1. Your credit report. Visit annualcreditreport.com and request your free credit report from each one of the major credit reporting agencies; Experian, Equifax and TransUnion.
2. Analyze your auto insurance coverage to make sure you are getting the best deal and that you are adequately covered.
3. Check your savings and investment accounts. Make sure you are taking full advantage of employer matched savings programs and check the diversity of your investment portfolio. If you need help with investments, talk to a certified financial advisor.
4. Determine your net worth. Make a list of the value of all of your assets and the amount of your liabilities. Then subtract your liabilities from the assets. If the number is negative, you owe more than the value of your assets. If part of your debt is unsecured look for ways to reduce it or eliminate it as soon as possible. Every dollar that goes to repaying interest on unsecured debts, like credit cards, is a dollar you cannot use for securing your financial future, buying a home or meeting your personal financial goals. Certified Credit Counselors can help you determine your net worth and develop plans for managing your debt. Visit the Association for Independent Consumer Credit Counseling Agencies at www.aiccca.org to find a counselor.
5. Once you know the worth of your belongings and investments, determine the level of home or renters insurance you may need.
6. Finally, evaluate your need for life insurance.  MSN Money has a great calculator you can use to determine how much life insurance would be necessary if something happened to you.

The above is just a bare bones list of items you should evaluate on, at minimum, an annual basis. By reviewing these critical areas you will have the information you need to create a plan for your financial success!

1. Open a checking and savings account at a bank or credit union, manage your accounts carefully and never bounce checks. This is the initial step to take to start proving your credit worthiness.
    
2. Get a copy of your credit report from all three of the major credit bureaus once per year and check the accuracy of your reports. If you find discrepancies, follow the directions on the report and dispute them with the credit bureau. There may be inaccuracies on your credit reports and it is up to you to monitor them. You are entitled to one free copy of your report from each bureau once per year. Go to www.annualcreditreport.com or call 1-877-322-8228.
    
3. Pay all of your bills on time, every time. Your payment history accounts for 35% of your credit score and it only takes one missed payment to hurt your score. Set up automatic payments when possible and keep a calendar of due dates and a payment reminder system.
    
4. On your revolving accounts (credit cards) keep the balance you owe under 30% of your credit limit. One more thing; paying your bill in full each month is the smartest way to use credit and will have the greatest positive impact on your score.
    
5. Be sure that your lenders are reporting your credit limits accurately. If the limits are too low, it can affect your score. Remember the 30% rule!
    
6. Do not apply for more credit if you already have open, unused credit lines. Also, do not open new accounts simply to pay off existing accounts. Opening several new accounts can cause your score to drop.
    
7. If you do not have a credit history and are trying to build one, consider a secured credit card, but shop carefully! The lender will require you to deposit money up to the credit limit. Try your own bank or credit union first and make sure that the card you pick:
    
   1. Has no (or a very low) application or annual fee
   2. Converts to a regular unsecured credit card after 12 – 18 months of on-time payments
   3. Will be reported to all three credit bureaus. If the issuer does not report to the credit bureaus, the card will not help build your credit history

    

8. Keep older credit card accounts open. *One thing you shouldn’t do if you’re just trying to boost your score is close unused accounts, says Craig Watts, consumer affairs manager for Fair Isaac Corp. “If someone tells you to close unused accounts to improve your score, they’re pulling your leg,” he says. “It won’t help you and it can hurt you.”
    
9. Be patient. It takes time to build or rebuild credit. Continue paying all of your debt on time, and if you are behind on accounts – get current.
    
10. Look for help if you feel overwhelmed. Credit counselors can help you put together a plan to manage your credit. You can find a credit counselor by contacting the Association of Independent Consumer Credit Counseling Agencies by visiting www.aiccca.org, or calling them at 1-866-703-8787.
     

Source:

*Curry, Pat. 2007 August 3. Tips for Boosting Your Credit Score. Bankrate.com. Retrieved from http://www.bankrate.com/finance/credit-debt/tips-for-boosting-your-credit-score-1.aspx.

FTC June 2009

Paying the Debts of a Deceased Relative: Who Is Responsible?

After a relative dies, the last thing grieving family members may expect are calls from debt collectors asking them to pay their loved one’s outstanding debts. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, a surviving relative usually has no legal obligation to pay the debts of a family member who has died. In fact, the rights of surviving relatives are covered by the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, which is enforced by the FTC, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Here’s what the law has to say about who has responsibility for a dead relative’s debts.

• Who is responsible for paying the debts of a relative who has died?
  Generally, someone’s estate is responsible for paying their debts. But if there isn’t enough in the estate to cover the debts, they typically go unpaid.
• Am I legally obligated to pay the debts of a deceased relative?
  You usually don’t have a legal obligation to pay the debts of a deceased relative who was not your spouse. Even a spouse’s obligation to pay may be limited under state probate law. To determine whether you’re legally obligated to pay, talk to an attorney who is knowledgeable about this area of the law.
• What should I do if a debt collector contacts me about a debt of a relative who has died?
  Give the debt collector the contact information of the decedent’s personal representative. That’s the person responsible for settling their affairs, including paying any outstanding debts from the estate. If there is a will, the personal representative is known as the executor; if there is no will, the personal representative is known as the administrator.

Don’t give any of your personal information, like your Social Security number, birth date, or financial account numbers to anyone unless you know who you’re dealing with. Some con artists may check obituaries and other legal notices, and then contact relatives of a deceased posing as debt collectors. These scam artists can use your personal information to help them commit identity theft or other types of fraud.

• Do I have to speak with a debt collector who contacts me about the debts of a deceased relative?
  No. But if you’re a decedent’s personal representative, or otherwise legally obligated to pay the debt, you may want to talk with the debt collector to see if you can resolve the matter.
• Can I stop a debt collector from contacting me about the debts of a deceased relative?
  Yes. If you decide that you don’t want a debt collector to contact you again, write a letter to the collector saying so. Then, make a copy of your letter, send the original by certified mail, and pay for a “return receipt” so you will be able to document what the collector received and when. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact and to let you know that they or the creditor plan to take a specific action, like filing a lawsuit. Remember that even though the collector is prohibited from contacting you again, they still may sue the estate of your relative or the legally responsible person to collect the debt.
• Can debt collectors tell anyone else about my dead relative’s debt?
  Other than to get the personal representative’s location, a debt collector generally is not allowed to disclose your relative’s debt to anyone other than the deceased’s spouse, parent (if your relative is a minor child), or guardian.

For Complaints and More Information

Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

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 or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

There is not one perfect way to get out of debt – every person’s financial situation is different. If you’re struggling to make your minimum payments each month, getting late fees, over-the-limit fees, or even collection calls, you need to get help to prioritize your obligations and to determine the best options available to you.

If you are ready to tackle your debt on your own, use these steps as a guide;

1. If you’re in a hole, the first step is to stop digging. Cut up the credit cards, stop using them, put them away; whatever you need to do to not charge on them.
2. Make cutbacks where you can on the necessities; buy store brands instead of name brands, use coupons, brown bag your lunch, etc.
3. Stop non-essential spending wherever possible; movies, eating out, coffee, etc.
4. Start an emergency fund by opening a savings account and aim for at least $500. If possible set up regular automatic deposits. Why? If unexpected expenses come up and you don’t have an emergency fund, you will skip your debt payments to pay for the unexpected expenses. The emergency fund protects you and your debt payments.
5. Acknowledge your debt by listing it out and make your repayment plan. Use our Debt Spreadsheet.
6. Keep a monthly budget. Use our Budget Worksheet.
7. Make paying bills on time a habit. Late payments on any bill can be very costly. If you have a hard time getting bills paid on time set up reminders on your calendar or online banking may be a good option – check with your bank.
8. Grow your income. Another great way to get out of debt faster is to make more money. Look for ways you can make money on the side, or ask for a raise, or look for a higher paying job. See our tips on Possible Ways to Increase Income.
9. Track your progress on your Debt Spreadsheet. Update it every payday (or however often you pay bills) so that you can see your shrinking debt amount. It may be a ways off, but it’s within sight!
10. Have fun! Celebrate your accomplishments! Make it an adventure. It is very empowering to take back control of your spending and finances.

Many agencies offer Debt Settlement Services, often charging high upfront or ongoing fees when individuals are already experiencing financial distress.

An individual can work directly with a creditor to settle a debt on their own but must have a lump some of money to offer the creditor(s) and be prepared for settlement negotiations.

For example; Molly is behind on her store charge card and owes $1500. Molly negotiates with the creditor to pay 65% of her total debt and the creditor agrees. Molly pays the lump sum settlement amount of $975.

What are the Incentives?
For creditors, the primary incentive is to recover funds that otherwise would have been lost if the account was charged-off to a collection agency or the debtor filed for bankruptcy relief.

For consumers, the primary incentives are to avoid paying debts in full or to avoid the stigma that is sometimes associated with bankruptcy.

What are the Consequences?
A debtor can still be sued during the debt negotiation process. Typically, during the time frame that the debtor is saving funds to make a settlement offer, the creditors are not receiving regular payments therefore the account is in default. During this period a creditor can pursue legal action that may result in wage garnishment or lien.