead of $9, 324, 000 or a loss of $2, 324, 000 to each of us. However, the senior official has indicated that if we pay him $25, 000 now, he will look the other way and we may proceed as previously arranged. Can you provide the $25, 000 for two weeks which is the time it will take for the total sum of $28, 000, 000 to be transferred into your account? Your humble servant, Senjy.
Harry responded by fax that he would be able to front the $25, 000. Mr. Senjy replied with instruction on how Harry could wire the $25, 000 to a bank in the Sudan where Mr. Senjy indicated that the senior official has a secret bank account.
Harry wired the money. Days later, Mr. Senjy faxed the following message to Harry.
Dear Mr. Harry. You have proved that you are an honorable man whom my father and I can trust to do business with and who we can trust with sending to you the $28, 000, 000 and whom we know will not cheat us when we are dividing up the money. The money is now ready to be sent awaiting only our paying the taxes necessary to transfer the money from Nigeria to the United States. The taxes on the $28, 000, 000 is $47, 342.50. If you would wire the money to the Bank of West Niger, Abuja, Nigeria, account number 23-333-333-889, I will be able to wire by return the $28, 000, 000 to your account.
Harry wired the $47, 342.50. In reply, Mr. Senjy faxed back to Harry the following message.
Dear Mr. Harry. You are an honest and honorable man so you will believe that the senior official who had agreed to take $25, 000 for his silence has now demanded an additional $90, 000 which neither my father nor I have. Could you wire such sum to his account in Bank of Islam, Khartoum, Sudan, account number 23-686900-001? He has agreed to allow the $28, 000, 000 to be wired to you upon receipt of the $90, 000.
Harry finally smelled a rat. He faxed to Mr. Senjy the following comments.
Dear Mr. Senjy: I am not capable to sending any more money. I took you at your word that the official required $25, 000 only. Please refund the $47, 342.50 I sent you for the taxes owing on the $28, 000, 000.
Mr. Senjy never replied. However, Mr. Harry's 401k and bank account were drained by an overseas withdrawal. This was in addition to the $72, 342.50 plus wire transfer fees.
5.2 The Contractor (a case history)
Jane wanted a new kitchen and a remodel of her family room. She hired Fred whom she found listed in the local newspaper.
When Fred came over to bid the job, Jane found him charming. Jane should have realized that building contractors all seem like nice guys when you first meet them. Many remain so. However, some are just plain bad actors.
What Jane didn't realize was that all building contractors must keep their job stream going. This means that they don't dare turn down a job in fear that when they finish the last job, there will be no work available.
In Jane's case, she found her project delayed when Fred wouldn't show up and wouldn't answer her telephone calls. Several weeks passed while her kitchen was unusable. As she later learned, Fred was out lining up new business and starting two others large jobs.
Another thing Jane didn't realize was that when she called Fred's cell phone from her home, Fred knew who was calling. Since he didn't want to talk to her, he didn't answer the call. Fred's trick of avoiding speaking to irate customers became clear to Jane when she tried to call Fred from a neighbor's house: Fred answered on the second ring thinking he was getting a call from new business.
After several months of inconvenience, Jane had a new kitchen and a remodeled family room..
Jane's worse nightmare was yet to appear: Jane received notice of a lien on her home from the local building supply store and one from a worker who had helped Fred on the job.
Jane discovered that even though she had paid Fred in full for the job, he had failed to pay for the supplies and failed to pay for the work done by the sub-contractor on the project.
Next, Jane received a bankruptcy notice stating that Fred had filed for relief under the bankruptcy code.
Jane was forced to pay off the liens. She was not able to recoup the amount she paid from Fred.
In the agreement with Fred, Jane should have held back a final payment to settle any potential lien claims. And before she made the final payment to Fred, she should have received lien waivers from each supplier and from each sub-contractor who had worked on the job.
5.3 Affinity Scam
This scam begins with a friend inviting others over to the friend's home to listen to a financial presentation. The presenter tempts the audience with tales of riches or scares the hell out of the audience to lure them towards investments sold by the presenter.
On the excuse that the information is necessary to evaluate differing financial strategies, the presenters glean the guests' personal financial data. The presenters then suggest the guest shift assets into other investments where the presenter group will receive fees.
Seldom is the advice given at these financial get-togethers worthwhile; other times it is downright disastrous.
5.4 The Inheritance (a case history)
Joan is a waitress. She makes good money with wages and tips and has saved $8, 000 towards retirement. Recently, she met a "very nice" man at Church who confided in her his very sad and compelling story. Amiel has a daughter in Lebanon who is very ill. She is on dialysis awaiting a kidney transplant. Amiel is having difficulty paying for his daughter's medical care. He needs to borrow a little money until an inheritance from an uncle clears probate. He asks Joan if she could help. Joan explains that she has a little savings which she would be willing to lend Amiel. Amiel graciously accepts the $8, 000.
About a month later, Joan asks how his daughter is doing and inquires about his uncle's estate. Amiel draws a blank. "What daughter, what uncle?" he replies. Joan nervously reminds him of his daughter's illness and his uncle's probate. Amiel's memory suddenly recovers. "Oh, yes. Well, not well, " he responds. "My daughter continues to require money and the attorneys will not finalize the probate until I pay their fees in full. I just don't have the money to pay them. If I could just get the lawyers paid, all my uncle's money would come to me and I would then be able to repay you your $8, 000." Joan explains that her savings are exhausted. Amiel appears very distressed and asks, "Do you have any credit cards?". "Yes, a few, " Joan replies. "Well, let me see them, " demands Amiel.
The short of it was that Amiel convinced Joan to take cash advances to the maximum available credit on all of her cards . She was able to raise $40, 000 which she gave to Amiel.
She thinks he has gone to Lebanon to bring the money to help his daughter, but she has not heard from him again. She cannot pay her minimum payments and is being called at her work by the creditors. Her boss says he'll have to let her go if the calls don't stop.
Would a bankruptcy help Joan?
Yes, although Joan can insist that the creditors refrain from calling her at work (a violation of the Federal Debt Collection Practice Act), she fears that the calls will continue.
A bankruptcy would eliminate her credit card obligations, but it won't return her $8, 000.
5.5 The Lottery
Here is an example of actual emails received by one of my clients:
-----Original Message-----
From: Osaki Godier Electronics Co. Ltd [mailto:jobs_info@bellsouth.net]
Sent: Wednesday, March 14, 2007 9:59 AM
To: info@osaki.com
Subject: INTERNATIONAL REPRESENTATIVE NEEDED
Dear Prospective Representative,
I am Mr.Dong Bin, Chief executive director of Osaki Godier Electronics Co. Ltd. , CHINA. Through my search in the internet , I got your email address
and after due verication with my colleagues, I decided to forward to you this
business proposal in anticipation that you may be in position to
assist/handle this business with me.
We are a dynamic company specialized in providing top grade service and
products to our customers. Established in 1987, Osaki Godier Electronics Co.
Ltd. Is a multi-national firm dedicated to its customers and their needs.
Small size of our firm allows us to give special attention to our customers
special needs. We are providing top quality LED display, electronic goods,
consumer products, and speciality items into America, Canada and Europe
Industrial market. The product can be applied to: Banks, Stock exchange
corporation, station, billboard, etc. It is concolorous, bichrome,
trichrome. And we can also develope new product according to the demand of
the customer. Together with the wholeset of soft in English.
Presently, we are faced with some problems most especially with our Payment methods as most clients we have in the United States/Canada and Europe
prefer to pay us with cheque rather than cash. We find it very cumbersome in
accepting such payments due to the new monetary policy in our banking
systems here in China and this is crippling our business. We have numerous
customers in the United States/Canada and Europe, we cannot afford to lose
them due to this problem.
We hereby request for your hand in partnership to act as our payment
Representatives (Osaki Godier Electronics Co. Ltd), to act as our clients
who shall receive payment on our behalf from our customers in the United
States and Canada and Europe.
Please if you are interested forward to us your full contact details as
requested below. Thanks in advance, please fill in the blank spaces below:
1 Your Full Names:...
2 Cell Number:...
3 Direct Phone:...
4 Age:...
5 Sex:...
6 Your Full Contact Address:...
7 State/Country:...
8 Company Name:...
As soon as you indicate your interest, further instructions will be passed
on to you on the procedure that we will follow in accomplishing this deal.
On accomplishment of this deal you will be entitled to 10% of the total
sum.And this transaction is 100% risk free. If this proposal is accepted by
you, kindly reach me immediately via e-mail: dong_bin101@yahoo.com.hk
Looking forward to hearing from you.
Best Regards,
Mr.Dong Bin
General Manager
Osaki Godier Electronics Co. Ltd
9 Osaki Godier Road
Shanghai 100835
People's Republic of China

And another email in the same vein.
From: Delixi Consults [mailto:trekkers053@shaw.ca] Sent: Friday, March 09, 2007 4:03 PM
Subject: BE OUR AGENT
Dear Sir/Madam,
A company, Delixi Consults based in People Republic of China, is in need of representatives in Europe and North America to represent its interests with
some companies that export products from China tothis continents The
representatives will act as a receiving payment agents and also placing
order for goods and products from customers.
Your percentage will be 10% for a start, If you are interested and for more
information, please send an email with your name and address and cell phone
number and fax to:delixiconsultcompany8@yahoo.it
Thank you.
Mike Scott (marketing),
for Delixi Consults & Co

5.6 Gift Cards
Did you know that gift cards often include a scam?
Suppose you bought a $50 gift card. The offer claims that the card never expires. However, did you read the fine print? Often the terms include an escheatment clause.
"Escheat is a legal doctrine that operates to ensure that property is not left in limbo and ownerless. It originally referred to situations where a legal interest in land lapsed causing the ownership of the land to revert to the immediately superior feudal lord." (Wikipedia)
In the gift certificate case, the escheatment reclaims a portion of the card's value if the card is unused for a period of time. For example, the card's value may be reduced a percentage or a dollar amount each month until the card becomes worthless even though it has never been used.
Olive Garden, Red Lobster, Smokey Bones, and Bahama Breeze, agreed to a FTC cease and desist order regarding deceptive practices in advertising and selling its gift cards with escheat provisions. Darden Restaurants, owners of these restaurants, entered into a consent decree to alter this practice.
Hopefully, this temporarily put a stop to Darden Restaurants' gift card escheat practices. However, consent agreements are for settlement purposes only and do not constitute an admission by the defendant of criminal conduct.
Unfortunately, the practice of dropping prosecution of a misleading business practices in exchange for a company's agreement to cease the practice doesn't stop the practice continuing in other businesses, or after some period of time, in the same business.
Consent decrees are mere wrist slaps where the offending company pays some small percentage of its dubious gain and keeps most of the profit. College business classes cite this dodgy practice as proof that questionable business practices which generate profits are often worth the risk.
Is this fair?
In a 2006 report by the Maryland Division of Consumer Affairs on gift cards found that 9 out of 30 studied retail gift cards impose an expiration date or a potential fee, and that 6 of those 9 companies failed to disclose those restrictions pre-purchase in their stores or on their web sites or both.
A company's failure to clearly and conspicuously disclose all the material terms relating to their gift cards including expiration dates and any potential fees, may constitute a deceptive act or practice under Section 5 of the FTC Act. (See, Montgomery County, Maryland, Division of Consumer Affairs' 2006 annual report on gift cards at www.montgomerycountymd.gov Go to "resident services" then go to "consumer information, " then look at the article entitled "Gift card report."
5.7 Funerals
The Federal Trade Commission has a section on funerals. The following section is a quote from the commission's web site:
"When a loved one dies, grieving family members and friends often are confronted with dozens of decisions about the funeral, all of which must be made quickly and often under great emotional duress.
What kind of funeral should it be?
What funeral provider should you use?
Should you bury or cremate the body, or donate it to science?
What are you legally required to buy?
What other arrangements should you plan?
And, as callous as it may sound, how much is it all going to cost?
Each year, Americans grapple with these and many other questions as they spend billions of dollars arranging more than 2 million funerals for family members and friends.
The increasing trend toward pre-need planning (when people make funeral arrangements in advance) suggests that many consumers want to compare prices and services so that ultimately, the funeral reflects a wise and well-informed purchasing decision, as well as a meaningful one.
Many funeral providers offer various "packages" of commonly selected goods and services that make up a funeral. But when you arrange for a funeral, you have the right to buy individual goods and services. That is, you do not have to accept a package that may include items you do not want.
According to the Funeral Rule regulating funeral service providers, you have the following rights:
You have the right to choose the funeral goods and services you want (with some exceptions).
The funeral provider must state this right in writing on the general price list.
If state or local law requires you to buy any particular item, the funeral provider must disclose it on the price list, with a reference to the specific law.
The funeral provider may not refuse, or charge a fee, to handle a casket you bought elsewhere.
. A funeral provider that offers cremations must make alternative containers available."
For further information, go to www.ftc.gov. Navigate to "consumer protection, " then "shopping for products and services, " then "funerals."
5.8 Spam
Do you want to eliminate spam?
"How to Can unwanted Email" is a publication by the Federal Trade Commission. For further information, go to www.ftc.gov Navigate to "consumer protection, " then "computers and the internet, " then "spam email."
5.9 Do-not-call list
Numbers placed on the Do-Not-Call list expire in five years and need to be renewed. To check the expiration date of a number, long on to www.donotcall.gov and click on the "Verify a Registration" button. Enter the phone number and an e-mail address. A verification with the expiration date will be sent to you by e-mail. To register, go to www.donotcall.gov or call 1-888-382-1222.
5.10 The Federal Scam
Conservatives have historically preached fiscal responsibility. When Reagan became president and ran up deficits, political observers expressed worry. How would the voters react to this irresponsible fiscal policy? The few negative voices did not win the day.
What has been overlooked by many is the fact that deficits are a stealth tax on the poor.
This phenomena results from the fact that an overwhelming percentage of the population has no capital. They live day to day, paycheck to paycheck. On the other hand, the rich, by definition, own great amounts of capital. But, how does this make any difference?
When our government spends more than it takes in, the value of the dollar falls.
Sometimes this is referred to as inflation. We see this in the rise in price of fuel, food and housing. But what about the rise in real estate values?
A few who are not "rich" do own a home so they do see the effect of owning capital. In this case, when the fair market value of the home goes up expressed in terms of dollars, we tend to think that our house increased in value. In truth, what happened is that now it takes more dollars to buy the same piece of real property but the actual "value" of the house stays constant because the value of the dollar has dropped. The "value" of the home floats with the "value" of the dollar. So as the dollar falls 20% in value, the price of your house, expressed in terms of dollars, increases by 20%; but, the value remains the same.
Dick Cheney expressed the plutocratic view well when he said, "Deficits don't matter." What he meant was that deficits would not hurt the Republicans at the ballot box.
As the dollar falls in value, the value of Dick's capital floats upwards protecting him from any real loss. For example, Dick owns 50 million shares of oil stocks valued at $100 per share. The dollar falls 20% in purchasing power (value) but Dick's share prices increase by 20% to $120 per share. His capital has not been diminished by the drop in the value of the dollar.
Or for example, Dick has real property bought for fifty million. The dollar's purchasing power drops but the dollar value of his real property goes up as with your home and this keeps Dick whole.
Of course, the majority of us own no capital except our home, and we find our monthly wages calculated in dollars. What happens as the dollar loses value?
If your take home pay is $2, 500 a month and the dollar's purchasing power (value) drops 20%, your $2, 500 is now only able to purchase $2, 000 worth of fuel, food and housing.
The deficit spending stealth tax has taken $500 a month from your wages. This is the reason you cannot make it from payday to payday without using your credit cards.
Here, the stealth tax of governmental deficits affects only the poor whereas it does not lower the "value" of capital mostly held by the rich.
And if Dick's attitude regarding the suffering of the poor wasn't expressed clearly enough, in the years the Republicans controlled congress the minimum wage was not increased.
On the other hand, Democrat presidential candidate John Edwards speaking about the two Americas points out that our economy is only growing at the top. He says, "Over the last 20 years, American incomes have grown apart: 40 percent of the income growth in the 1980s and 1990s went to the top 1 percent of the population.
The top 300, 000 individuals now make more than the bottom 150 million. If all Americans were sharing in economic progress as they were nearly thirty years ago, families in the bottom 80 percent would be earning $7, 000 more a year." With an additional $7, 000 per year, we wouldn't need to use credit cards to live from pay check to pay check.
The deficit spending has added to many Americans becoming wage slaves, and benefitted the financial institutions that now charge 30% to 300% interest on bridge loans to the poor.
Do you think the consequential burden on the poor wasn't known and planned for by those with power and capital?
Is this fair?
5.10.1 How does deficit spending effect Social Security payments
Between 2000 when George W. Bush became president, the purchasing power of seniors has dropped 40%. The chart below highlights some of the losses in purchasing power of the dollar.
In fact a study done by the Senior Citizens League, from which the figures for the chart below were obtained, found that "people 65 and over have lost 40 percent of their buying power since 2000." (A chart that accompanies this text is not viewable on google's knol. To view, go to www.billpayersguide.com. During the same period COLA (cost of living adjustment for Social Security payments) only increased 19%.
5.11 Identity Theft
Identify thieves steal personal information, such as a credit card account number, Social Security number or driver's license number. Then they open up accounts in a consumer's name and run up charges on the account. Or, they use the personal information to charge goods and services to a consumer's existing accounts. In other cases, they may work, or even be arrested, while using the victim's name.
The harm to a consumer's credit and daily life can be devastating. Victims of ID theft often have trouble getting new credit cards or loans because of the damage to their credit ratings.
According to the ID Theft Data Clearinghouse, the most common types of identity theft are:
* using or opening a credit card account fraudulently
* opening telecommunications or utility accounts fraudulently
* passing bad checks or opening a new bank account
* getting loans in another person's name
* working in another person's name.
5.11.1 Investigating Identity Theft
The Identity Theft Data Clearinghouse is an essential tool for law enforcement. As the nation's repository for identity theft complaints, the Clearinghouse offers law enforcement officers:
* access to the nation's only central database of identity theft complaints
* information on trends in identity theft
* an opportunity to work with other law enforcement agencies and appropriate private organizations-from their own desktop computer.
The Identity Theft Data Clearinghouse is part of Consumer Sentinel, an online cybertool and fraud complaint database used by hundreds of civil and criminal law enforcement agencies in the United States and abroad. To access the Clearinghouse, contact the Consumer Sentinel project team at 1.877.701.9595. The Federal Trade Commission (FTC) manages and maintains the Clearinghouse and Consumer Sentinel.
5.11.2 The ID Theft Affidavit
The ID Theft Affidavit makes it easier for consumers to dispute debts resulting from identity theft. The ID Theft Affidavit is accepted by the three major credit bureaus, participating credit issuers and other financial institutions. Log on to www.consumer.gov/idtheft or call 1.877.ID.THEFT for a copy of the ID Theft Affidavit.
The Federal Trade Commission, the nation's consumer protection champion claims to be doing the following for you the consumer:
enforce federal laws that protect consumers.
provide free information to help consumers spot and avoid fraud and deception in the marketplace.
desires to hear from consumers who want to get information or file a complaint.
To find out more on this topic, go on line to www.ftc.gov
5.11.3 The difference between a fraud alert and a credit freeze
A fraud alert is another tool for people who have had their ID stolen - or who suspect it may have been stolen. With a fraud alert in place, businesses may still check your credit report. Depending on whether you place an initial 90-day fraud alert or an extended fraud alert, potential creditors must either contact you or use what the law refers to as "reasonable policies and procedures" to verify your identity before issuing credit in your name. However, the steps potential creditors take to verify your identity may not always alert them that the applicant is not you.
A credit freeze, on the other hand, will prevent potential creditors and other third parties from accessing your credit report at all, unless you lift the freeze or already have a relationship with the company. Some consumers use credit freezes because they feel they give more protection. As with credit freezes, fraud alerts are mainly effective against new credit accounts being opened in your name, but will likely not stop thieves from using your existing accounts, or opening new accounts such as new telephone or wireless accounts, where credit is often not checked. Also, only people who have had their ID stolen - or who suspect it may have been stolen, may place fraud alerts. In some states, anyone can place a credit freeze.
5.11.4 The Identity Theft Report
An Identity Theft Report can be used to permanently block fraudulent information from appearing on your credit report. An Identity Theft Report will also make sure these debts do not reappear on your credit report. An Identity Theft Report can prevent a company from continuing to collect debts that result from identity theft, or selling them to others for collection. It is also needed to place an extended fraud alert on your credit report.
5.11.5 Creating an Identity Theft Report may require two steps:
Step One: obtain a copy of a report filed with a local, state, or federal law enforcement agency, like your local police department, your State Attorney General, the FBI, the U.S. Secret Service, the FTC, or the U.S. Postal Inspection Service.
There is no federal law requiring a federal agency to take a report about identity theft; however, some state laws require local police departments to take reports. The law requires the report to provide as much information as you can about the crime, including anything you know about the dates of the identity theft, the fraudulent accounts opened and the alleged identity thief. If you do not provide detailed information, it may be impossible for consumer reporting companies and creditors to comply with your requests. We suggest that you file an online Complaint form with the FTC, and then ask your local police department to incorporate a copy of the printed ID Theft Complaint into the police report.
By following this procedure, the consumer reporting company and the information provider may require less additional information and/or documentation under Step Two, below.
Step Two: This step may vary depending on the policies of the consumer reporting company and the information provider (the business that sent the information to the consumer reporting company). That is, they may ask you to provide information or documentation in addition to that included in the law enforcement report which is reasonably intended to verify your identity theft. They must make their request within 15 days of receiving your law enforcement report, or, if you already obtained an extended fraud alert on your credit report, the date you submit your request to the credit reporting company for information blocking. The consumer reporting company and information provider then have 15 more days to work with you to make sure your Identity Theft Report contains everything they need. They are entitled to take five days to review any information you give them. For example, if you give them information 11 days after they request it, they do not have to make a final decision until 16 days after they asked you for that information.
If you give them any information after the fifteen day deadline, they can reject your Identity Theft Report as incomplete; you will have to resubmit your Identity Theft Report with the correct information.
You may find that most federal and state agencies, and some local police departments, offer only "automated" reports, reports that do not require a face-to-face meeting with a law enforcement officer. Automated reports may be submitted online, or by telephone or mail. If you have a choice, do not use an automated report. The reason? It's more difficult for the consumer reporting company or information provider to verify the information.
In cases other than when you are asking a consumer reporting company to place an extended fraud alert on your credit report, if you use an automated report, the consumer reporting company will probably ask you to provide additional information or documentation.
6.0 Student Loans
6.1 Finding Student Loans
Checking out your Expected Family Contribution (EFC) can be useful in determining whether looking for financial aid for college is worth your while. The College Board provides an on-line calculator at www.collegeboard.com.
6.2 America's new Indentured Servants
In colonial times, impoverished persons wanting to relocate to America would contract with a land owner to work a period of years in exchange for the cost of passage. This worker was indentured and was in fact a servant.
Today, those who wish to obtain a college education must also indenture themselves with student loans to pay tuition. These students will become indentured servants of the lenders - private and public.
For a like reason that home prices skyrocketed when mortgage money was abundant and easy to obtain, college tuition has skyrocketed as more student loan money has become available.
The prospect of becoming an Indentured Servant is becoming a deterrent to a generation whom might otherwise obtain a college education and enhance the intellectual capital of America. Rather, reducing the pool of college educated citizens will undermine the well being of our nation.
Is this fair?
6.3 Eliminating Student Loans
Many students are leaving college with unbelievably high federally guaranteed student loans. These Student loans are not dischargeable in bankruptcy except for hardship that is difficult to obtain.
A better route than bankruptcy, where you probably will not prevail, is to petition the U. S. Department of Education to have your loan put into an uncollectible status. Go to the Department web site, www.ed.gov, and begin where the following question is posed:
Question: I am having trouble paying back my student loans. What are my options?
Answer: If you are having trouble making your education loan payments, immediately contact the organization that services your loan. You might qualify for a deferment, forbearance, or another form of payment relief. It's important to take action before you are charged late fees. For Federal Perkins Loans, contact your loan servicer or the school that made you the loan. For Federal Family Education Loans, contact the lender or agency that holds your loan. For Direct Loans, contact the Direct Loan Servicing Center online or by calling 1-800-848-0979 or 1-315-738-6634. TTY users should call 1-800-848-0983. For more information on different options, please see Student Aid on the Web. If you are unsure of what type of loan(s) you have outstanding, you can check your loan history with the National Student Loan Data System.
For further information, please go on-line to the Department of Education at www.ed.gov Go to "Student Financial Aid" then go to "repay loans" then find the article relating to "Statement of Student Financial Status - Administrative Wage Garnishment." Here you will find a PDF to fill out in which you give the agency your financial situation.
Your goal is to be put into a non-collectable status.
7.0 Medical Bills
Medical bills can be staggering. If you have no health insurance, the expenses for just one trip to the hospital could create a need for a bankruptcy. In fact, a Harvard study in 2005 is summed up as follows:
"In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1, 771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11, 854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick."
Even those on Medicare are struggling to make the payments on their drugs. Thanks to congress, the gap in prescription coverage has left many seniors going without food, just to afford their medication.
Certainly, medical bills are not the only problem which forces those with large medical bills to file bankruptcy, it frequently is the "straw" that breaks the camel's back.
Seniors should think twice before considering filing a bankruptcy if their only income is social security. They may be judgment proof (a term discussed later in this Guide). In that case, a bankruptcy is a costly and worthless maneuver.

III. BILL COLLECTORS
8.0 When the bill collector calls
If you become delinquent in paying your bills, you will receive a call from a bill collector. When the call comes, you should know some of the rules that the caller must follow. He will not abide by these rules unless you know what they are, and unless you let the collector know the extent of your knowledge (if you read this whole Guide, you will know more about the subject than most collectors do).
One way to assure that the bill collector follows the rules set forth herein is to inform the collector that you have a tape recorder on for "quality control purposes" and to be able to refer back to the conversation later if something seems unclear.
8.1 What the bill collector must tell you
The Fair Debt Collection Practice Act requires bill collectors to do the following:
Identify themselves and notify you, in every communication, that the communication is from a debt collector.
Upon your request, provide you with the name and address of the original creditor (company to which the debt was originally payable).
. Upon your request, the bill collector must provide you with verification of the debt (though the Act is not clear as to what constitutes verification).
. notify you of your right to dispute the debt, in part or in full, with the debt collector. Such a dispute must also be reported by the creditor to any credit bureau that reports it.
8.2 What the bill collector can't say
The Act prohibits several actions by the bill collector. These prohibited actions have been banned because they have been found to be deceptive and abusive when the bill collector is in the process of collecting a debt.
These limitations include:
. Contacting you by telephone before 8:00 a.m. and after 9:00 p.m. local time.
. Contacting you in any way if they have received WRITTEN notice that you wish no further contact or that you refuse to pay the debt. The exception is that the bill collector can contact you to say that collection efforts are being terminated or that the collector intends to file a lawsuit. Furthermore, contact can be made in the event that a lawsuit is filed.
Contacting you at your job after having been told verbally or in writing that this is not acceptable. However, you should probably not expect to rely upon a mere verbal request; you should take the time and effort to write the collector using the U.S. P.O. certified mail, return receipt requested and keep a copy of your written request. By making this written request, you put the collector on notice that you know your rights and that you intend to protect those rights.
The collector is prohibited from continuing collection efforts if you send a WRITTEN request for validation of the debt. After you have been provided with the information requested, collection efforts may continue.
The collector may not misrepresent the debt or use deceptive tactics to collect the debt.
. The collector is prohibited from publishing your name or address on a "bad debt" list.
Unless it is allowed by law, the collector is prohibited from adding extraneous "charges" or "fees" to the original balance. This may be hard to detect when the legal prohibition has been violated since Congress has let the credit industry have a free hand in its procedures.
. The collector may not threaten you with arrest or legal action that is not actually contemplated or even possible.
The collector is prohibited from using profane or abusive language in the course of his communication with you relating to the debt.
The collector is prohibited from discussing or even revealing the nature of debts with anyone other than you, your spouse or your attorney.
. The collector is prohibited from giving false information on your credit report or threatening to do so in the process of collection
The collector may not file a lawsuit in a place other than where you live or where you signed the contract. I have found several instances where a collection agency sued a defendant in the place where its office is located rather in the place of the defendant's residence or the place where you signed the contract.
After the collector knows the debtor is represented by an attorney with regard to the subject debt and has knowledge of the attorney's name and address, the collector may not communicate with any person other than that attorney. If you have legal representation, the attorney has a duty to respond to the collector's communications within a reasonable period of time, or the collector is allowed to re-contact you.
A violation of any of these rules should be reported to the Federal Trade Commission at www.ftc.gov.
I have had clients tell me that they don't want to file a complaint. However, by not filing a complaint (just like not voting), you are allowing objectionable practices to continue.
8.3 What you should say and do when the bill calls
1. Ask the bill collector to give you his/her name and mailing address. Expect the bill collector to ask you why you want this information. Before you answer this question, insist on obtaining his name, the name of his company, and the mailing address. Also ask for the name of the original creditor and his reference number for your account.
2. When you have the information requested in #1 above, tell the collector that you are going to send him a written demand to cease further communications including to you at your home or, if you have a job, at your work. At this point, you can inform the creditor that his only future call allowed is one to notify you that a lawsuit will be filed.
3. Write and send a letter to the collector. I have made an example letter below. The letter can be hand written:
Bill Doe (your name)
123 Minor Street (your street address; it would be best to have a P.O. Box)
San Francisco, CA 94102 (your city, state and zip)

January 9, 2008 (Today's date)

Friendly Collection Agency (Business name of the collection agency)
425 Peacock Court (street or P.O. address for collector)
Minneapolis, MN 60401 (collector's city, state and zip)

Re: City Bank Credit Card (the creditor)
Last four digits: ***4567 (the account reference)
Attention: Nick Slick (the bill collector)

Dear Mr. Slick:

Pursuant to the Federal Law [15 USC 1692c] , Fair Debt Collection Practices Act Section 805 [Communication in connection with debt collection] (c) , you are hereby notified that you are to cease further communications with me at either my home, my work or any other location.
I refuse to pay any amount on this claim.
Should you violate this notice and communicate further with me (other than informing me at to what further action will be taken), I will file a complaint with the Federal Trade Commission and seek $1, 000 in damages against you and your company under 15 USC 1692k (Fair Debt Collections Act, Section 813 (a) (1) and (2) (A)).

Very truly yours,
Your signature
Bill Doe (Your name)

4. Make a copy of your letter and keep it in a safe place.
5. Send a copy of the letter using the United States Post Office. I suggest you use the service which records the delivery of the letter.
6. When the collector calls you again at your place of work or at your home, remind the collector that this is the last call that can be made. Ask for the collector's name and company affiliation.
7. When the collector calls a second time, ask again for the name and company affiliation.
8. Go to ftc.gov and file a complaint. If you do not have on-line access to the internet, go to your public library and file the complaint using their computer.
9.0 In Court
Occasionally, you will be sued. When the bill collector files a lawsuit, a copy of the suit must be served on you. Don't think you can be clever and "avoid" service. Just take the papers and follow some simple steps.
9.1 Should you hire an attorney?
If you are unsure whether you should hire an attorney or defend yourself, don't begin by calling the person suing you or his attorney. If you have any doubts, you should interview a few attorneys to determine whether you can afford an attorney and whether you can tolerate dealing with one.
If you are going to use an attorney, contact one immediately. You can find attorneys by using Google search engine, www.google.com. When in Google, search for an attorney by area, selecting one who has an office in the city where the lawsuit has been filed. In that geographic area, enter a speciality such as "debt collection defense." I suggest interviewing more than one attorney. Some attorneys you may find offensive. There are a lot of attorneys. Don't hire one if you get an uncomfortable feeling when you meet.
I feel that using an attorney to defend yourself in a collection case in which the only issue is the amount of money you owe, is a waste of money.
But you may be terrified representing yourself. In that case, the cost of an attorney may be worth the fee.
If you choose to defend yourself, you should prepare for the eventuality that you are probably going to lose. If you owe money, you're going to have to pay some amount. You may be able to challenge the exact amount you should be required to pay, such as contesting fees and charges, but you will pay something unless you have a Statute of Limitation defense. Don't count on winning on that issue.
However, contesting the lawsuit will delay the entry of judgment, and in doing so, you could be able to work out a better payment plan than if you do nothing and let the lawsuit proceed to judgment by default.
Therefore, file an answer or other responsive paperwork at the court clerk's office.
9.2 Answer to the Complaint
You must file an Answer or Response (hereinafter "answer") to a lawsuit if you are sued and served with a Complaint and Summons. The filing of the answer will prevent an immediate judgment being taken against you by default.
Your answer does not have to be worded in fancy, lawyer-like lingo. In fact, some answers with plain language are better. Simply stating your case lets you expand on possible defenses which might not be known to you at the time.
The "complaint" is often full of legal language used by the plaintiff (the creditor who is suing you) that after reciting preliminary facts such as the identify of the plaintiff and why he is entitled to file his "complaint" in the specific court, states the relevant facts (called allegations).
The allegations set forth the facts that justify the law suit. The allegations are usually divided into numbered paragraphs. To answer, you must file a written reply called an "answer."
In your answer, you must deny the allegations in the complaint and set forth your defense. In some cases, you don't know what your defenses might be, but you should recite all of the defenses you think you might have.
A common error is to omit affirmative defenses such as the Statute of Limitation defense. The limitation defense is based on the idea that a plaintiff must bring his case to court quickly or is otherwise barred. This is an "Affirmative Defense, " meaning that if it is not stated in writing in your answer, it is waived. Therefore, put it into your answer along with anything and everything you think favors your position.
Without limiting the possibilities, you might claim that an increase in the interest rate was unauthorized and therefore unjustified. Or you might state that the charges for late fees and or over limit fees were improper or were improperly calculated.
Don't be bashful with defenses: you will not be penalized for raising as many defenses as you reasonably believe you have.
As a general rule, "general denials" are not acceptable answers if the damages sought exceed $1, 000. Therefore, you must specifically state your denials. For instance, if the plaintiff's complaint contains 14 paragraphs, you could answer by writing, "defendant denies each and every allegation of paragraphs 1 through 14 of plaintiff's complaint on file herein."
And, if the plaintiff uses a "judicial council" form, you could deny each paragraph specifically by naming the paragraph and then denying it.
But remember, this guide is not a substitute for personalized advice from a knowledgeable lawyer and should not be used as such. If you desire the help of a trained professional, consult an attorney licensed to practice law in the state in which you reside.
9.3 Proof of Service
Filing the answer will require you to attach evidence that the answer was served on the plaintiff. Service can be by mail. It must be done by someone other than you or a co-defendant. The usual evidence of service is referred to as a "Proof of Service."
The proof of service document states the name of the person actually mailing the answer, the address to which the answer was mailed, and the date of mailing. A copy of a typical "Proof of Service" is set forth below. If you use this copy, leave out the items in parenthesis since that information has been inserted only as a guide.
After you fill out the proof of service, make three copies of both the Answer and the "Proof of Service." Attach one copy of the Proof of Service to each copy of the Answer. Keep one copy for yourself and file the original Answer with the original proof of service attached. You cannot be the one who signs and mails these two documents. This task must be done by someone who is not a party to the lawsuit. You may have a friend or relative sign and mail the documents. When you take the Answer with the Proof of Service attached to it to the clerk's office to be filed, you will have to pay the filing fee. Most clerk's offices will not take personal checks.
A sample "proof of service" is printed below at Forms: Proof of Service.
But remember, this Guide is not a substitute for personalized advice from a knowledgeable lawyer and should not be used as such. If you desire the help of a trained professional, consult an attorney licensed to practice law in the State in which you reside.
9.4 The consequences of a judgment
A judgment is an order by a court of law finding either for the moving party (plaintiff) or responding party (defendant). The judgment may be for a money (dollar) amount or may regard other matters.
This Guide addresses only money judgments arising out of a credit card debt, car repossessions, medical bills, or other ordinary overdue obligations. If you are facing a judgment based upon other legal theories such as fraud, assault, embezzlement, negligence, and/or where punitive damages are sought, consult an attorney.
Once the judgment has been entered, the creditor is given certain powers such as being able to garnish your wages or bank account. A judgment may also be recorded which when done becomes a lien on your real property. In addition, the judgment creditor is able to have an order issued commanding you to appear in court to give the creditor information regarding your assets and income.
This court procedure is called an Order of Examination. At the examination, you will be put under oath by the judge and sent into the hall, whereupon the creditor is allowed to ask you about your employment, your bank accounts, and your other assets such as car, boat, home, stocks, etc.
9.5 Wage garnishment
The federal law sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for support, bankruptcy or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of your disposable earnings, or the amount by which your disposable earnings are greater than 30 hours at minimum wage (currently $5.85 an hour).
For illustration, if the pay period is weekly and disposable earnings are $175.50 ($5.85 X 30) or less, there can be no garnishment. If disposable earnings are more than $175.50 but less than $234.00 ($5.85 X 40), the amount above $175.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $234 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts. See: Department of Labor web site, www.dol.gov Go to "wages" then "garnishment" then "Employment Law Guide: Wage Garnishment Section."
9.6 Claim of exemption when wages or other assets are attached
When your wages are garnished by a creditor, you may be able to get some relief using a document entitled "Claim of Exemption." The process is one in which you file the document declaring that all of your wages are required for the necessities of yourself and/or your family.
The document is usually filed with the Sheriff or Marshall or other court officer who has attached your pay. The officer will then apply to the court for a hearing to determine whether the garnished wages will be forwarded to the creditor or returned to you.
Asking for a hearing before a judge will help even if the law does not support your argument such as in the case of medical bills that are considered a necessity of life.
Many judges will limit the garnishment amount when a compelling argument is made by the wage earner. It's always worth a try to claim an exemption to a wage garnishment, because the opposition at the hearing is usually more reasonable when their actions are being reviewed by a judge.

IV. SOLUTIONS
Complain: Policy will never change if the people who are harmed by it are silent!
10.1 Complaining to the Federal Government
If you feel, in any way, that you have been treated dishonestly, unfairly, or unlawfully, file a complaint with the Federal Government's agency, Federal Trade Commission at www.ftc.gov. When you go to the FTC's web site, use the navigation bar for "Consumer Protection" then, using the second navigation bar, click on "File a Complaint". Don't feel that your complaint will do no good. It may be just one more hard luck story to some bureaucrat, but when enough complaints appear about one company or one business practice, these problems will be addressed.
10.2 Filing a complaint in Small Claims Court
Small Claims Court is the great equalizer of the legal system. Here, without the need of an attorney and at little cost, you can bring your dispute before a judge. Monetary limitations may keep you from seeking this forum, but when you wish to publicize an injustice this may just be the forum you need.
Most Small Claims Courts have advisors who can suggest and advise you on procedure. They may also discourage you from using this service. On the other hand, if you feel that a creditor has acted unfairly or dishonestly or charged you unjustly, this could be an avenue you can use to settle the problem.
10.3 Doing Nothing
When a client calls me with financial problems, the first thing I look for is whether the client is "judgment-proof."
This term means that all of the client's income and assets are protected from creditors. Examples are the unemployed and those on Social Security or Social Security Disability. Frequently, exemptions protect the only assets the client has such as an old car or a newer one which is financed but is worth less than is owed against it.
When a client is judgment-proof, I suggest he do nothing. Filing a bankruptcy makes no sense in these cases. Sometimes these judgment-proof individuals do file a bankruptcy to find peace of mind. However, it may not be worth giving up an ability to file a second bankruptcy for another eight years. The bill payer may want to keep the bankruptcy option in reserve for future debt related problems.
Also, bankruptcy is difficult to do without an attorney and does cost money even for the self-represented. Therefore, before you decide whether to stop paying on your credit card bills or file bankruptcy, ask yourself, "Am I judgment-proof?"
If you are a recipient of Social Security only and owe federally guaranteed student loans, see the section on Student Loans, 6.0 above.
10.4 Settling your credit card debt
Credit card companies are often willing to settle an account for a fraction of the stated balance. Their reason is to get some money rather than none at all and to get that money back into the system by lending to someone who will be willing and able to make timely payments. The card companies must decide to accept a payout which may be the only money they will ever get from you. After all, you may file a bankruptcy or die. Additionally, with the money you pay them, the card companies can loan it out again for interest rates of 30% to 40%. With late fees and over limit fees, it makes sense to them to settle and look for another fish.
There are problems with credit card settlements. Firstly, the people who you deal with are not always honest. They will agree to settle and after you send the money, they "forget" the settlement terms.
Therefore, it is imperative that all offers to settle from the credit card companies be in writing and the writing in your hand before you send any money.
I suggest having the offer faxed to you, but you could have the offer faxed to Kinkos or the USP package store.
Secondly, be sure you keep a copy of your money order or Cashier's Check that you use to pay the settlement. Third, send the payment by a system which tracks the delivery. The U.S. Post Office offers a good service such as Certified Mail, Return Receipt Requested.
Whichever delivery method you chose, keep all of these forms forever and keep them together: staple the credit card company's offer, the Certified Mail receipt, the return receipt postcard, and your copy of the Money Order together.
Once you have settled your debt, plan on continuing to hear from collection agencies trying to collect again on the bill. If you have all of the documents I've listed above, you will be able to defend yourself against further collections or lawsuits should these problems arise.
Fourth, the credit card company will notify the credit services that the account was "paid" or "settled." Neither of these designations looks good on your report because they are code words for not paying in full. If you pay an account in full, your credit report says "paid in full."
Fifth, the credit card company will notify the Internal Revenue Service (the IRS) that you did not pay the full amount. The IRS's position will be that the amount you were not required to pay was "debt cancellation" income and expect you to pay taxes at regular tax rates on that amount. Be prepared for this problem. Challenge the IRS's position and claim that you settled a disputed debt and the amount paid represented the true amount borrowed, not including junk fees and unjustified charges.
Another defense to the tax on "debt cancellation" income is to prove your insolvency. This may be hard to do since you have to prove that your debts exceed the value of your assets.
However, if you have done some of the exercises listed above to determine the value of your assets and you have a list of your debts, you may be able to convince the IRS that you were insolvent and that no taxes should be owed on the "debt cancellation" income.
Some bill payers hire an attorney to do the negotiation to settle the credit card charges. But, you can do the settlement yourself even though having an attorney's help will prove more successful in many cases. Remember that an attorney's function is to act as a spokesman who can represent your position in a way you are not able to do.
I recently represented a client who owed over $120, 000 in credit card debt. Since the card company felt he was "judgment-proof, " they settled for 17% of the balance payable in six equal monthly installments.
I have reproduced some of the letters I have sent to the card companies that have proved successful in settlement negotiations. They are set forth below under Forms: Sample Settlement Letters to Credit Card Companies.
Remember, this Guide is not a substitute for personalized advice from a knowledgeable lawyer and should not be used as such. If you desire the help of a trained professional, consult an attorney licensed to practice law in the state in which you reside.
10.5 The Payout (a case history)
Michael and Josephine owned a home worth $350, 000. It was fully paid for. Over the years, they had accumulated credit card debt of $75, 000 paying the medical expenses of a relative. They considered bankruptcy but were informed that the equity in their home could not be protected with a homestead since it exceeded the exempt amount ($150, 000 here in California because one was over 65).
They dealt with the credit card debt by borrowing $40, 000 on their home and settling each card, one at a time, at 17% to 50% of the balance. Over the course of 18 months, with the help of an attorney, they were left with no credit card debt and a low interest rate mortgage.
10.6 Should you consider a debt consolidator?
What are debt consolidators? They are organizations that claim to aid you paying off your credit card debt and improving your credit score.
Some of these organizations may help, such as Consumer Credit Counselors (CCC), others well not help. CCC is funded by the credit industry and tries to keep you from having to file bankruptcy. On the other hand, many of the CCC counselors will honestly tell you that you can't be helped and suggest bankruptcy.
But, beware, with the exception of a few honest companies, an entire industry awaits your call and will do you little or no good.
These bad-news consolidators may suggest one of several techniques to solve your problem. One of the methods is the "hard money loan." This is money lent to someone with bad credit. If you are seeking help from a consolidator, your credit is probable bad. Unfortunately, hard money loans are only offered at a high rate of interest - probably higher than you can get from your credit card companies.
Remember, these loans cost you money for higher interest that you could use to lower your existing debt.
Another method you may choose is the very risky "balance transfer" solution. Here, you use the offers you receive in the mail to get some low interest money. Often, you are offered two rates: one at 0% for a limited time, and the second at 4.99% for the life of the loan. Never take the lower amount because it is only for a limited time. When the time is up, you may not be able to flip the loan using another balance transfer. In fact, the amount of additional money you spend on the higher rate loan during this "limited time" probably doesn't amount to enough to take a chance that your finances will improve.
There is no magic in what debt consolidators do. They simply take your money and hold off the creditors for a few months. Often, they then throw up their hands, dump the credit card mess back into your lap, and say goodby.
Why can't debt consolidators solve your problem? Because they have no power over the credit card companies. They may be able to get one or two of card companies to lower the interest rate from 24%...but to what? And, in the end, the card companies want their money. Where will the money come from but from you?
No debt consolidator can eliminate your debt. It will only be able to give you breathing room which may allow you to get a job or a raise. But for their services, you will have to pay them a fee. Sometimes the fee is several thousand dollars.
Unfortunately, this group has political clout; otherwise they would be put out of business.
For some on-line comments about debt consolidators, go to www.google.com and enter into the search "debt consolidators." MSN Money has some warnings about these organizations.
Another approach is to negotiate with your credit card companies for a lump sum payout as discussed in 10.4 above.
10.7 Should you file a Bankruptcy?
Many people tell me, "I'll never file a bankruptcy. I ran up these debts and feel a moral obligation to pay them off."
Strong but foolish words because the debts you are struggling to pay off can be paid after you file a bankruptcy; and then on your terms.
After filing bankruptcy, you will choose each month how much you can afford to re-pay. The difference is that with the bankruptcy defense, you will not be forced to pay balances that continue to mount and that you will never be able to satisfy.
Bankruptcy Law just may be the only way you can fulfill your desire to "pay your debts off."
The subject of bankruptcy is discussed in more detail below in Chapter 12 entitled, Bankruptcy.
10.8 Contact your legislator
Send your congressman/senator an email. Just click on the wiki site below and merely fill in your message along with your geographical address, and the wiki site will send your message to your elected representative to either the House or the Senate, or both. www.rallycongress.com/wiki/
It is easy to send an email. Try it.
Send an email even if you just say hello to let your representative know you're out there.
You might write something like this....
"Dear Senator Steadfast: I want you to know I exist and that I vote. I am adversely affected by many laws you supported that were not in my best interests. Of course, I do not take you to lunch nor on golfing trips, I do not donate large sums of money for your re-election, but when I voted for you, I expected you to protect my interests and those of others like me.
People like me and my neighbors are your constituents. Not those who have your ear at lunch.
Among other matters that concern me, you are not supporting legislation that regulates the interest charged by pay-day lenders and credit-card companies.
Thanks, I'll be seeing you at the polls, Best Regards, Joe Doe"
Here's what www.wikicongress.com has to say about itself:
"It's Time You Had a Voice on Capitol Hill! WikiCongress is a completely non-partisan site that lets you, the hard-working American citizen, have a voice in Washington, D.C. At this site, you can send free email to Capitol Hill on any topic, or create your own campaign and watch it take off. At WikiCongress, you can become a Representative too!
Using wikicongress, you can do the following:
Vote on the bills that the U.S. Congress is currently considering, and we'll deliver the results to Capitol Hill.
Create your own petition campaigns that actually send email directly to Congress.
. Earn Seniority by voting and introducing successful campaigns.
Create or join a Caucus to advance your interests.
WikiCongress claims to value your privacy. On their site, they state, "We do not sell or share your information with anyone other than your elected officials when you send a letter."
Professor Elizabeth Warren's interview is a must read about the credit card industry. It looks at the industry's successful efforts to remove limitations on their predatory lending practices. Ms. Warren said in the interview, "Up until the early 1980s, we had consumer regulations that protected us against credit cards that jumped from 9.9 percent to 29 percent interest rates. We had regulations that prevented people from taking out $2, 000 worth of credit card debt and discovering, eight years later, that they had now paid back more than $7, 000 to the company and still [hadn't] paid off the loan." For a complete text of Professor Warren's remarks, go to www.pbs.org and in the search field type "Elizabeth Warren."
10.8.1 It's only fair
Fairness as a legislative principle should be defined as treating people equally. As such, our legislative representative should view each piece of legislation in this light.
Ask your representative whether it is fair to allow the financial sector to be unregulated when clear evidence shows that lending practices are unfair.
Is it fair to allow the credit card companies to continue the following objectionable practices?
. Raising interest rates when a card user's credit score drops;
Raising interest rates when a consumer is late on an unrelated loan;
Retroactively increasing the interest rates on prior balances which have already been billed at a lower rate;
. Permitting card users to go over their credit limits, then charging the consumer high fees for doing so;
Using hair trigger tactics to impose penalty fees and rates, such as treating payments received after 1:00 p.m. on the due date as a late payment;
. Holding a payment before processing to allow the due date to pass thereby allowing a late fee to be imposed;
Changing the terms of a credit card account for any reason, or no reason at all.
Are these credit card practices fair (read section 2.3 above).
Is it fair that we live in a country where 300, 000 of the richest citizens earn as much as the 150, 000, 000 poorest? This economic imbalance is illustrated in the following example: As one of the 150 million poorest citizens earns $1, 000, one of the richest 300, 000 is rewarded with $500, 000.
Is this fair?
Also unfair is passing the cost of a college education onto the students who must borrow to learn resulting in their owing $100, 000 to $150, 000 upon graduation. These cost should, as in the past, be suffered by society as a whole (read also Section 6.2 below).
Allowing deficit spending to fund a hugely unpopular and unnecessary war in Iraq is unfair because the burden is borne by those who cannot afford it (the loss in the purchasing power of their wages) while enriching those who are unaffected by a deficit and who profit by war (read section 5.10 above).
Express these sentiments in your email and letters to your State and Federal representatives.
It's only fair.
10.9 Just Vote!
Many of our elected representatives at both the State and Federal level don't seem to be paying attention to the interests of Joe and Jane Doe.
Many times their attention is captured by powerful lobbing groups representing anything and anyone but you. The reason they are not paying any attention to us is that we don't vote and the representatives know it. If the representative rides roughshod over the interests of the common citizen, their actions will not effect whether they will stay in office or be voted out.
Voting rates are abysmally low. Ask yourself when you last voted or failed to vote because you didn't like your choices.
You're only hurting yourself by not voting because a low turnout says to the elected representative that the voting public is not interested in the issues. The higher the percentage of eligible voters who are willing to go to the polls, the better the chances that our elected representatives will consider our interests when they vote on a bill.
The Census Bureau has released voting and registration data from the November, 2004, elections. The report examines the levels of voting and registration in the November, 2004, presidential election, the characteristics of citizens reporting they were registered to vote and actually did vote, and the reasons why others who registered but did not vote. The report, from the Current Population Survey, released in May, provides the first-ever analysis of national- and state-level data. Information on reported voting and registration by various demographic and socioeconomic characteristics is collected for the nation and states in November of congressional and presidential election years in the Current Population Survey (CPS). Historical time series tables are also available for elections from 1964 to the present. For information on this report, go to www.census.gov and type into the search field "voting statistics." 10.10 Join "Working America"
Working America is a powerful force for working people. Congress listens to money. (HERE IS WHERE THE KNOL STOPPED. COMPLETE TEXT AT www.billpayersguide.com)
O. It combine the strength of 10 million union men and women and millions of workers without the benefit of a workplace union who share common challenges and goals to fight in communities, states and nationally for what really matters--good jobs, affordable health care, world-class education, secure retirements, real homeland security and more.
It works against wrong-headed priorities favoring the rich and corporate special interests over America's well-being.
Membership benefits include Health Savings Program, Legal Services, and Credit Card offerings.
In addition, it provides you with breaking news on the issues affecting you and your family.
11.0 Lower your expenses
When you consider the plight of the bill payer, you must first think of his purchases. What is being purchased either with cash or "on the card" that could be avoided or obtained some other way.
As opposed to buying, the more goods we can create for ourselves, or the better we use the resources we have available, the less chance we will find ourselves financially struggling. Take, for instance, our food consumption.
11.1 Food
Most of us eat more than we need. Obesity rates among both children and adults prove that point. However, we all have evolved from ancestors who grew or gathered their own food. You can do some of that too.
As a suggestion, consider square-foot gardening described in the next section.
11.1.1 Square foot gardening
Here's what wikipedia says about square foot gardening:
"Square Foot Gardening is a type of intensive gardening popularized by Mel Bartholomew. It is based on the idea that the wide rows in conventional home gardening are a waste of time, work, water and space, and that more quality vegetables can be grown in less space with less effort, no chemical additives, and on any type of ground, since the underlying soil is not used in the garden."
You can purchase Mel Bartholomew's book or learn more about the concept by visiting Mel's web site at www.squarefootgardening.com
You can also join a gardening co-op.
11.1.2 Vegetarian Diet
Not everyone is a vegetarian. However, cutting down on the meat in your diet will lower your food bill immensely, improve your diet, and improve your health.
Animal-lib.org. gives a historical perspective to our society's meat consumption in its publication "Why Do So Many People Eat Meat?"
"Meat-eating in the quantity our society eats today really began with the industrial revolution. Better machines led to more efficient agriculture. When a surplus of crops was produced, this was fed to animals and the animals eaten by those who could afford meat. Thus meat became something of a status symbol.
Unfortunately the status symbol developed into a habit so that most of us in the wealthier countries think that it is a normal part of our diet. As we approach a new century, it is high time we turned back to the healthier, less wasteful diet of our forebears." You may view the complete comment on this subject at www.animal-lib.org
You might be interested in a web site devoted to a garden diet. You will find it at www.thegardendiet.com
11.1.3 Solar Cooking
Check out the web site www.solarcookers.org for the latest in using the free power of the sum to cook. For $47.00, you can get The Solar Chef's Kit. It's perfect for a beginner or an experienced solar cook. This kit contains a black pot, CooKit (solar cooker), and Eleanor's cookbook. Users claim to save $40.00 and more per month using these devices.
11.1.4 Is bottled water worth the price?
Did you know that a sizable portion of the billions of bottles of water sold in plastic bottles comes from the same source as your tap water?
What's the difference? Well, some of the bottling companies do filter the water. Of course, you can too. The real difference is that the fancy bottled water costs two thousand eight hundred eighty times more than tap water.
In fact, you can buy 450 gallons of tap water for the same $1.35 you pay for a 20 ounce purchase of the same water put into a fancy plastic container.
In other words, you could re-fill the fancy plastic bottle yourself from your tap for one-twentieth of a cent!
And, it is estimated that the plastic bottles sold in the United States in one year consume 16 million barrels of oil to produce.
A real way to save is to bottle your own water in a reusable container.
11.1.5 Eat Less!
The quickest way to lower your food bill is to eat less. Seems simple. It's clear that most Americans are eating too much food. Cut out hot food for dinner and you will lose weight, lower you food bill and lower your utility charges.
11.2 Transportation
Some of us are lucky enough to live where owning a car is not a necessity for a job. We have public transportation that is available and efficient. If you are one of these lucky individuals, you have no excuse to own a car.
Vehicle ownership is costly in many ways:
The purchase price;
The interest on the purchase price;
. The cost of maintenance;
The cost of fuel;
The cost of insurance;
The cost of storage.
If you don't need a car for work, rent one when you need it for other tasks.
11.2.1 The half mile solution
If you insist or require a vehicle, park it a half mile from your home. This will force you to get the exercise of walking one mile each time you use your car. It will serves as a deterrent to driving short distances when you could walk or bike.
It will save you a lot of money because you will use your vehicle less. It will force you to exercise and will improve your health.
11.2.2 When you buy your next vehicle, bone up on the facts.
Cars lose 65% of their "value" within the first 5 years. This means that a car purchased for $30, 000 five years ago is worth, on average, $10, 500 today. Many vehicles, such as Toyota and Honda, run well for ten or fifteen years. If your ego allows you to drive an older vehicle, buy one. It will be cheaper to purchase and less expensive to insure.
11.2.3 Support our troops.
Did you hear that the United States is dependant on foreign oil? Did you know that driving slower uses less gas? In fact, every five miles per hour over 55, increases gas consumption 5% percent. If we all drove 55, the United States would use millions of barrels of oil less each year. That decrease in oil use would do more to help our troops than any "support" sought by war profiteers.
Check out the "new" Environmental Protection Agency's mile per gallon estimates at www.fueleconomy.gov This site will give you a good look at the consequences of wasteful gas consumption.
Saving gas by driving slower saves you money, helps the environment, and uses less foreign oil.
The EPA says, "Petroleum imports cost us over $4.4 billion a week-that's money that could be used to fuel our own economy."
Support our troops, drive 55 miles per hour!
11.3 Utilities
We have all heard it: "Lower the thermostat in Summer or Winter", "Insulate your home, " "Use low energy lighting, " and, how about "Eat raw food"! These are all suggestion you should consider seriously if you intend to lower your expenses.
11.3.1 Reduce your carbon footprint
Several web sites will give you an idea as to the size of your carbon footprint. Starting with the EPA's web site: www.epa.gov, type "power profiler" into the search field.
With the Power Profiler, you can
Determine your power grid region based on your ZIP code and electric utility.
Compare the fuel mix and air emissions rates of the electricity in your region to the national average.
Determine the air emissions impacts of electricity use in your home or business.
Other web sites that can help you understand your carbon footprint are:
www.carbonfootprint.com
www.drivinggreen.com
www.conservation.org
www.terrapass.com
www.wri.org.
Professor Sheldon Jacobson of the University of Illinois calculated that Americans are using approximately 1 billion more gallons of gasoline each year to propel their cars than in 1960 because of American's collective weight gain.
Furthermore, Professor David Orr of Oberlin College states, "The average car driven the average U.S. mileage emits its weight in carbon each year. So, if you drive a 2 ton-SUV for one year, you've exceeded your carbon emission allotment for the year seven times over before anything else is counted."
11.3.2 The clothes line
Did you ever wonder how clothes were dried before 1950? Wet clothes were hung on a line. Anyone who lives in Phoenix and uses a clothes dryer is wasting money. In fact, clothes can be dried indoors even in cold climates by using a rack. There is a sizable monetary savings to be had if you are willing to forego the use of a clothes dryer.
11.4 Plastic
Once upon a time, there was no plastic. No plastic bottles, no plastic toys, and no plastic credit cards. Everyone paid cash. Sometimes, a personal check was accepted. If the cash wasn't in the pocket or the money in the checking account, the purchase would not be made. That's still a solution to staying out of debt.
Of course, there are times when a credit card is demanded. This may be the sole reason to carry a credit card (not a debit card!).
But, don't use plastic to make a purchase you can't afford.
11.5 AC/DC
Are you an active consumer (AC) or a delay capacity consumer (DC)?
An AC buys what he wants on credit notwithstanding his lack of funds. A DC consumer has patience: the capacity to delay his purchase until he has sufficient funds on hand to make the purchase.
Not too many years ago, everyone was a DC because credit was limited. People were poor but not in debt. Think of your own personality: would you benefit from being a DC and developing some patience?
11.6 Relocate
Some families have decided to move to different locations, where cost of living is cheaper.
Should you decide to relocate, there are several web sites that you may find useful. Here is a collection:
www.bankrate.com With this site, you may compare the city you are moving from and the one that you may be considering moving to. You can enter your current income to determine the advantages, if any, of each city you select.
www.salary.com On this site, you can explore the cost-of-living difference between two locations.
www.homestore.com This site also makes cost-of-living calculations for may of the cities in the U.S.
www.relocationessessentials.com With this site, you enter your current salary and location and the new location for comparisons.
www.cityrating.com. Compare the cost-of-living in different locales.

Working America is a powerful force for working people. Congress listens to money. Alone, you will accomplish little in Washington, but if you are part of a group of like citizens, with united resources, you will accomplish much.
As is outlined on their web site: www.workingarmerica.org, it is a community affiliate of the AFL-CIO. It combine the strength of 10 million union men and women and millions of workers without the benefit of a workplace union who share common challenges and goals to fight in communities, states and nationally for what really matters--good jobs, affordable health care, world-class education, secure retirements, real homeland security and more.
It works against wrong-headed priorities favoring the rich and corporate special interests over America's well-being.
Membership benefits include Health Savings Program, Legal Services, and Credit Card offerings.
In addition, it provides you with breaking news on the issues affecting you and your family.
11.0 Lower your expenses
When you consider the plight of the bill payer, you must first think of his purchases. What is being purchased either with cash or "on the card" that could be avoided or obtained some other way.
As opposed to buying, the more goods we can create for ourselves, or the better we use the resources we have available, the less chance we will find ourselves financially struggling. Take, for instance, our food consumption.
11.1 Food
Most of us eat more than we need. Obesity rates among both children and adults prove that point. However, we all have evolved from ancestors who grew or gathered their own food. You can do some of that too.
As a suggestion, consider square-foot gardening described in the next section.
11.1.1 Square foot gardening
Here's what wikipedia says about square foot gardening:
"Square Foot Gardening is a type of intensive gardening popularized by Mel Bartholomew. It is based on the idea that the wide rows in conventional home gardening are a waste of time, work, water and space, and that more quality vegetables can be grown in less space with less effort, no chemical additives, and on any type of ground, since the underlying soil is not used in the garden."
You can purchase Mel Bartholomew's book or learn more about the concept by visiting Mel's web site at www.squarefootgardening.com
You can also join a gardening co-op.
11.1.2 Vegetarian Diet
Not everyone is a vegetarian. However, cutting down on the meat in your diet will lower your food bill immensely, improve your diet, and improve your health.
Animal-lib.org. gives a historical perspective to our society's meat consumption in its publication "Why Do So Many People Eat Meat?"
"Meat-eating in the quantity our society eats today really began with the industrial revolution. Better machines led to more efficient agriculture. When a surplus of crops was produced, this was fed to animals and the animals eaten by those who could afford meat. Thus meat became something of a status symbol.
Unfortunately the status symbol developed into a habit so that most of us in the wealthier countries think that it is a normal part of our diet. As we approach a new century, it is high time we turned back to the healthier, less wasteful diet of our forebears." You may view the complete comment on this subject at www.animal-lib.org
You might be interested in a web site devoted to a garden diet. You will find it at www.thegardendiet.com
11.1.3 Solar Cooking
Check out the web site www.solarcookers.org for the latest in using the free power of the sum to cook. For $47.00, you can get The Solar Chef's Kit. It's perfect for a beginner or an experienced solar cook. This kit contains a black pot, CooKit (solar cooker), and Eleanor's cookbook. Users claim to save $40.00 and more per month using these devices.
11.1.4 Is bottled water worth the price?
Did you know that a sizable portion of the billions of bottles of water sold in plastic bottles comes from the same source as your tap water?
What's the difference? Well, some of the bottling companies do filter the water. Of course, you can too. The real difference is that the fancy bottled water costs two thousand eight hundred eighty times more than tap water.
In fact, you can buy 450 gallons of tap water for the same $1.35 you pay for a 20 ounce purchase of the same water put into a fancy plastic container.
In other words, you could re-fill the fancy plastic bottle yourself from your tap for one-twentieth of a cent!
And, it is estimated that the plastic bottles sold in the United States in one year consume 16 million barrels of oil to produce.
A real way to save is to bottle your own water in a reusable container.
11.1.5 Eat Less!
The quickest way to lower your food bill is to eat less. Seems simple. It's clear that most Americans are eating too much food. Cut out hot food for dinner and you will lose weight, lower you food bill and lower your utility charges.
11.2 Transportation
Some of us are lucky enough to live where owning a car is not a necessity for a job. We have public transportation that is available and efficient. If you are one of these lucky individuals, you have no excuse to own a car.
Vehicle ownership is costly in many ways:
The purchase price;
The interest on the purchase price;
. The cost of maintenance;
The cost of fuel;
The cost of insurance;
The cost of storage.
If you don't need a car for work, rent one when you need it for other tasks.
11.2.1 The half mile solution
If you insist or require a vehicle, park it a half mile from your home. This will force you to get the exercise of walking one mile each time you use your car. It will serves as a deterrent to driving short distances when you could walk or bike.
It will save you a lot of money because you will use your vehicle less. It will force you to exercise and will improve your health.
11.2.2 When you buy your next vehicle, bone up on the facts.
Cars lose 65% of their "value" within the first 5 years. This means that a car purchased for $30, 000 five years ago is worth, on average, $10, 500 today. Many vehicles, such as Toyota and Honda, run well for ten or fifteen years. If your ego allows you to drive an older vehicle, buy one. It will be cheaper to purchase and less expensive to insure.
11.2.3 Support our troops.
Did you hear that the United States is dependant on foreign oil? Did you know that driving slower uses less gas? In fact, every five miles per hour over 55, increases gas consumption 5% percent. If we all drove 55, the United States would use millions of barrels of oil less each year. That decrease in oil use would do more to help our troops than any "support" sought by war profiteers.
Check out the "new" Environmental Protection Agency's mile per gallon estimates at www.fueleconomy.gov This site will give you a good look at the consequences of wasteful gas consumption.
Saving gas by driving slower saves you money, helps the environment, and uses less foreign oil.
The EPA says, "Petroleum imports cost us over $4.4 billion a week-that's money that could be used to fuel our own economy."
Support our troops, drive 55 miles per hour!
11.3 Utilities
We have all heard it: "Lower the thermostat in Summer or Winter", "Insulate your home, " "Use low energy lighting, " and, how about "Eat raw food"! These are all suggestion you should consider seriously if you intend to lower your expenses.
11.3.1 Reduce your carbon footprint
Several web sites will give you an idea as to the size of your carbon footprint. Starting with the EPA's web site: www.epa.gov, type "power profiler" into the search field.
With the Power Profiler, you can
Determine your power grid region based on your ZIP code and electric utility.
Compare the fuel mix and air emissions rates of the electricity in your region to the national average.
Determine the air emissions impacts of electricity use in your home or business.
Other web sites that can help you understand your carbon footprint are:
www.carbonfootprint.com
www.drivinggreen.com
www.conservation.org
www.terrapass.com
www.wri.org.
Professor Sheldon Jacobson of the University of Illinois calculated that Americans are using approximately 1 billion more gallons of gasoline each year to propel their cars than in 1960 because of American's collective weight gain.
Furthermore, Professor David Orr of Oberlin College states, "The average car driven the average U.S. mileage emits its weight in carbon each year. So, if you drive a 2 ton-SUV for one year, you've exceeded your carbon emission allotment for the year seven times over before anything else is counted."
11.3.2 The clothes line
Did you ever wonder how clothes were dried before 1950? Wet clothes were hung on a line. Anyone who lives in Phoenix and uses a clothes dryer is wasting money. In fact, clothes can be dried indoors even in cold climates by using a rack. There is a sizable monetary savings to be had if you are willing to forego the use of a clothes dryer.
11.4 Plastic
Once upon a time, there was no plastic. No plastic bottles, no plastic toys, and no plastic credit cards. Everyone paid cash. Sometimes, a personal check was accepted. If the cash wasn't in the pocket or the money in the checking account, the purchase would not be made. That's still a solution to staying out of debt.
Of course, there are times when a credit card is demanded. This may be the sole reason to carry a credit card (not a debit card!).
But, don't use plastic to make a purchase you can't afford.
11.5 AC/DC
Are you an active consumer (AC) or a delay capacity consumer (DC)?
An AC buys what he wants on credit notwithstanding his lack of funds. A DC consumer has patience: the capacity to delay his purchase until he has sufficient funds on hand to make the purchase.
Not too many years ago, everyone was a DC because credit was limited. People were poor but not in debt. Think of your own personality: would you benefit from being a DC and developing some patience?
11.6 Relocate
Some families have decided to move to different locations, where cost of living is cheaper.
Should you decide to relocate, there are several web sites that you may find useful. Here is a collection:
www.bankrate.com With this site, you may compare the city you are moving from and the one that you may be considering moving to. You can enter your current income to determine the advantages, if any, of each city you select.
www.salary.com On this site, you can explore the cost-of-living difference between two locations.
www.homestore.com This site also makes cost-of-living calculations for may of the cities in the U.S.
www.relocationessessentials.com With this site, you enter your current salary and location and the new location for comparisons.
www.cityrating.com. Compare the cost-of-living in different locales.

10.10 Join "Working America"
Working America is a powerful force for working people. Congress listens to money. Alone, you will accomplish little in Washington, but if you are part of a group of like citizens, with united resources, you will accomplish much.
As is outlined on their web site: www.workingarmerica.org, it is a community affiliate of the AFL-CIO. It combine the strength of 10 million union men and women and millions of workers without the benefit of a workplace union who share common challenges and goals to fight in communities, states and nationally for what really matters--good jobs, affordable health care, world-class education, secure retirements, real homeland security and more.
It works against wrong-headed priorities favoring the rich and corporate special interests over America's well-being.
Membership benefits include Health Savings Program, Legal Services, and Credit Card offerings.
In addition, it provides you with breaking news on the issues affecting you and your family.
11.0 Lower your expenses
When you consider the plight of the bill payer, you must first think of his purchases. What is being purchased either with cash or "on the card" that could be avoided or obtained some other way.
As opposed to buying, the more goods we can create for ourselves, or the better we use the resources we have available, the less chance we will find ourselves financially struggling. Take, for instance, our food consumption.
11.1 Food
Most of us eat more than we need. Obesity rates among both children and adults prove that point. However, we all have evolved from ancestors who grew or gathered their own food. You can do some of that too.
As a suggestion, consider square-foot gardening described in the next section.
11.1.1 Square foot gardening
Here's what wikipedia says about square foot gardening:
"Square Foot Gardening is a type of intensive gardening popularized by Mel Bartholomew. It is based on the idea that the wide rows in conventional home gardening are a waste of time, work, water and space, and that more quality vegetables can be grown in less space with less effort, no chemical additives, and on any type of ground, since the underlying soil is not used in the garden."
You can purchase Mel Bartholomew's book or learn more about the concept by visiting Mel's web site at www.squarefootgardening.com
You can also join a gardening co-op.
11.1.2 Vegetarian Diet
Not everyone is a vegetarian. However, cutting down on the meat in your diet will lower your food bill immensely, improve your diet, and improve your health.
Animal-lib.org. gives a historical perspective to our society's meat consumption in its publication "Why Do So Many People Eat Meat?"
"Meat-eating in the quantity our society eats today really began with the industrial revolution. Better machines led to more efficient agriculture. When a surplus of crops was produced, this was fed to animals and the animals eaten by those who could afford meat. Thus meat became something of a status symbol.
Unfortunately the status symbol developed into a habit so that most of us in the wealthier countries think that it is a normal part of our diet. As we approach a new century, it is high time we turned back to the healthier, less wasteful diet of our forebears." You may view the complete comment on this subject at www.animal-lib.org
You might be interested in a web site devoted to a garden diet. You will find it at www.thegardendiet.com
11.1.3 Solar Cooking
Check out the web site www.solarcookers.org for the latest in using the free power of the sum to cook. For $47.00, you can get The Solar Chef's Kit. It's perfect for a beginner or an experienced solar cook. This kit contains a black pot, CooKit (solar cooker), and Eleanor's cookbook. Users claim to save $40.00 and more per month using these devices.
11.1.4 Is bottled water worth the price?
Did you know that a sizable portion of the billions of bottles of water sold in plastic bottles comes from the same source as your tap water?
What's the difference? Well, some of the bottling companies do filter the water. Of course, you can too. The real difference is that the fancy bottled water costs two thousand eight hundred eighty times more than tap water.
In fact, you can buy 450 gallons of tap water for the same $1.35 you pay for a 20 ounce purchase of the same water put into a fancy plastic container.
In other words, you could re-fill the fancy plastic bottle yourself from your tap for one-twentieth of a cent!
And, it is estimated that the plastic bottles sold in the United States in one year consume 16 million barrels of oil to produce.
A real way to save is to bottle your own water in a reusable container.
11.1.5 Eat Less!
The quickest way to lower your food bill is to eat less. Seems simple. It's clear that most Americans are eating too much food. Cut out hot food for dinner and you will lose weight, lower you food bill and lower your utility charges.
11.2 Transportation
Some of us are lucky enough to live where owning a car is not a necessity for a job. We have public transportation that is available and efficient. If you are one of these lucky individuals, you have no excuse to own a car.
Vehicle ownership is costly in many ways:
The purchase price;
The interest on the purchase price;
. The cost of maintenance;
The cost of fuel;
The cost of insurance;
The cost of storage.
If you don't need a car for work, rent one when you need it for other tasks.
11.2.1 The half mile solution
If you insist or require a vehicle, park it a half mile from your home. This will force you to get the exercise of walking one mile each time you use your car. It will serves as a deterrent to driving short distances when you could walk or bike.
It will save you a lot of money because you will use your vehicle less. It will force you to exercise and will improve your health.
11.2.2 When you buy your next vehicle, bone up on the facts.
Cars lose 65% of their "value" within the first 5 years. This means that a car purchased for $30, 000 five years ago is worth, on average, $10, 500 today. Many vehicles, such as Toyota and Honda, run well for ten or fifteen years. If your ego allows you to drive an older vehicle, buy one. It will be cheaper to purchase and less expensive to insure.
11.2.3 Support our troops.
Did you hear that the United States is dependant on foreign oil? Did you know that driving slower uses less gas? In fact, every five miles per hour over 55, increases gas consumption 5% percent. If we all drove 55, the United States would use millions of barrels of oil less each year. That decrease in oil use would do more to help our troops than any "support" sought by war profiteers.
Check out the "new" Environmental Protection Agency's mile per gallon estimates at www.fueleconomy.gov This site will give you a good look at the consequences of wasteful gas consumption.
Saving gas by driving slower saves you money, helps the environment, and uses less foreign oil.
The EPA says, "Petroleum imports cost us over $4.4 billion a week-that's money that could be used to fuel our own economy."
Support our troops, drive 55 miles per hour!
11.3 Utilities
We have all heard it: "Lower the thermostat in Summer or Winter", "Insulate your home, " "Use low energy lighting, " and, how about "Eat raw food"! These are all suggestion you should consider seriously if you intend to lower your expenses.
11.3.1 Reduce your carbon footprint
Several web sites will give you an idea as to the size of your carbon footprint. Starting with the EPA's web site: www.epa.gov, type "power profiler" into the search field.
With the Power Profiler, you can
Determine your power grid region based on your ZIP code and electric utility.
Compare the fuel mix and air emissions rates of the electricity in your region to the national average.
Determine the air emissions impacts of electricity use in your home or business.
Other web sites that can help you understand your carbon footprint are:
www.carbonfootprint.com
www.drivinggreen.com
www.conservation.org
www.terrapass.com
www.wri.org.
Professor Sheldon Jacobson of the University of Illinois calculated that Americans are using approximately 1 billion more gallons of gasoline each year to propel their cars than in 1960 because of American's collective weight gain.
Furthermore, Professor David Orr of Oberlin College states, "The average car driven the average U.S. mileage emits its weight in carbon each year. So, if you drive a 2 ton-SUV for one year, you've exceeded your carbon emission allotment for the year seven times over before anything else is counted."
11.3.2 The clothes line
Did you ever wonder how clothes were dried before 1950? Wet clothes were hung on a line. Anyone who lives in Phoenix and uses a clothes dryer is wasting money. In fact, clothes can be dried indoors even in cold climates by using a rack. There is a sizable monetary savings to be had if you are willing to forego the use of a clothes dryer.
11.4 Plastic
Once upon a time, there was no plastic. No plastic bottles, no plastic toys, and no plastic credit cards. Everyone paid cash. Sometimes, a personal check was accepted. If the cash wasn't in the pocket or the money in the checking account, the purchase would not be made. That's still a solution to staying out of debt.
Of course, there are times when a credit card is demanded. This may be the sole reason to carry a credit card (not a debit card!).
But, don't use plastic to make a purchase you can't afford.
11.5 AC/DC
Are you an active consumer (AC) or a delay capacity consumer (DC)?
An AC buys what he wants on credit notwithstanding his lack of funds. A DC consumer has patience: the capacity to delay his purchase until he has sufficient funds on hand to make the purchase.
Not too many years ago, everyone was a DC because credit was limited. People were poor but not in debt. Think of your own personality: would you benefit from being a DC and developing some patience?
11.6 Relocate
Some families have decided to move to different locations, where cost of living is cheaper.
Should you decide to relocate, there are several web sites that you may find useful. Here is a collection:
www.bankrate.com With this site, you may compare the city you are moving from and the one that you may be considering moving to. You can enter your current income to determine the advantages, if any, of each city you select.
www.salary.com On this site, you can explore the cost-of-living difference between two locations.
www.homestore.com This site also makes cost-of-living calculations for may of the cities in the U.S.
www.relocationessessentials.com With this site, you enter your current salary and location and the new location for comparisons.
www.cityrating.com. Compare the cost-of-living in different locales.
V. Bankruptcy
If the debtor be insolvent to serve creditors, let his body be cut in pieces on the third market day. It may be cut into more or fewer pieces with impunity. Or, if his creditors consent to it, let him be sold to foreigners beyond the Tiber.
-Twelve Tables, Table III, 6 (ca. 450 B.C.)
12.0 Bankruptcy reviewed
The Romans view of bankruptcy in 450 B.C. divided the debtor into pieces. The Federal Bankruptcy Law today divides the debtor's assets into pieces.
Bankruptcy is a federal law which allows a bill payer to cancel unsecured debt or to save a home from foreclosure. In addition, bankruptcy is used by business to restructure debt and to re-negotiate union contracts. This guide does not attempt to explain Bankruptcy Law in detail, nor to aid a bill-payer who may wish to file one himself. However, it is hoped that the reader will obtain an overview of the law and how it may be of benefit.
12.1 Benefits
Cancels much of your debt.
. Provides you with a "fresh start" which means that you can pay those old bills, if you are able. But, you will not be forced to pay them.
. As the result of having your debts canceled, you will have a positive attitude to deal with life's other stresses and responsibilities.
Allows you to keep your car if you remain current on the payments.
. If you own a home, allows you to keep your home if you remain current on the payments, and your equity is protected by an exemption.
If your home is in foreclosure, allows you in many cases to avoid foreclosure and make monthly payments into the bankruptcy court to catch up on the past due amounts.
Does not prevent you from obtaining credit.
Does not prohibit you from paying selected creditors after it is filed.
Prevents creditors from making a claim after the bankruptcy is filed even if you later win the lottery.
12.2 Detriments
The "fresh start" envisioned by the bankruptcy law is only obtainable every eight years.
For ten years, your credit report will show that a bankruptcy was filed.
You may have to wait 2 years before you can buy a home, although some lenders allow for home loans after one year.
Your credit score will be reduced until you re-establish your credit.
12.3 Frequently asked question about bankruptcy
After years of helping ordinary individuals make sense of their finances, I have concluded that if everyone who is struggling to pay his credit card bills knew as much about bankruptcy as I do, the line to file one would stretch from the Atlantic to the Pacific.
Here are some issues to consider:
Question: Is there a minimum amount I must owe to be eligible to file for bankruptcy?
Answer: No.
Question: If I file bankruptcy can I later pay back the debts listed on the bankruptcy?
Answer: Yes, as long as the payment is made from money you earn after you file. A problem will arise if you make payments to friends or other special people before you file. After you have filed bankruptcy, you can pay each creditor or just some creditor, as you wish. At that point, you will be able to make a payment you can afford rather than the amount that is demanded.
Question: After my bankruptcy is successfully completed, can my creditors that were discharged come after me for the debt, if I become better able to pay my bills?
Answer: No. The successful completion of a voluntary bankruptcy discharges your debts. Of course, some debts are not discharged in bankruptcy (you should consult an attorney if you wonder whether any of your debts might be non-dischargeable). A discharge prevents your creditors from attempting to collect on the debt because a discharged debt is one you do not owe. If they continue to bother you by letter or telephone, provide them with the information regarding your bankruptcy. The continued attempt to collect a debt discharged in bankruptcy is a violation of the law.
Question: Who will know that I filed a bankruptcy?
Answer: Probably noone unless your credit report is checked, or you mention it. Technically, a bankruptcy is a matter of public record. But, unless you are filing as a business, the filing will not normally appear in the local newspaper. Of course, in time, the information may come out...if, say, someone googles your name.
Question: May I keep my home and still file for bankruptcy?
Answer: Yes, in most cases. However, you need expert advice on how to manage this. There are no bargains in bankruptcy representation. The law is tricky and changing. Get a pro.
Question: If my home is in foreclosure, can a bankruptcy help me?
Answer: Yes. You have options under bankruptcy law, and seeking advice on this matter quickly is a necessity.
Question: Can I keep my car?
Answer: Yes. The finance company only wants the money. If you keep current and reaffirm the car loan, you will be allowed to keep the car. However, in some cases where the car is worth more than you owe on it (the difference is referred to as "equity") and the equity is not exempt, you could lose the car to the bankruptcy trustee ("exempt" is a term used for assets that you are allowed to keep from your creditors who in a bankruptcy are represented by a trustee) .
Question: If my car is paid off, can I keep it?
Answer: Yes, subject to whether your equity in the vehicle is exempt.
Question: If someone has obtained a judgment against me, can a bankruptcy wipe this debt out?
Answer: Yes. However, even though the debt is extinguished, the lien underlying the judgment could be a problem for you if you own, and intend to keep, real property with a judgment lien attached. The court has the power to void the lien in many cases. Removing judgment liens are problematic. This is a case that should be handled by an attorney.
Question: Will I ever be able to obtain credit again?
Answer: Of course. You're probably a better credit risk after you file than before, because you can't file again for eight years. Remember, credit card companies want your business, particularly at the interest rate they are allowed to charge. Furthermore, you should understand that credit is based on your ability to pay. If you can demonstrate an ability to pay, you will be able to get credit. However, you may have to pay higher interest rates on some loans. But in time, and with a good credit record, the interest rate you will be required to pay will go down.
Question: Will I be able to get a credit card?
Answer: I wish I could say no; however, the answer is yes. To start, you could get a debit card from a bank. This card would be limited by the amount in your checking or savings account that is linked to the card. Almost too soon, you'll have many companies wanting your business at usurious interest rates and changing terms.
Question: How often can I receive a bankruptcy discharge?
Answer: Every eight years. However, a Chapter 13 might be available - consult an attorney.
Question: After filing bankruptcy, can I buy a home?
Answer: You are legally allowed to buy a home immediately. Obtaining a home loan will take you some time, usually one or two years.
Question: Will my bankruptcy hurt my spouse's credit rating?
Answer: No. Of course, if you and your spouse apply jointly for credit, your prior bankruptcy will be taken into consideration in determining whether the loan will be granted to you both, and upon what terms.
Question: Can I wipe out taxes by filing a bankruptcy?
Answer: Some taxes are eliminated when you file a bankruptcy. If you are contemplating filing bankruptcy because of tax obligations, consult an attorney.
Question: What debts typically survive a bankruptcy?
Answer: Family support, student loans, fines, personal injury caused by your driving drunk, debts arising from your malicious actions, and some taxes. If you have doubts as to whether some of your debts will be eliminated in a bankruptcy, consult an attorney.
Question: What are the advantages/disadvantages of so called "do-it-yourself" bankruptcies?
Answer: If you understand Bankruptcy Law and how to navigate the process, you will save attorney's fees which may run $1, 500 to $2, 400. The disadvantages of doing it yourself include attorney's fees to correct your mistakes, should you make any. Second, you have to deal with creditors yourself. These creditors can be nasty and unscrupulous. You may end up being harassed by a creditor who has "bought" your debt from the original creditor, and then come after you, thinking you won't know how to protect yourself. Lastly, you may be wrong when you assume that a bankruptcy will solve your problem. Perhaps a bankruptcy won't produce the results you seek. Perhaps you should file a Chapter 13 rather then a Chapter 7. This analysis is best done by an attorney who specializes in bankruptcy law because protecting your assets can be difficult without an attorney.
Question: I want to file for a bankruptcy for myself but not for my spouse. We're both on the credit cards. If I list the credit cards on my bankruptcy, will the debt be extinguished for my spouse as well?
Answer: No. A person who files a bankruptcy seeks a discharge of his debts. However, the debt that is discharged is only wiped out against the debtor (the person who filed the bankruptcy) but not extinguished for other purposes. Therefore, the creditor still holds a valid claim against the non-filing co-debtor. In this case, the spouse would still be liable on a debt if he was jointly liable for it prior to bankruptcy.
Question: I might have exaggerated (lied) on my mortgage application and now face losing my home in a foreclosure. I am anticipating a law suit from the lender on the mortgage fraud issue. Should I wait until the suit is resolved before I file a bankruptcy?
Answer: No. In this set of facts, you should file your bankruptcy prior to having a judgment entered against you for fraud. If the creditor is scheduled and does not challenge your discharge by an Adversary Proceeding in your case, your bankruptcy discharge will eliminate this debt.
Question: I run a small business as a sole proprietor, but I only want to bankrupt the business. Can I just include my business debts and leave out my personal obligations that I want to pay?
Answer: No. If you are an individual doing business as a sole proprietor, your business and you are the same. All of your assets, both personal and business, and all of your debts, both personal and business, are lumped into the bankruptcy.
Question: Is there a moral issue here?
Answer: Yes, but not on your side of the ledger. Ask yourself, "Am I suffocating in credit card debt?"
Credit card interest rates are up to 29% and pay-day loans charge interest of over 300 %. Add to this late fees and over limit fees charged each month and you will find yourself in an impossible dilemma. How do I keep paying my credit card debt, when I have difficulty just keeping current on my day to day expenses buying food and paying for housing?
Many individuals and families have found their monthly income less than it was at the time the credit card debt was incurred, or have found that they have medical bills that were not covered by insurance. These factors make the ability to repay impossible.
On the other hand, if interest rates were reasonable, such as 10%, repayment could be possible. However, the creditors are not willing to lower the interest rates and our elected legislative representatives are unwilling to protect those of us who voted them into office.
A few years ago, interest rates above 10% were illegal. Higher rates were charged by loan sharks. Guess what happened! Credit card companies manipulated both Courts and Congress to allow the industry to regulate themselves. This has allowed the lenders to set their own limits on interest rates.
To obtain governmental acquiescence, the credit industry gave members of Congress more than $100, 000, 000 over ten years in political contributions to de-regulate the lending industry and to re-write the bankruptcy law making a discharge harder to obtain and more costly.
Congress is punishing evil people who have had the audacity not to have paid a comparable bribe to them. Do you vote?
This new Bankruptcy Law....
Creates a "means test" for eligibility to file a Chapter 7. The test determines whether you have money available to make some payment to your creditors. If you pass the means test (meaning that you are really broke), and if your net monthly income is zero (without deducting payments for debts you will discharge in bankruptcy), you qualify for a Chapter 7; otherwise, you will be required to complete a Chapter 13 before being able to obtain a discharge.
Imposes an extra fee to be paid by your attorney, if the bankruptcy trustee challenges your budget figures, wins, and it is determined that your attorney did not do the work previously done by the trustee in bankruptcy to determine whether you concealed assets or made material misrepresentation on your bankruptcy schedules regarding your assets or income.
Requires a "certificate" from a credit counseling agency, before you can file a bankruptcy. The requirement to complete a credit counseling course, costing about $50, is one of the more absurd aspects of the new law. The course instructs you that to avoid debt, you should spend less than you earn.
Brilliant!
12.4 The Daughter (a case history)
Anne, 65, is unemployed yet owns a home valued at $400, 000. Her mortgage debt equals $275, 000. She is current on her mortgage payments but she can no longer make her credit card payments. She has not been living off her credit cards however. The problem arose when she allowed her daughter to use the card "for a few things." In the course of a few months, the daughter and her boyfriend were able to charge over $40, 000 on the cards. The daughter is not working and her boyfriend who does work doesn't want to make the monthly payments. He feels that the mother should just borrow the money against her home and "get over it."
If Anne were to file bankruptcy in California, her home would be protected and her credit card debt would be discharged.
12.5 The Boyfriend (a case history)
Mary is unemployed with an infant and rents a small apartment. She and her boyfriend have run up $85, 000 in credit card debt. She owns two cars - one, valued at $1, 500, paid in full and a truck worth $16, 000 and owing $22, 000 with monthly payments of $550. In addition, she owns two motorcycles with monthly payments of $350 and $450 respectively. All vehicle payments are delinquent. The motorcycles and the truck are in the possession of her boyfriend, Joe, who is the father of her child. Mary receives welfare but no child support. Joseph, who drives the truck and keeps the motorcycles at his separate residence, does not make the payments. Mary thinks a bankruptcy would be helpful, believing that it would allow her boyfriend to keep the truck and motorcycles without paying for them. She's wrong: a bankruptcy would not be advisable at this time because Mary's only benefit would be to eliminate harassing calls and letters from creditors.
Remember: bankruptcy is a defense only. Here, Mary's welfare payments cannot be taken by a creditor and bankruptcy would not protect the vehicles from repossession if the payments are not kept current.
Mary should get rid of this boyfriend, get rid of the motorcycles and expensive car, and wait until she gets a job before considering bankruptcy.
12.6 The Casino (a case history)
Scooter, a single guy, grosses $750 per week. His home is worth $250, 000 with a first mortgage of $175, 000 and a second of $30, 000. He owes $23, 000 on a new Dodge 440 Ram 4 /4 pickup worth $18, 000. He also owns an old Toyota which runs well and is worth $2, 000. His credit card bills amount to $180, 000 some of which came from gambling at the local casino. He can't make the minimum monthly payments with the interest rates at 29.9%. He located a company which guaranteed they could "work things out with the creditors." However, after paying the company over $2, 000, his credit card debts are larger than they were when he hired the company.
Would Scooter be eligible for a Chapter 7 Bankruptcy in California and would it be advisable? Yes and Yes.
He is eligible for a Chapter 7 because his gross income is below $3, 700 per month. His home is exempt because he lives in it , which qualifies him for a homestead; and his equity (the amount of money he would put in his pocket if he sold his home at the fair market value) is less than $50, 000. He can and should let the Dodge go and drive the Toyota, which is exempt.
His bankruptcy will discharge the obligation on the Dodge and eliminate the $180, 000 in credit card debt. However, he won't be able to get another bankruptcy discharge for eight years and his credit report will reflect his bankruptcy filing for 10 years.
Fortunately or Unfortunately, within months, Scooter will be inundated with credit card offers...and here he goes again.
12.7 What does the Bible say?
Answer: Deuteronomy Chapter 15:1. At the end of every seven years thou shalt make a release. 2. And this is the manner of the release: every creditor shall release that which he hath lent unto his neighbor; he shall not exact it of his neighbor and his brother; because the LORD'S release hath been proclaimed; or said another way: 15:1. In the seventh year thou shalt make a remission, (Septimo anno facies remissionem); 15:2. Which shall be celebrated in this order. He to whom any thing is owing from his friend or neighbor or brother, cannot demand it again, because it is the year of remission of the Lord, (Quae hoc ordine celebrabitur cui debetur aliquid ab amico vel proximo ac fratre suo repetere non poterit quia annus remissionis est Domini).
12.8 The Morals of it all
Most people want to pay their debts. Perhaps the only way you will ever do that is to file a bankruptcy first.
You only live once: file now.
12.9 Worksheets
Below are two worksheets which can be of use in roughly calculating the effect of filing a bankruptcy.
One of the charts gives you a dollar amount of debts which would be discharged in a Chapter 7 if you qualify to file one.
Should I file for bankruptcy? This is not a legal question, but a factual one. There is no minimum amount of debt which dictates whether you should file a bankruptcy.
Remember:
you can only receive a discharge every 8 years; and,
the fact that you filed a bankruptcy will remain on your credit record for 10 years. This worksheet does not display in google's knol format, to view, go to www.billpayersguide.com.
12.10 Guidelines
A Chapter 7 bankruptcy may be a good option if you will discharge more debt than you could ever pay off. This includes "cancellation of debt" taxes, deficiencies on autos and recourse on foreclosed real property. It is not a good option if your debts cannot be discharged or if you will lose non-exempt assets you cannot cover by filing a Chapter 13.
It is always good to review your particular financial situation with a bankruptcy attorney before you make any decisions regarding your course of action.
VI Appendix
13.5 Form: Proof of Service

PROOF OF SERVICE BY MAIL

I, ___________________________________________, declare under penalty of perjury under the laws of the State of ______________ as follows:

I am a citizen of the United States, over the age of 18, a resident of the County of ________ and not a party to the within action; my resident and/or business address is:____________________ ________________________________ .

On the date below noted, I served the______________________________ on the interested parties in said cause by placing a true copy thereof with postage thereon fully prepaid, in the United States mail at _________________(city) _____________________ (state) addressed as follows:
____________________________
____________________________
____________________________
____________________________

I declare under penalty of perjury under the laws of the State of ____________________ (state) that the above is true and correct, and that this declaration was executed in __________________________________(city and state) on ______________, 200__(date)

________________________________

(End of Proof of Service)

13.6 Forms: Sample Settlement Letters to Credit Card Companies
___________________________________________________

Edmund Dechant
Attorney at Law
Post Office Box xxxx
Santa Rosa, CA 95402
Voice (707) xxx-xxxx - Fax (707) xxx-xxxx

July 27, 2008

Bankruptcy Department
Anyone's Depot
PO Box 1667080
Detroit, MI 40353-7080

Re: Your Reference No. 68 2255 949494
Amount Balance: $6, 524.21
Client's Name: Joe and Molly Doe

Gentlemen:

This office is working with Joe and Molly Doe in an attempt to avoid a Chapter 7 bankruptcy. I have evaluated their financial status and feel they qualify for debt relief under the bankruptcy laws.

However, Mr. & Mrs. Doe have indicated a preference to working out a payment plan. They feel their financial situation will be much improved in three to five years and would like to pay minimum amounts, with a reduced interest rate during that period. Alternatively, a relative has offered to help them retire their credit card obligations. This option would work if your company would be willing to settle the balance at a reduced payoff amount somewhere around 30%.

Hopefully, you would rather receive some money eventually instead of none at all.

I look forward to hearing from someone in your organization who can structure such a workout.

Thank you in advance for your prompt attention to this matter.

Very truly yours,

Edmund Dechant
ED/sfc

_______________________________________________________

[your letter would look a little different such as the one just below. Notice that a post office box is used. I suggest using one. Additionally, it is good if you have a fax number. If you don't own a fax machine yourself, you can use those at Kinkos or the U.P.S. package store.]
______________________________________________

Joe and Molly Doe
Post Office Box xxxx
Santa Rosa, CA 95402
Voice (707) xxx-xxxx - Fax (707) xxx-xxxx
July 27, 2008

Bankruptcy Department
Anyone's Depot
PO Box 1667080
Detroit, MI 40353-7080

Re: Your Reference No. 68 2255 949494
Amount Balance: $6, 524.21
Customers' Name: Joe and Molly Doe

Gentlemen:

We are trying to avoid filing a Chapter 7 bankruptcy.

We have consulted with an attorney and established that we qualify for Chapter 7 relief. evaluated their financial status and feel they qualify for debt relief under the bankruptcy laws.

However, we prefer to working out a payment plan. We feel our financial situation will be much improved in three to five years and would like to pay minimum amounts, with a reduced interest rate during that period. Alternatively, a relative has offered to help us retire our credit card obligations. This option would work if your company would be willing to settle the balance at a reduced payoff amount somewhere around 30%.

Hopefully, Anyone's Depot would rather receive some money eventually rather than none at all.

We look forward to hearing from someone in your organization who can structure such a workout.

Thank you in advance for your prompt attention to this matter.

Very truly yours,

Joe and Molly Doe
JD/sfc

____________________________________________________

[of course, none of these creditors want either a long payment plan or a bankruptcy. Therefore, you will receive a reply either by letter or telephone. Make sure you tell the caller that you are recording the call and make sure you do in fact record it when you get permission. They will be recording the call themselves so they should not object if you do likewise]

_______________________________________________________

Edmund Dechant
Attorney at Law
Post Office Box xxxx
Santa Rosa, CA 95402
Voice (707) 6xx-xxxx - Fax (707) xxx-xxxx

July 27, 2008

VIA FAX ONLY TO 1-7xx-691-7311
Rob Bob Jones
XYZ Financial Systems
P.O. Box 441457
Ohama, NE 18101-1457

Re: Anybank No.54xx-xxxx-5006-7953
Amount Balance: $4, 391.82

Client's Name: Joe and Molly Doe

Dear Mr. Jones:

This letter is sent to resolve the above listed account for a lump sum payment of 30% of the referenced balance.

I attach two letters establishing our success in obtaining a 30% settlement from other creditors of the Does.

If Anybank agrees to accept our offer, please indicate in writing and fax the acceptance to me to the fax number noted above.

Thank you for your consideration of this offer.

Very truly yours,

Edmund Dechant
ED/sfc
Enclosures

___________________________________________________

[your letter would look a little different such as the one just below. Notice that a post office box is used. I suggest using one. Additionally, it is good if you have a fax number. If you don't own a fax machine yourself, you can use those at FedEx or the U.P.S. package store.]
____________________________________________________

Joe and Molly Doe
Post Office Box xxxx
Santa Rosa, CA 95402
Voice (707) 6xx-xxxx - Fax (707) 8xx-xxxx

July 27, 2008

VIA FAX ONLY TO 1-7xx-691-7311
Rob Bob Jones
XYZ Financial Systems
P.O. Box 441457
Ohama, NE 18101-1457

Re: Anybank No.54xx-xxxx-5006-7953
Amount Balance: $4, 391.82

Customer's Name: Joe and Molly Doe

Dear Mr. Jones:

This letter is sent to resolve the above listed account for a lump sum payment of 30% of the referenced balance.

We attach two letters establishing our success in obtaining a 30% settlement from other creditors.

If Anybank agrees to accept our offer, please indicate in writing and fax the acceptance to us to the fax number noted above.

Thank you for your consideration of this offer.

Very truly yours,

Joe & Molly Doe
JD/sfc
Enclosures

_________________________________________________

[sometimes a creditor will demand proof that another creditor has agreed to settle for less than the full amount. If you face this objection, try to settle with another creditor. Once you have been successful, return to this creditor with proof of settlement.]
___________________________________________________

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