Important Update: Changes in FDIC Deposit Insurance Coverage
The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.
Weighed Down by Debt? Here are Ways to Ease the Load
If you're finding yourself overwhelmed by debt, it's crucial to find a solution. FDIC Consumer News offers a few tips for what to do.
Contact your lender immediately if you think you won't be able to make a loan payment. "Lenders generally prefer to work with customers to find a solution that benefits both parties, so ask for their help, preferably before you miss the payment," said Sukari Smith, an FDIC Community Affairs Specialist. This advice also applies to other bills, such as those from utility companies.
With your mortgage, it's especially important to contact your lender or its loan servicer quickly to ask what can be done to keep your home. "Programs exist to help homeowners with payment problems, but borrowers need to be proactive and reach out to their lender and respond to their requests for information," Smith added.
Reputable credit counseling organizations can help you develop a personalized plan to solve money problems. The quality of these organizations can vary, so interview several, check their background (including contacting your state Attorney General's office or local consumer protection agency for complaints), get key details and costs in writing before signing a contract, and ask about any disadvantages to a proposed solution. For referrals to local counselors, see the box below.
Also be very careful of "debt settlement" companies that claim they can reduce what you owe for a fee. To curb certain deceptive and abusive practices, new Federal Trade Commission (FTC) rules require additional disclosures from debt settlement companies, including information about how long it will take to obtain the promised debt relief. The rules also prohibit debt relief services from collecting a fee until they have settled, reduced or otherwise changed the terms of at least one of the consumer's debts. However, the rules don't stop firms from charging high fees.
In general, before doing business with a for-profit debt settlement company, you should first seek out a reputable, non-profit credit counselor.
Avoid scams. Warning signs of possible fraud include demands for upfront fees and requests to start making payments to the organization instead of your creditors directly.
Also be wary of promises to quickly eliminate your debts or remove negative but accurate information from your credit file. "The only legitimate way to rebuild a bad credit history is to show you pay your debts on time and keep your debt to a manageable level," said Luke W. Reynolds, Chief of the FDIC's Community Outreach Section. "That cannot be accomplished overnight by an outside party."
Remember that you have rights when it comes to debt collection. The federal Fair Debt Collection Practices Act requires that you be treated fairly and without harassment. For example, if you dispute a bill in writing within 30 days of being contacted about payment, the debt collector must provide you with proof of the debt before contacting you again to collect the money. Also, debt collection companies that work for your creditor cannot call you at work if you ask them not to.
"And don't believe a debt collector who suggests you can go to jail for missing payments on a loan," added Reynolds. "That threat should be reported to the Federal Trade Commission and your state Attorney General."