Due to the recent state of our economy, many people have been confronted with an unpredictable loss of income as companies are forced to restructure their workforce. Layoffs, downsizing and foreclosure seem to be constantly in the news. Companies are also cutting back on overtime, which can cause a profound reduction in income while salaried individuals are asked to take on more tasks and work more hours. It is wise to start thinking about “what if” alternatives and plan for possible unemployment, a reduction in pay, loss of overtime or a potential pay freeze. If you are married you should have a plan if either of you becomes unemployed.

Following are some tips to help you prepare if you think you may be facing a pay cut or reduction in income.

• The most important item on your agenda should be an updated budget.  If you are like most consumers, your monthly income never goes far enough. After paying for the house and groceries, it seems there is little leftover for things that matter most. The reality is it may not be your salary that is to blame; it might be a pattern of poor spending choices.
• It has long been recommended that people set aside the equivalent of three to six months of income to carry them through a crisis. Review your current monthly expenditures i.e. food, gas, needs, mortgage, auto loans/leases, insurance, etc. and reconfirm that your savings can sustain you for this period of time. If not, you must put aside extra funds from your current cash flow to build up your savings.
• Plan to pay off any 401(k) loans that are outstanding. If you lose your job you will be required to pay back any 401(k) loans rather quickly, possibly within just a few weeks. If you do not repay these loans, the government considers these funds an early withdrawal and will require you to pay taxes and penalties on the funds.
• Review employment benefits, including medical, dental coverage and life insurance. Take care of necessary annual checkups and examinations while you’re still covered. Married couples who are both employed should look into moving the entire family to one spouse’s plan. You may be able to reduce your expenses by reevaluating telephone plans, eliminating a cell phone, or eliminating a home maintenance service. Any of these funds could be deposited into your savings account.

DMCC offers free budget counseling sessions for anyone who is interested in getting their finances organized; even if you are not facing a reduction in income or unemployment. Establishing a budget is the first and most important step when confronted with an income reduction.  This is a necessary tool in formulating a strategy to stay ahead of your finances.

Our certified credit counselors will help figure out what you can do to maximize your income and put some funds away for savings.  DMCC can also help you answer questions that you may be facing about repaying your debts on a lower income.

Jessica Stokes is the Education and Research Coordinator at Debt Management Credit Counseling Corp. (DMCC) a 501 (c)(3) nonprofit charity committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt. DMCC is approved by HUD to offer housing counseling and by the U.S. Department of Justice to provide bankruptcy counseling and education. DMCC is located at 700 W. Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441. To speak to a certified credit counselor, call 866-618-DEBT (3328), email contact@dmcconline.org or visit www.dmcconline.org.

If you are struggling to pay your credit cards or other unsecured debts each month and you simply to do not have sufficient income to balance your budget, there are three primary options that may provide you the relief you need.

Debt Management Plans (DMPs)

DMPs are offered by your creditors through authorized credit counseling agencies and are designed to help you payoff your credit cards and other unsecured debt in full within 5 years. Benefits generally include reduced interest rates, one lower consolidated monthly payment, and no more collection calls or past due fees. Some creditors will also re-age your past due accounts and report them to the credit bureaus as current. Credit counseling agencies offering DMPs are highly regulated, insured and bonded. Fees typically consist of an initial setup fee not exceeding $75 and recurring monthly fees based on your amount of debt not exceeding $50.

Debt Settlement Plans (DSPs)

If you cannot afford the payment required by a DMP, another alternative to bankruptcy is a debt settlement plan. A DSP provides you relief when your creditors agree to accept payments for less than you owe in full settlement of your debts. However, your creditors will only accept settlements if they believe you are unable to repay the full balance. Under a DSP you stop making any payments to your creditors and instead, save the specified plan amount each month in a bank account until there are sufficient funds to make acceptable settlement payments. It is important to understand that DSPs are not endorsed by most creditors and during the time they are not getting paid, they will increase their efforts to collect from you. DSPs are primarily offered by attorneys and for-profit companies. Fee rates are generally not regulated, and typically consist of recurring monthly fees plus settlement fees at the time each debt is settled.

Bankruptcy

If filing for bankruptcy protection from your creditors is your best option, there are two types of filings that are available to most consumers; Chapter 7, which will discharge most of your unsecured debts in full, and Chapter 13, which will provide you a plan for the partial repayment of your debts. The Chapter under which you are qualified to file is determined by specified tests. Consumers filing bankruptcy are required to receive credit counseling from an approved provider prior to filing and complete a personal financial management course after filing. Although not required, most consumers use attorneys to file bankruptcy. Fees typically average $1,700 for singles filing Chapter 7 and $3,500 for Chapter 13, plus court costs.

Phil Heinemann is the Executive Director at Debt Management Credit Counseling Corp. (DMCC) a 501 (c)(3) nonprofit charity committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt. DMCC is approved by HUD to offer housing counseling and by the U.S. Department of Justice to provide bankruptcy counseling and education. DMCC is located at 700 W. Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441. To speak to a certified credit counselor, call 866-618-DEBT (3328), email contact@dmcconline.org or visit www.dmcconline.org.

Step 1: Open a browser and go to www.annualcreditreport.com.

Step 2: Select your state using the drop down menu and click “Request Report”.

Step 3: Complete the online form and click “Continue”.

Step 4: Click on the check box next to TransUnion (you may also choose Experian or Equifax, but their reports do not include full account numbers).

Note: You are entitled to one free credit report per credit reporting company per year. That means you may go back and get reports from the other two credit bureaus at any time during the year.

Step 5: You will be transferred to the credit reporting company’s site where you have to create an account.

Step 6: The credit reporting company will need to confirm that you are who you say you are. It will ask you questions related to your account numbers, address history, or employer history.

Note: You typically will only have to answer one open ended question like “Of the four following cities, type the name of a company that you worked that was based in one.”

Step 7: In addition to your free credit report, you will be offered to see your credit score for a small fee (under $10). Click “No Thanks” to see just the free credit report.

Step 8: Your free credit report now appears. Print it out or save it to a file on your computer.

Note: If you disagree with any part of it, there is a link for you to learn about how to correct inaccuracies.

Step 9: Click “Logout” when finished.

STEPS TO OBTAIN FREE CREDIT REPORT THROUGH THE MAIL OR PHONE

If you would like to obtain your credit reports by U.S. P.S. you must go to www.annualcreditreport.com and download the request form. Print and complete the form. Mail the requested information to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Your reports will be mailed to you within 15 days. Please allow 2-3 weeks for delivery.

To request your credit report by phone call 1.877.322.8228. You will go through a simple verification process over the phone.

After being enrolled in DMCC’s Debt Management Program (DMP), you qualify for a Credit Score Analysis.

What is a Credit Score Analysis?

Your credit score is a direct result of what is listed on your credit reports. Therefore, changes to your reports, could have positive or negative consequences. DMCC has the ability to simulate changes to your reports. After 6 months on our DMP, DMCC will show you what you need to do to improve your score. Contact DMCC and learn how you could get a free analysis.

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.

1. You do not have any savings.

2. You make minimum payments on your credit cards.

3. You use credit cards for things you used to buy with cash, such as groceries.

4. You use increasing amounts of your total income to pay off debts.

5. You have more than two or three major credit cards.

6. After you pay your credit card bill, you increase your balance by the same amount (or more) the following month.

7. You are at or near your credit limit on your credit cards.

8. You count on the float in order to pay your bills, writing a check hoping that you’ll be able to cover it by the time it clears your bank.

9. You are unsure of the total amount you owe on all your debts.

10. You take out cash advances on your credit card to pay other bills.

11. You have tried to make a purchase with your credit card and been declined.

12. You have been denied credit.

13. You bounce checks.

14. You get calls from collectors.

15. You lie to your spouse or other family member about your spending, hide credit card statements or constantly argue with family members about your finances.

If you realize that you are in over your head, the sooner you act, the easier it will be to get out from under the burden of debt. Beware of companies that promise to fix your credit. There is no easy fix, but it is possible to turn your finances around if you work at it.

Here are some other warning signs that you might be piling up too much debt:

• You cannot pay off the bill in full each month. Even before you get to the stage where you’re only paying the minimum, there are warning signs. If you rarely see your credit card balance drop to zero, you need to start rethinking your spending/saving plan.

• You are charging because you haven’t got the money. If you are making purchases with your credit card because you can’t afford to pay cash for it, that’s a strong sign you are in financial trouble.

• You are near or at the limit with your credit cards. You have spent yourself into a corner, and the credit you need for everyday life is used up.

• You are suffering physically. Your brain is recognizing that your spending patterns are in conflict with your income and your anxiety level increases.

• You are running up unsecured lines of credit. Many institutions offer lines of credit or overdraft protection on checking or savings accounts. If you are utilizing these services on your accounts month to month, then you have a problem. Because these services usually have a cost associated with them, they can be costly every time they are used.

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.

Budgeting and Self-help

In many cases, consumers can actually get out of debt on their own. It takes planning, hard work and dedication.

The first thing you need to do is design a realistic, workable spending plan. Debt Management Credit Counseling Corp. can help you design your budget with our free budget analysis. A certified financial counselor will help you analyze your income and expenditures to see where you can cut your expenses in order to get out of debt. This service is absolutely free. Please contact DMCC at 1-866-618-DEBT to speak to a member of our staff.

Debt Consolidation and Debt Management Plans

In the past couple of years, there has been a lot of talk about debt consolidation and what it can really do for indebted consumers. A debt consolidation company usually receives payments from a debtor and distributes the funds to the various creditors. This way the debtor only has to write one check a month, but still satisfies all of his creditors. DMCC offers a debt management plan (DMP) that combines debt consolidation of unsecured debt with reduced interest rates, lower monthly payments, and the elimination of fees from your creditors. Our certified financial counselors will assist you in designing a debt management plan that fits your specific situation. DMCC also offers a variety of free educational information and a financial literacy program that will help you gain the skills you need to make smart financial decisions. Please contact DMCC at 1-866-618-DEBT to find out how our program can help you get out of debt.Debt Consolidation Loans

 With a debt consolidation loan, a lender will give you a loan for an amount that will pay for all of your unsecured debt. The loan may or may not have a lower interest rate than what you were paying to all of your individual creditors. Although DMCC does not offer debt consolidation loans, we can help you find the right way to get out of debt. DMCC works with several mortgage lenders with special programs for consumers enrolled in a DMP for a minimum period of time. If our DMP is not your best option, our certified financial counselors will help you find someone who can help. Call DMCC today at 1-866-618-DEBT for more information about your options to get out of debt.

Debt Settlements

A debt settlement program involves hiring a debt negotiator to negotiate with your creditors and achieve a significant reduction in your overall debt. Successful debt settlement programs result in you owing only a fraction of your original debt. However, this settled amount usually must be paid in one lump sum payment. Debt settlements can also hurt your credit history and subsequently your credit score. Unless otherwise negotiated, settled accounts are not considered “paid in full.” The negative information will stay on your credit report for 7 years. DMCC can help you analyze your financial situation to find out if a debt settlement is right for you. We can also refer you to a reputable debt settlement company. Call us at 1-866-618-DEBT for more information.

Bankruptcy

People who face severe debt delinquency may consider bankruptcy as a viable option. All collection activity will cease from the time an attorney represents a client or when the initial bankruptcy papers have been filed. Bankruptcy is a serious decision. DMCC can help you decide if bankruptcy is the right option for you and may be able to offer you alternatives to avoid it. Call us at 1-866-618-DEBT to speak to a certified financial counselor about your situation. We strongly recommend that you also speak with a bankruptcy attorney if you are considering this option.

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.

Depending on the circumstances, when you apply for credit, you may receive a notice with information about your credit report or credit score. The new rules introduce several types of notices:

• Credit Score Notice. In some cases, you will get a notice that states your credit score and information about how it compares to other consumers’ scores. A lender would provide this “credit score notice” to all credit applicants, whether you apply for a mortgage, auto loan or another type of credit.
• Risk-Based Pricing Notice. Not all lenders provide a credit score notice to all applicants. Instead, you may receive a “risk-based pricing notice”. You would only receive this if you are offered credit on terms that are less favorable than the terms offered to other consumers because of information in your credit report. For example, you may receive this type of notice if you have negative information in your credit report and you are offered a loan with an annual percentage rate (APR) that is higher than the APR offered to other consumers who apply for that loan.
• Account Review Notice. If your APR on an existing credit account is increased based on a review of your credit report, you may receive an “account review notice”. For example, some credit card issuers conduct periodic reviews of customers’ credit reports. If there has been a change in your report since you initially applied for the card, the issuer may increase your APR. Under these circumstances, you would receive this notice providing you with the credit report information that resulted in the APR increase.

What do the notices do for me?

These new notices give you the opportunity to check the accuracy of the information in your credit report. The notices identify the credit bureau that provided your credit report or credit score to your lender, allowing you to dispute any information that you believe is incorrect. All of the notices provide information on how to obtain a free credit report. In addition:

• A “credit score notice” will include your credit score. You can check the accuracy of your credit report by obtaining a free annual credit report, which is available to all consumers regardless of whether they have received a notice.
• A “risk-based pricing notice” or an “account review notice” will not include your credit score, but will include information about how to obtain a free credit report from the credit bureau identified in the notice within 60 days of receiving that notice. This report will be in addition to the free annual credit report available to all consumers.

What should I do if I receive a notice?

1. Review the notice. If you receive any of these notices, read it carefully to make sure you understand how your credit report or credit score may affect the price you pay for credit. Ask the lender to explain anything in the notice that you do not understand.
2. Obtain and examine your credit report. If you get a “risk-based pricing notice” or an “account review notice”, get your free credit report by following the instructions on your notice and review the information in it right away. If you get a “credit score notice”, and you are surprised by how your credit score compares to the scores of other consumers, you may want to get your free annual credit report from the credit bureau identified in the notice and review it for accuracy.
3. Dispute any errors. If you find errors in your credit report, you may dispute the information and request that the information be deleted or corrected.

Article provided by www.federalreserve.gov

There are, however many differences in these two types of debt. Students often do not understand the long term effect of this toxic debt. Of note: Student loans cannot be discharged in bankruptcy. There is no statute of limitations on the repayment of these student loan obligations. As long as you owe, you owe. Repayment begins six months after graduation or the student leaving the educational facility. Loans that are awarded based on financial need are low-interest loans sponsored by the federal government. The government subsidizes these loans, so no interest accrues until you begin repayment after you graduate or leave school. There are other loan options available that are not need-based. If you need to borrow money to attend college, be sure your federal loan options are exhausted before considering private loans. On some private loans, interest accrues while students are in school.

Rethink college and the finances of your degree. Pay as you go, get a job. Save before you get there (students and parents). Live like a college student. Get college credits while in high or attend community colleges for general education. Do a budget. Live at home. Apply for scholarships. Minimize your college expenses.

If you must borrow for your education, follow these tips.

1. Ignore your available loan limits and borrow as little as possible.

2. Pay a little each month on each loan while you are in college so you know this is not free money.

3. Be certain to notify all lenders of your new address and contact information after graduation or when you move.

3. Keep track of all your loans. Students may graduate with three to four types of loans and with a loan for each semester they are in school. Set up a spread sheet that lists the following categories: lender’s name, website, payment address and phone number for the lender, type of loan (Federal, Perkins, Stafford, private, etc.), loan amount, interest rate and any fees, date interest begins to accrue, loan term, deadlines for repayment and any payments made.

4. Know that even if you are granted forbearance, an economic hardship deferment or an alternate repayment schedule your interest on the loans continue to accrue.

5. Payments must be made on each loan in a timely manner unless they are consolidated.

6. Cut your expenses. There are five categories of expenses while in college for the average student. Tuition and fees are set by the institution. Maximize your credit hours for the tuition paid. Twelve plus hours cost the same tuition as 15 or 18 hours. Room and board are the costs that are most controlled. Live like a college student not your professor or your parents.

Books and supplies also have some student control functions. Frequently these options may also include a timing and preplanning component. New texts may cost $230 while renting the same may be only $110.

You must plan ahead. Personal expenses include cell phones, computers, internet, clothes, etc. These also may be controlled by the student and the “wants versus needs” analysis should apply.

Transportation is the final category. Limits on where and how you travel may save you years of future debt.

Think before you borrow. Plan after you do. Pay off your loans as soon as you can once you graduate.

“GET CASH UNTIL PAYDAY! . . . $100 OR MORE . . . FAST.”

The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans, cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans. The Federal Trade Commission, the nation’s consumer protection agency, says that regardless of their name, these small, short-term, high-rate loans by check cashers, finance companies and others all come at a very high price.

Here’s how they work: A borrower writes a personal check payable to the lender for the amount the person wants to borrow, plus the fee they must pay for borrowing. The company gives the borrower the amount of the check less the fee, and agrees to hold the check until the loan is due, usually the borrower’s next payday. Or, with the borrower’s permission, the company deposits the amount borrowed — less the fee — into the borrower’s checking account electronically. The loan amount is due to be debited the next payday. The fees on these loans can be a percentage of the face value of the check — or they can be based on increments of money borrowed: say, a fee for every $50 or $100 borrowed. The borrower is charged new fees each time the same loan is extended or “rolled over.”

The federal Truth in Lending Act treats payday loans like other types of credit: the lenders must disclose the cost of the loan. Payday lenders must give you the finance charge (a dollar amount) and the annual percentage rate (APR — the cost of credit on a yearly basis) in writing before you sign for the loan. The APR is based on several things, including the amount you borrow, the interest rate and credit costs you’re being charged, and the length of your loan.

A payday loan — that is, a cash advance secured by a personal check or paid by electronic transfer is very expensive credit. How expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115, with $15 the fee to borrow the money. The check casher or payday lender agrees to hold your check until your next payday. When that day comes around, either the lender deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend the financing for 14 more days. If you agree to electronic payments instead of a check, here’s what would happen on your next payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an additional $15. The cost of the initial $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Alternatives to Payday Loans

Before you decide to take out a payday loan, consider some alternatives.

1. Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people. A cash advance on a credit card also may be possible, but it may have a higher interest rate than other sources of funds: find out the terms before you decide. In any case, shop first and compare all available offers.
2. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR. Military personnel have special protections against super-high fees or rates, and all consumers in some states and the District of Columbia have some protections dealing with limits on rates. Even with these protections, payday loans can be expensive, particularly if you roll-over the loan and are responsible for paying additional fees. Other credit offers may come with lower rates and costs.
3. Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service — a late charge, an additional finance charge, or a higher interest rate.
4. Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.
5. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan — however modest — can help you avoid borrowing for emergencies. Saving the fee on a $300 payday loan for six months, for example, can help you create a buffer against financial emergencies.
6. Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems. Find out the terms of the overdraft protection available to you — both what it costs and what it covers. Some banks offer “bounce protection,” which may cover individual overdrafts from checks or electronic withdrawals, generally for a fee. It can be costly, and may not guarantee that the bank automatically will pay the overdraft.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

Protections for Military Consumers:

Payday loans (and certain other financing) offered to servicemembers and their dependents must include certain protections, under Federal law and a Department of Defense rule. For example, for payday loans offered after October 1, 2007, the military annual percentage rate cannot exceed 36%. Most fees and charges, with few exceptions, are included in the rate. Creditors also may not, for example, require use of a check or access to a bank account for the loan, mandatory arbitration, and unreasonable legal notices. Military consumers also must be given certain disclosures about the loan costs and your rights. Credit agreements that violate the protections are void. Creditors that offer payday loans may ask loan applicants to sign a statement about their military affiliation.

Even with these protections, payday loans can be costly, especially if you roll-over the loan. You instead may be able to obtain financial assistance from military aid societies, such as the Army Emergency Relief, Navy and Marine Corps Relief Society, Air Force Aid Society, or Coast Guard Mutual Aid. You may be able to borrow from families or friends, or get an advance on your paycheck from your employer. If you still need credit, loans from a credit union, bank, or a small loan company may offer you lower rates and costs. They may have special offers for military applicants, and may help you start a savings account. A cash advance on your credit card may be possible, but it could be costly. Find out the terms for any credit before you sign. You may request free legal advice about a credit application from a service legal assistance office, or financial counseling from a consumer credit counselor, including about deferring your payments.

Military consumers can contact the Department of Defense, toll-free 24 hours a day, 7 days a week, at 1-800-342-9647, or at www.militaryonesource.com. Information on the Department of Defense rule, alternatives to payday loans, financial planning, and other guidance is available.

To Complain/For More Information

The FTC works 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 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. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. 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.

For more information on any state or local protections for payday loans, contact the consumer protection agency in your area. This information is available in the GSA Consumer Action Handbook, at www.consumeraction.gov. The state offices are listed at: www.consumeraction.gov/state.shtml

This article was publised by the FTC. For more information visit www.ftc.gov.

The Ill Effects of Medical Identity Theft

How would you know if your personal, health, or health insurance information has been compromised? According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, you may be a victim of medical identity theft if:

• you get a bill for medical services you didn’t receive;
• a debt collector contacts you about medical debt you don’t owe;
• you order a copy of your credit report and see medical collection notices you don’t recognize;
• you try to make a legitimate insurance claim and your health plan says you’ve reached your limit on benefits; or
• you are denied insurance because your medical records show a condition you don’t have.

Medical identity theft may change your medical and health insurance records: Every time a thief uses your identity to get care, a record is created with the imposter’s medical information that could be mistaken for your medical information – say, a different blood type, an inaccurate history of drug or alcohol abuse, test results that aren’t yours, or a diagnosis of an illness, allergy or condition you don’t have. Any of these could lead to improper treatment, which in turn, could lead to injury, illness or worse.

An Ounce of Prevention

While there’s no fool-proof way to avoid medical identity theft, the FTC says you can take a few steps to minimize your risk.

• Verify a source before sharing information. Don’t give out personal or medical information on the phone or through the mail unless you’ve initiated the contact and you’re sure you know who you’re dealing with. Be wary of offers of “free” health services or products from providers who require you to give them your health plan ID number. Medical identity thieves may pose as employees of insurance companies, doctors’ offices, clinics, pharmacies, and even government agencies to get people to reveal their personal information. Then, they use it to commit fraud, like submitting false claims for Medicare reimbursement.
• Safeguard your medical and health insurance information. If you keep copies of your medical or health insurance records, make sure they’re secure, whether they’re on paper in a desk drawer or electronic in a file online. Be on guard when you use the Internet, especially to access accounts or records related to your medical care or insurance. If you are asked to share sensitive personal information like your Social Security number, insurance account information or any details of your health or medical conditions on the Internet, ask why it’s needed, how it will be kept safe, and whether it will be shared. Look for website privacy policies and read them: They should specify how site operators maintain the accuracy of the personal information they collect, as well as how they secure it, who has access to it, how they will use the information you provide, and whether they will share it with third parties. If you decide to share your information online, look for indicators that the site is secure, like a lock icon on the browser’s status bar or a URL that begins “https:” (the “s” is for secure). Remember that email is not secure.
• Treat your trash carefully. To thwart a medical identity thief who may pick through your trash or recycling bins to capture your personal and medical information, shred your health insurance forms and prescription and physician statements. It’s also a good idea to destroy the labels on your prescription bottles and packages before you throw them out.

Detecting Medical Identity Theft

Paying close attention to your medical, insurance and financial records can help you spot discrepancies and possible fraud.

• Read the Explanation of Benefits (EOB) statement that your health plan sends you after treatment. Make sure the claims paid match the care you received. Look for the name of the provider, the date of service, and the service provided. If there’s a discrepancy, contact your health plan to report the problem.
• Order a copy of your credit reports, and review them carefully. Credit reports are full of information about you, including what accounts you have and whether you pay your bills in a timely way. The law requires each of three major nationwide credit reporting companies – Equifax, Experian and TransUnion – to give you a free copy of your credit report each year if you ask for it. Visit www.AnnualCreditReport.com or call 1-877-322-8228 to order your free credit reports each year, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can download the form at www.ftc.gov/freereports.Once you have your reports, look for inquiries from companies you didn’t contact, accounts you didn’t open, and debts on your accounts that you can’t explain. Check that your Social Security number, your address(es), name or initials, and your employers are listed correctly. If you find inaccurate or fraudulent information, get it fixed or removed. Visit www.ftc.gov/idtheft to learn how.
• Ask for a copy of your medical records. If you believe you’ve already been a victim of medical identity theft, review your medical and health insurance records regularly. The thief may have used your name to see a doctor, get prescription drugs with your health ID number, file claims with your insurance provider, or done other things that leave a trail in your medical records. Try to review your health records for inaccuracies before you seek additional medical care. The Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule gives you the right to copies of your records that are maintained by health plans and medical providers covered by that law. Health care providers and health plans generally are required to give you your files within 30 days after you ask for them. Unlike credit reports, there is no central source for your medical records. You need to contact each provider you do business with – including doctors, clinics, hospitals, pharmacies, laboratories and health plans – that is relevant to your experience. For example, if a thief got a prescription in your name, you may want the record from the pharmacy that filled the prescription and the health care provider who wrote the prescription. Or if you’ve been using the same hospital for 20 years and you think that the identity theft is recent, you may want to limit your request to records of the last few years or months.It’s likely that you have to complete a form and pay a fee to get a copy of your records. Keep track of your communications with your health plan and providers, including copies of postal and email correspondence, and a log of your phone calls, conversations and activities. Be patient: Health plans and providers, particularly small ones, may not have handled a claim of medical identity theft before, and may not be sure how to respond.In most instances, a provider who denies you access to your records must give you the reason in writing. Some providers may refuse to give you copies of your medical or billing records for fear that they’re violating the identity thief’s HIPAA privacy rights. These providers are mistaken: You have the right to know what’s in your file. If your request is denied, you have the right to appeal. Contact the person identified in the provider’s Notice of Privacy Practices or the patient representative or ombudsman, explain the situation and request your file. If a provider still refuses to give you access to your records within 30 days of your written request, file a complaint with the U.S. Department of Health and Human Services’ Office for Civil Rights, at www.hhs.gov/ocr.

You also should get a copy of the accounting of disclosures for your medical record from your health plan and providers. It will help you follow the trail of your information and identify who has incorrect information about you. The law allows you to order one free copy of the accounting from each of your providers every 12 months. The accounting is a record of:

• the date of the disclosure;
• the name of the person or entity who received the information;
• a brief description of the information disclosed;
• a brief statement of the purpose of the disclosure or a copy of the request for it.

Certain disclosures that occur often or as a matter of routine – like each time a doctor’s office sends treatment information to another health care provider, or sends payment information to an insurer for reimbursement – may not be included in the accounting.

For more information about your rights under HIPAA, visit the U.S. Department of Health and Human Services, Office for Civil Rights at www.hhs.gov/ocr, or the World Privacy Forum at www.worldprivacyforum.org/FAQ_medicalrecordprivacy.html.

Bouncing Back from Medical Identity Theft

If you are a victim of medical identity theft, here are several steps to take immediately. Keep detailed records of your conversations and copies of your correspondence.

1. File a complaint with the Federal Trade Commission online at https://www.ftccomplaintassistant.gov or by phone at 1-877-ID-THEFT (438-4338); TTY: 1-866-653-4261.
2. File a report with your local police, and send copies of the report to your health plan’s fraud department, your health care provider(s), and the three nationwide credit reporting companies. Information on how to file a police report is at www.ftc.gov/idtheft/consumers/defend.html.
3. Exercise your right under HIPAA to correct errors in your medical and billing records. Write to your health plan or provider detailing the information that seems inaccurate. Include copies (keep the originals) of any document that supports your position. In addition to providing your complete name and address, your letter should identify each item in your record that you dispute, state the facts and your reasons for disputing the information, and request that each error be corrected or deleted. You may want to enclose a copy of your medical record with the items in question circled. Send your letter by certified mail, and ask for a “return receipt,” so you can document what the plan or provider received. Keep copies of your dispute letter and enclosures.

Generally, your health plan or medical provider must respond: The creator of the information is obligated to amend the inaccurate or incomplete information. It also should notify other parties, like labs or other health care providers, that may have received incorrect information. If an investigation doesn’t resolve your dispute with your plan or provider, you can ask that a statement of the dispute be included in your record.

Other Steps to Consider

A fraud alert can help prevent an identity thief from opening additional accounts in your name. Contact the toll-free fraud number of any one of the three nationwide credit reporting companies to place a fraud alert on your credit report. Contact only one of the three companies to place an alert. The one you call is required to contact the others that, in turn, place an alert on their versions of your report, too.

• TransUnion: 1-800-680-7289; www.transunion.com; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
• Equifax: 1-800-525-6285; www.equifax.com; P.O. Box 740241, Atlanta, GA 30374-0241
• Experian: 1-888-EXPERIAN (397-3742); www.experian.com; P.O. Box 9532, Allen, TX 75013

A security freeze, also known as a credit freeze, is a warning sign to businesses or others who may use your credit file. It locks down your credit file and blocks access by potential creditors. In short, it makes it less likely that an identity thief can open new accounts. Most states have laws that allow consumers to place a credit freeze with credit reporting companies. In many of these states, any consumer can freeze their credit file; in others, only identity theft victims can freeze their files.

Placing a credit freeze does not affect your credit score, keep you from getting your free annual credit report, or keep you from buying your credit report or score. It doesn’t prevent you from opening a new account, applying for a job, renting an apartment, or buying insurance, either. In these situations, the business usually needs to review your credit report. You can ask the credit reporting company to lift your credit freeze temporarily, or remove it altogether.

There are two key differences between security freezes and fraud alerts:

• The credit reporting companies are not required to share a request for a security freeze as they are with a fraud alert. If you want to freeze all your credit files completely, you have to contact each company with your request.
• The credit reporting companies may charge you a fee to place a freeze or to lift it. The fees and lead times to freeze or “thaw” your credit file vary among states, so it’s wise to check with your state authorities or with a credit reporting company in advance if possible. In many states, security freezes are free for identity theft victims; in others, consumers must pay a fee – typically $10. It’s also important to know that each credit reporting company charges a fee for this. More information is at www.ftc.gov/idtheft.

If you have a valid police or other investigative report about the theft, you usually can place or lift a freeze for free.

If you believe you are a victim of medical identity theft and are concerned that your identity could be compromised further – say, by credit accounts being opened in your name – you may want to consider a freeze as an additional layer of protection.

For More Information

For information about getting and correcting your medical records:

World Privacy Forum
2033 San Elijo Avenue, #402
Cardiff by the Sea, CA 92007
www.worldprivacyforum.org
760-436-2489

Center on Medical Record Rights and Privacy
Health Policy Institute
Georgetown University
Box 57144
Washington DC 20057-1485
http://ihcrp.georgetown.edu/privacy/records.html
202-687-0880

If you believe that a health plan or provider violated your rights under HIPAA, you may want to file a complaint with:

U.S. Department of Health and Human Services
Office for Civil Rights
200 Independence Avenue, SW
Washington, DC 20201
www.hhs.gov/ocr

The FTC works 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 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. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. 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.

Information provided by www.ftc.gov.

Expect your bank to send you an explanation about how it treats overdrafts; here is an example (38 KB PDF). Here are some key things you need to consider when reading the notice:

The basic facts

An overdraft occurs when you make a purchase or ATM transaction but don’t have enough money in your account to pay for it. For a fee, your bank will cover you when you become overdrawn. This fee can apply each time you overdraw your account.

Generally, banks can cover your overdrafts in one of two different ways:

• Standard overdraft practices. Your bank will cover your transaction for a flat fee of about $20-30 each time you overdraw your account. For example, if you make a purchase with your debit card for $150 but only have $100 in your account, your account will be overdrawn by $50 and your bank will charge you a fee. If you then make an ATM withdrawal for $50, your account will be overdrawn by $100 and you will be charged another fee. In this example, if the fee your bank charges for its standard overdraft practices is $30, you will pay a total of $60 in fees.
• Overdraft protection plans. Your bank may offer a line of credit or a link to your savings account to cover transactions when you overdraw your account. Banks typically charge a fee each time you overdraw your account, but these overdraft protection plans may be less expensive than their standard overdraft practices.

The new rules

• You choose. In the past, some banks automatically enrolled you in their standard overdraft practices for all types of transactions when you opened an account. Under the new rules, your bank must first get your permission to apply its standard overdraft practices to everyday debit card and ATM transactions before you can be charged overdraft fees. To grant this permission, you will need to respond to the notice and opt in (agree).
• Existing accounts. If you do not opt in (agree), beginning August 15, 2010, your bank’s standard overdraft practices won’t apply to your everyday debit card and ATM transactions. These transactions typically will be declined when you don’t have enough money in your account, but you will not be charged overdraft fees.
• New accounts. If you open a new account on or after July 1, 2010, your bank cannot charge you overdraft fees for everyday debit card and ATM transactions unless you opt in. If you open a new account before July 1, 2010, your bank will treat you as an existing account holder: you will receive a notice about your bank’s standard overdraft practices and will have to decide if you want them for everyday debit card and ATM transactions.
• Flexibility. Whatever your decision, the new overdraft rules give you flexibility. If you opt in, you can cancel at any time. If you do not opt in, you can do so later.
• Checks and automatic bill payments. The new rules do not cover checks or automatic bill payments that you may have set up for paying bills such as your mortgage, rent, or utilities. Your bank may still automatically enroll you in their standard overdraft practices for these types of transactions. If you do not want your bank’s standard overdraft practices in these instances, talk to your bank; you may or may not have the option to cancel.

Information retrieved from www..federalreserve.gov.