Charitable Giving Tips
Whether charitable organizations use their employees, volunteers or professional fund- raisers to solicit donations by phone, mail, or in person, consider the following precautions to ensure that your donation dollars benefit the people and programs you want to help.
-Ask for written information, including the charity's name, address, and telephone number. A legitimate charity or fund- raiser will give you materials outlining the charity's mission, how your donation will be used, and proof that your contribution is tax deductible.
-Ask for identification. Many states require paid fund-raisers to identify themselves as such and to name the charity for which they're soliciting. If the solicitor refuses, hang up and report it to local law enforcement officials.
-Call the charity. Find out if the organization is aware of the solicitation and has authorized the use of its name. If not, you may be dealing with a fraudulent solicitor.
-Watch out for similar sounding names. Some phony charities use names that closely resemble those of respected, legitimate organizations.
-Know the difference between "tax exempt" and "tax deductible." Tax exempt means the organization doesn't have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return. Even though an organization is tax exempt, your contribution may not be tax deductible. If deductibility is important to you, ask for a receipt showing the amount of your contribution and stating that it is tax deductible.
-Know that a 501(c)(3) organization must make a copy of its annual returns, (Form 990 or Form 990EZ) for the last three years and its exempt status application and supporting documents available for you to view during business hours.
-Be skeptical if someone thanks you for a pledge you don't remember making. If you have any doubt whether you've made a pledge or previously contributed, check your records. Be on the alert for invoices claiming you've made a pledge when you know you haven't. Some unscrupulous solicitors use this approach to get your money.
-Ask how your donation will be distributed. How much will go to the program you want to support, and how much will cover the charity's administrative costs? If a professional fund-raiser is used, ask how much it will keep.
-Refuse high pressure appeals. Legitimate fund-raisers won't push you to give on the spot.
-Be wary of charities offering to send a courier to collect your donation immediately.
-Consider the costs. When buying merchandise or tickets for special events, or when receiving free goods in exchange for giving, remember that these items cost money and generally are paid for out of your contribution. Although this can be an effective fund-raising tool, less money may be available for the charity.
-Be wary of guaranteed sweepstakes winnings in exchange for a contribution. You never have to donate anything to be eligible to win.
-Avoid cash gifts that can be lost or stolen. For security and tax record purposes, it's best to pay by check. Use the official full name of the charity - not initials - on your check. Avoid solicitors who want to send a courier or use an overnight delivery service to pick up your donation.
Credit & Debt Counseling, Management and Consolidation
The Federal Trade Commission offers the following advice regarding credit and debt counseling, management and consolidation:
If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. Debt negotiation is yet another option. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.
CREDIT COUNSELING AND DEBT MANAGEMENT PLANS
CREDIT COUNSELING: If you're not disciplined enough to create a workable budget and stick to it, can't work out a repayment plan with your creditors, or can't keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that, just because an organization says it's "nonprofit," there's no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make "voluntary" contributions that can cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
DEBT MANAGEMENT PLANS:
If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.
In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for - or use - any additional credit while you're participating in the plan.
You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can't make the payments - or if your payments are late - you could lose your home.
What's more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay "points," with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.
Be wary of credit counseling organizations that:
*charge high up-front or monthly fees for enrolling in credit counseling or a DMP.
*pressure you to make "voluntary contributions," another name for fees.
*won't send you free information about the services they provide without requiring you to provide personal financial information, such as credit card account numbers, and balances.
*try to enroll you in a DMP without spending time reviewing your financial situation.
*offer to enroll you in a DMP without teaching you budgeting and money management skills.
*demand that you make payments into a DMP before your creditors have accepted you into the program.
Visit www.ftc.gov for more information.
Credit Card Protection Offers
The thought of someone getting their hands on your credit cards and charging hundreds, even thousands of dollars is alarming. There are companies out there that are trying to ease such fears by offering credit card loss protection programs. Your BBB, along with the Federal Trade Commission warns that some offers are not worth the money, so beware.
Credit card protection offers are popular among fraudulent promoters who are trying to exploit consumers' uncertainty. In some cases, scare tactics and misleading information are used to sell protection that is not needed. Some scam artists may even claim to be connected with your credit card issuer and ask to "verify" your account number to make sure you are protected. Your real credit card issuer does not need your account number-it already has it.
The BBB advises consumers to avoid doing business with telemarketers who claim that:
-you are liable for more than $50 in unauthorized charges on your credit card account
-you need credit card loss protection because hackers can access your credit card number and charge thousands of dollars to your account
-a computer bug could make it easy for thieves to place unauthorized charges on your credit card account
-they are from the "security department" of your credit card organization and want to activate the protection feature on your credit card, but first they need to "verify" your account number to make sure you are protected.
The best defense against these types of scams is to educate yourself and know your rights as a consumer. Under federal law, you are not responsible for any charges if you report your card missing before someone else has used it and you are not liable for more than $50 if it has been used, as long as you report the problem promptly.
Most card issuers have voluntary policies to remove unauthorized charges completely if you report them as soon as you discover them. In you are not sure what your issuer's policy is, ask.
As a precaution for all unsolicited telephone calls, never give out personal information unless you have initiated the call and know the organization with which you are dealing. Also, check out any organization with your BBB before making a purchase decision.
Credit Repair Fraud
All consumers now can obtain a free credit report once a year through the Federal Trade Commission at www.annualcreditreport.com. This can also be ordered toll-free at 1-877-322-8228.
Every day, there are companies nationwide that appeal to consumers with poor credit histories. For a fee, they promise to clean up your credit report so you can obtain a car loan, a home mortgage or even get a job. Unfortunately, many of these companies can't deliver. After paying these companies hundreds or thousands of dollars in upfront fees, these companies do nothing to improve your credit report and many simply vanish with your money.
The truth is, no one can legally remove accurate and timely negative information from a credit report. The law does, however, allow you to request a reinvestigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act, you are entitled to a free copy of your credit report anytime you've been denied credit within the last 30 days. You can also dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation.
If you decide to respond to a credit repair offer, your BBB suggests you beware of companies that:
-do not tell you your legal rights and what you can do -- legally -- for free
-recommend that you not contact a credit bureau directly
-want you to pay for credit repair services before any services are provided
-advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity by obtaining a federal employer identification number to use instead of a social security number. If you follow illegal advice and commit fraud, you may be subject to prosecution.
It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
If you have a complaint about a credit repair clinic, contact your BBB, your state attorney general's office and the Federal Trade Commission.
Home Foreclosure Prevention
The possibility of losing your home because you can't make the mortgage payments can be terrifying. If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. Most loan servicers are willing to work with customers they believe are acting in good faith, and those who call them early on. The longer you wait to call, the fewer options you will have. After you've missed three or four payments and your loan is in default, most loan servicers won't accept a partial payment of what you owe. They will start foreclosure unless you can come up with the money to cover all your missed payments, plus any late fees.
Contacting Your Loan Servicer:
Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan. Then, write down the answers to the following questions:
-What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
-Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term?
-What other financial issues may be stopping you from getting back on track with your mortgage?
-What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?
Know Your Options:
Consider discussing the following foreclosure prevention options with your loan servicer:
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you've missed only a small number of payments.
Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn't going to help you if you're in a home you can't afford.
Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications can include lowering the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A loan modification may be necessary if you are facing a long-term reduction in your income.
Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you've reduced other expenses, your loan servicer may be more likely to negotiate with you.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy another home, get life insurance, or sometimes, even get a job. Still, it is a legal procedure that can offer a fresh start for people who can't satisfy their debts.
Throughout the Foreclosure Prevention Process:
Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.
Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, "return receipt requested," so you can document what the servicer received. Keep copies of your letter and any enclosures.
Meet all deadlines the servicer gives you.
Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional "workout" assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.
Be Alert to Scams:
Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far away from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
The foreclosure prevention specialist: The "specialist" really is a phony counselor who charges outrageous fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
The lease/buy back:
Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the "rescuer" walks off with most or all of the equity.
Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don't know they've been scammed until they get an eviction notice.
For more information, visit, www.ftc.gov and www.mymoney.gov.
SOURCE: Federal Trade Commission, (www.ftc.gov)