Disability Income And Debt

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By Eric Olsen, Executive Director, HELPS Nonprofit Law Firm

It’s a constant struggle to stay afloat financially on disability income. Many disabled persons have credit card debt they can’t pay, often incurred before they were disabled. What can disabled persons do about telephone calls and letters from collectors? What happens if you are sued? As the Executive Director of HELPS, a nationwide nonprofit law firm that protects seniors and disabled persons from unwanted collector contact, I’d like to answer some of the pressing financial questions we regularly hear from disabled persons.

1.How safe is disability income from collectors?

The most important thing to know is that Social Security in all its forms, including SSD, is protected by federal law from debt collectors. Almost all states have laws that protect private disability as well. Even if a creditor files a lawsuit and obtains a judgment, they can’t take…

Can The IRS Or Student Loan Creditors Garnish My Social Security?

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By Eric Olsen, Executive Director, HELPS Nonprofit Law Firm

Federal law protects Social Security and retirement incomes from garnishment by almost all collectors. But what about the IRS and student loan debts? The IRS and public student loan lenders can and occasionally will garnish 15% of a senior’s Social Security income. There is much information on the Internet scaring seniors about this practice, but very little information discussing how a garnishment of Social Security for taxes or student loans can be prevented or stopped.

It is not the general practices of the IRS or student loan collectors to garnish other forms of retirement such as pensions or VA benefits. State tax collectors and private student loan collectors cannot garnish Social Security or seniors’ other retirement income. The IRS or a public student loan collector must notify seniors in advance by mail before garnishing their Social Security benefits. Seniors often think they have n…

Zombie Debt 101

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Zombie debt refers to old unpaid debt, declared dead and uncollectable long ago, that rises from the grave to ingest the bank accounts of the living. Who are the mad financial scientists that create this zombie debt, and how can you thwart them when it comes for you?

The zombie masters, if you will, are third-party debt collectors who specialize in purchasing uncollected debt from a variety of vendors at huge discount. The vendors are eager to get the debt off their books and will gladly take whatever they can get – literally pennies on the dollar.

If you have any connection to this debt in the eyes of the collection agency, they will contact you and attempt to get you to pay. It doesn’t matter to them whether you really are responsible for the debt, whether the statute of limitations has expired, whether it was wiped out by bankruptcy, or any other story – their job is to convince you to pay up. It is not uncommon for zombie debt to be the result of identity the…

How Medical Debt Affects Your Credit

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The Crushing Effects Of Medical Debt

How pervasive is America’s medical debt problem? According to 2017 data from the credit bureau Experian, unpaid medical debt in America topped $127 billion. New data from Consumer Reports shows that almost 30% of insured Americans had unpaid medical debt turned over to collection agencies in the past two years. A 2013 analysis by NerdWallet Health found that unpaid medical bills were the number one cause of bankruptcies, surpassing unpaid mortgages or credit card debts.

Even if you aren’t driven into bankruptcy, unpaid medical debt will eventually show up on your credit report – resulting in a lower credit score that further degrades your financial health. The Consumer Reports survey found that nearly one in five Americans has suffered a credit score drop related to unpaid medical bills. You can check your credit score and read your credit report for free within minutes by

Video: Seniors, Don’t Worry About Timeshares You Can’t Afford

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By Eric Olsen, Executive Director, HELPS
Nonprofit Law Firm

I just got off the phone with a senior couple who have a timeshare they can’t afford and don’t use any longer. They had called a company who advertised that they help people get out of timeshares. (I hear such advertisements on the radio and television regularly.) The senior couple had paid this company nearly $3,000. The next payment of $1,000 was scheduled to come out of their account in a few days. I took a deep breath and explained that they didn’t actually need to keep paying for their timeshare, let alone pay someone to help get out of it. The timeshare company couldn’t take anything from them if they simply stopped paying. The law protects their retirement income from collection – including wage garnishments and bank levies from the timeshare company. That includes Social Security, pensions, VA benefits …

Video: 5 Things You Need To Know If You Have A Debt In Collections

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What should you do if contacted by a collection agency? Watch MoneyTips Consumer Advocate Kristin Malia share five essential pieces of information that will empower you to deal with debt collectors. Knowledge is power!

If you want to reduce your interest payments and lower your debt, join MoneyTips and use our free Debt Optimizer tool.

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Credit Scores Up, Negative Info Down

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Cleaning Up Credit Reports

In April, we reported on the upcoming rise in credit scores thanks to the National Consumer Assistance Plan (NCAP). The NCAP was created by the three major credit bureaus (Experian, Equifax, and TransUnion) as part of a settlement with state attorneys general. The NCAP objectives and other actions by the bureaus to clean up credit reporting errors was expected to raise some Americans’ credit scores by 15 to 30 points on the FICO scoring scale.

A recent report from the New York Federal Reserve confirms these estimates. According to the Fed’s analysis of anonymized Equifax credit reports, eight million Americans had at least one collections account removed from their credit report – resulting in an average 11-point increase in their credit scores between June 2017 and June 2018. Overall collection account balance…

How To Negotiate With A Collection Agency

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Do you have a bill that has been turned over to a collection agency? Of course, you’ll want to make things right as well as remove the negative effect on your credit score. But what if you can’t afford to pay the bill in full? Why not try to negotiate with the debt collector? They likely bought the debt at a significant discount and may be more willing to accept a deal – and then you are on the path to a clearer mind and a better credit score.

If you decide to negotiate, make sure that you are prepared to follow through properly. Don’t try to shortcut by paying third parties to do it for you. Bankrate.com Chief Financial Analyst Greg McBride agrees, noting, “Don’t fall for this idea that another company’s going to be able to resolve this for you if you just pay them some fee.” McBride suggests sticking with the creditor or collection agency that owns the debt, since the current debt owner is the only one that can verify to the credit bureau that the debt has been paid.

What Do I Do When My Debt Is Sold?

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Just like assets can be sold, so can debts. It’s possible that your auto loan or mortgage could be sold by one lender to another. If your debt is in good standing, the terms and conditions of your agreement generally apply, but things relating to the servicing of your loan such as due dates and payment arrangements may change.

The new loan servicer must notify you within 30 days of assuming your loan, providing the date of transfer and the contact information that you will need to continue your payments. Since the due dates may change and any autopayment functions may need to be established, you should act as early as possible and contact the new servicer to work out details and verify that your loan terms remained intact. Mistakes can happen, and it’s less costly to spot them early.

If you already sent your payment into the previous servicer, don’t panic. You have a 60-day grace period that waives late fees if you mistakenly sent the payment to the wrong lender….