Banks use ChexSystems because of the billions of dollars they lose annually to check fraud and account abuse. This database assists banking institutions determine if an applicant is a risk to them. Usually, if you have written one or two bad checks or have overdrawn your account with your debit card a couple of times you would not end up in the ChexSystems database. However, if you owe money to a financial institution on a closed checking account or you have outstanding bad checks, there is a very good chance you are listed.

Tips to avoid being listed on ChexSystems:

- Make sure you have the funds available in your account before writing a check or using a check/debit card.

- Ask a representative at your bank how long it takes for checks and/or deposits to clear.

- Balance your checkbook regularly or keep track of your account via online banking daily.

- If you decide to close a checking account, make sure all transactions have cleared and are posted to the account.

If you are not on the ChexSystems database but still feel you need help or want to learn more about handling a checking account, you can check out Debt, Money & Credit Concepts, DMCCs free financial literacy program. Our program is available online at http://www.dmcccorp.org/FinancialLiteracy/Introduction.asp or by the United States Postal Service.

Source: http://www.bankrate.com/brm/green/chk/basics1-6a.asp

DMCC is a 501 (c)3 is a charitable organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with their debt.  Education is provided free of charge to consumers as well as personal counseling to identify the best options for the repayment of any unsecured debt. To speak to a certified credit counselor, call 1-954-418-1466, email contact@dmcconline.org.

DMCC is located at 700 West Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441.

Have you ever looked at your bank statement and felt like screaming at the top of your lungs? Do you feel like you are throwing money out the window? Maybe you purchased an item for $197.99 and you have $197.85 in your checking account. Congratulations, you have mastered the art of bouncing a check! Most banks will charge you anywhere from $30 – $36, for being short 14 cents. This has probably affected almost all consumers at one time or another.

According to a recent National Public Radio story by Chris Arnold, banks have always explored new ways to debit money from their customers. Almost all banks have adopted the policy of cashing your biggest transactions first, such as mortgage or car payments. This information will be provided in the terms and conditions of your account or in the account agreement. Here is a direct quote from a banks policy statement:

“When processing withdrawals from your account, such as those made through checks, in-person withdrawals, Automated Teller Machines, point of sale, or by any other electronic means, it is our policy to pay the largest item first.”

Let us assume you have $500 in a bank account and in one day, the bank debits your account for three of your checks and a cash withdrawal at an ATM.  Chronologically, your account would be debited as follows: Check #1 for $25, Check #2 for $40, ATM debit for $22, and check #3 for $495, totaling $586. If the bank cashed the checks and ATM charge in the order they were processed, you would be charged only one overdraft fee ($30) for check #3 ($495). Instead, the banks clear the largest check first. By doing this you will be charged three overdraft fees totaling $90. This has been an expensive day.

How to Avoid Overdraft Fees

Overdraft fees are not only costly, but also aggravating, so learn how to use all the tools at your disposal to manage your accounts and avoid these charges. Most banks have a toll free automated system that provides 24-hour account access. You can check your balance, verify what payments have been processed and which checks have cleared.  Most FDIC institutions offer online banking services as well, so take advantage of your banks website. Some banks can even issue alerts to your email or cell phone when bills are due and can automatically issue payments each month for your regular expenses, like car loans or mortgage payments. Almost all of the online banking services will archive your purchases and bill payments.  This can help you keep track of which bills you have paid and on what date. Also, if you have the possibility to use a direct deposit feature through your employer, take advantage of it. Getting your paycheck transferred directly into your bank account can help tremendously. If using the internet is inconvenient, then just keep a small calculator with you and log each transaction into your checkbook. The most important part is to deduct every purchase from your total balance to avoid those overdraft charges.

I Keep Getting Overdraft Fees

The good news is that most institutions have some kind of overdraft protection plan. Overdraft protection is a service to help you prevent from exceeding your checking account balance with purchases. By being enrolled in overdraft protection, funds from a savings account, money market account or a line of credit can cover the amount of the transaction not covered by your checking. Most institutions offer this service free of charge for signing up, but can assess fees up to $25 for each overdraft. So if you are tired of acquiring overdraft charges and you have tried tracking your purchases, it may be a good idea to contact your institution to see what they have to offer for overdraft protection.

DMCC is a 501 (c)3 is a charitable organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with their debt.  Education is provided free of charge to consumers as well as personal counseling to identify the best options for the repayment of any unsecured debt. To speak to a certified credit counselor, call 1-954-418-1466, email contact@dmcconline.org.

DMCC is located at 700 West Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441.

Washington Mutual is one of the many banks that have automatically enrolled their customers in a new bounced-check protection plan. Their customers didn’t have to sign up for a line of credit or pay an annual fee. If they wrote a check that was too large for their balance, the bank simply covered the check and charged a $22 fee. Their customers never again would face the embarrassment of a bounced check nor would they have to pay a merchant fine for writing a bad check.

Courtesy overdraft, or bounced-check protection, uses the banks money instead of the consumers money or credit line to cover the checks that exceed the consumers balance up to a certain amount  typically $100 to $1,000. In addition to the per-check fee, some banks tack on a daily fee of $2 to $5 until the checks are made good. Consumers must pay the money back within two to four weeks or risk facing collection actions.Other ways courtesy draft protection is different from overdraft protection include:

Its automatic. Banks typically extend the service to some or all of their customers, who must opt out if they dont want the coverage. With traditional overdraft protection, customers have to sign up.

Its discretionary - on the banks part. The bank decides whether or not to cover an overdraft; the consumer never knows for sure if the charge will be honored. With overdraft protection, the consumer signs a contract and the bank is typically obliged to honor checks that are under the plans limit.

Its costly. Traditional overdraft protection comes with a $10 to $50 annual fee, and users typically pay regular credit card or line of credit interest rates on any balances owed. With bounced-check protection, the fees banks charge $25 per check is average, although some go as high as $40  would translate into annual percentage rates of 200% to 500%, or even more.

How can you protect yourself?

Opt out. If you are not sure whether your bank has enrolled you in its bounced-check protection plan, you might have missed the glossy brochure advertisingthis service. Call and ask. You should be able to get the coverage removed if you specifically request it. Follow up in writing.

Sign up for real overdraft protection. The programs that connect your checking account to a savings account, credit card or line of credit are a much more cost-effective way to guard against bounced checks.

To avoid overdraft of your account, get some budgeting help. Go to the DMCC website at www.dmcccorp.org and click on to educational materials where you can view a free video on budgeting and download budgeting forms.

DMCC is a 501 (c)3 is a charitable organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with their debt.  Education is provided free of charge to consumers as well as personal counseling to identify the best options for the repayment of any unsecured debt. To speak to a certified credit counselor, call 1-954-418-1466, email contact@dmcconline.org.

DMCC is located at 700 West Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441.

Several events can cause individuals to lose control of their financial situation. Divorce, job loss, lawsuits, foreclosures or credit card debt can drive a person over the financial edge. Generally, filing bankruptcy allows people who are having financial difficulties to wipe out their debts. In most cases, people filing bankruptcy can keep all of their property. Thus, bankruptcy helps people wipe out their debts, keep their property and get a fresh start.

Many people filing for bankruptcy have accumulated a huge credit card debt and in some cases are trying to prevent a foreclosure on their home.

Ten Years of Bad Credit

Although bankruptcy can wipe out all unsecured debts through an order of the court called a discharge, bankruptcy information remains on a credit report for 10 years. Any negative information that appears on a credit report may prevent an individual from buying a home or car, or from obtaining a credit card or loan.

Bankruptcy serves two main purposes:

1. It gives creditors a fair share of the money that the debtors can afford to pay back.

2. It gives debtors a fresh start.

There are two ways in which bankruptcy can provide for payments to creditors and a discharge for debtors – Chapter 7 and Chapter 13.

Chapter 7

In a Chapter 7 bankruptcy, known as the liquidation chapter, debtors give up certain property when they file for bankruptcy. A trustee appointed by the court sells the property and uses the proceeds to pay the creditors. A trustee is usually a lawyer or accountant who specializes in bankruptcy cases. The debtor receives a discharge shortly after the case is filed.Debtors are allowed to keep any money earned after filing for bankruptcy, as well as most other property obtained after the filing. Under this chapter, all unsecured debts are wiped out. These debts include credit card bills, medical and legal fees, utility bills, deficiency balances (the difference between the amount owed and the value of the property), loans from friends and some student loans.

There are some debts that cannot be discharged through the bankruptcy process. These debts, known as non-dischargeable debts, include alimony, child support, some student loans, certain federal, state and local taxes, debts from fraud, larceny, theft, and fines and penalties for items worth over $1,000.

Chapter 13

Chapter 13 is designed for individuals with regular income who want to pay their debts but are currently unable to do so. The purpose of this chapter is to help individuals, under court supervision and protection, to propose and carry out a repayment plan under which creditors are paid over an extended period of time. Under this chapter, debtors are permitted to repay creditors in full or in part, in installments over a three-year period.

Try the following measures before declaring bankruptcy:

• Control spending, either with the help of a credit counselor or a debt consolidation plan.

• Set up repayment plans with creditors.

• Get credit counseling and learn about financial management.

Most experts advise against filing for bankruptcy and recommend finding alternative ways to pay off debt. Most consumers should try paying off their debts through a repayment plan before choosing bankruptcy. These types of programs will teach the consumer ways to reduce expenses and save money.

DMCC is a 501 (c)3 is a charitable organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with their debt.  Education is provided free of charge to consumers as well as personal counseling to identify the best options for the repayment of any unsecured debt. To speak to a certified credit counselor, call 1-954-418-1466, email contact@dmcconline.org.

DMCC is located at 700 West Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441.

The thought of personal bankruptcy is very frightening, however over 5.4 per 1,000 people have filed for bankruptcy last year, and this rate has been growing at an average of nearly 7 percent. Researchers have determined that the primary cause of personal bankruptcy is uncontrollable levels of consumer debt oftentimes coupled with an unexpected event, such as a major medical expense not covered by insurance, the loss of a job, divorce or death of a spouse.

According to economists’ surveys, the classic bankruptcy filer is a blue collar, high school graduate who is the head of a household in the lower middle-income class with heavy use of credit. In order to protect both debtor, and creditor, laws were enacted to provide equal, and fair measures to satisfy the objectives of all parties. The primary purpose of the laws of bankruptcy are: (1) to give an honest debtor a fresh start in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has property available for payment.

There are two types of structured plans for filing for personal bankruptcy, Chapter 7 or Chapter 13. Over two-thirds of personal filers choose Chapter 7 bankruptcy. Basically Chapter 7 requires the debtor to liquidate all non-exempt assists, and have them distributed among creditors. Some examples of exempt assists include equity in a primary residence, and a retirement program. On the other hand, Chapter 13 does not require liquidation, rather a debtor agrees to a specific payment plan, whereby a portion of any unsecured debts is paid, and the balance is forgiven. It must be stressed, that under both plans, certain debts are ineligible for bankruptcy protection. These debts include government student loans, child support, alimony, and income tax debt. These must be paid back in full.

Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. In an attempt to reverse the increasing trend in personal bankruptcy, the federal government has recently implemented sweeping bankruptcy reform legislation. On March 10, 2005, the Senate passed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. On April 20th, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Act of 2005). This act makes filing for bankruptcy more difficult through income-means testing, tougher guidelines for the homestead exemption, increased lawyer liability and required credit counseling.