The new credit card rules that affect your money management planning are supposed to protect you. But do they?

No doubt, the days of easy credit are long gone, along with very low introductory rates for extended periods, no annual fees, and high credit limits for just about anyone who wanted a credit card.

Let’s look at what is coming with the new credit card rules

Effective February 22, 2010 the Credit Card Act of 2009 (Credit Card Accountability Responsibility and Disclosure Act of 2009) goes into effect. Quite a few of the changes protect the consumer, for example:

1 – Your card company has to notify you at least 45 days in advance of any modification they intend to make in your account, like raising the interest rate you pay, changing certain fees like late fees or annual fees. However, there are situation where they do NOT have to notify you in advance.

2 – They can only increase the interest rates on new charges, while the existing charges have to remain at the old interest rate.

3 – They have to get you your credit card bill a minimum of 21 days before the payment is due so you have time to make the payment without being late and getting dinged for a late fee or triggering other unpleasant events.

4 – The card company can only charge interest charges on balances in the current billing cycle; no more double-cycle billing.

5 - Protect consumers who are under the age of 21 by making them show that they are able to make payments, or require that they have a co-signer, in order to open a credit card account.

The New Laws Will Also Hurt Consumers …

While, the new legislation prohibits a variety of credit card billing practices, the banking industry stands to lose as much as $50 billion in lost revenue as a result of the new restrictions.

There is little doubt that they will take action to make up for these losses. In fact, the issuers of credit cards are taking action now to implement changes before the new law goes into effect that will cost the consumer more. They are:

1 - Raising annual interest rates on current balances,

2 - Lowering credit card limits,

3 - Changing from fixed interest rates to variable rates,

4 - Stopping the low promotional rates campaigns, and

5 – Starting to punish consumers who don’t get their statement on-line by charging a fee for mailing you a paper statement.

There is a lot more information you can learn from this website Federal Reserve’s consumer information site that explains the new credit card rules in-depth.

Have your credit card companies made any of these changes on your cards? Leave a comment…

You can apply for income tax relief for up to $2 million (or $1 million if married and filing separately) in debt that is cancelled, or forgiven, by your mortgage lender on your primary residence. The law has been extended through 2012 under the Emergency Economic Stabilization Act.

If you have lost your home through foreclosure or have restructured your mortgage loan, you may qualify for this tax relief under the extended tax law called the Mortgage Forgiveness Debt Relief Act of 2007. The claim can be made by using IRS Form 982.

There are two qualifying factors that must be met on the mortgage debt exclusion: 1) it must be your primary home, and 2) the debt must have been used to buy, build, or make substantial improvements to the residence to which the mortgage applies. Certain business or farm property may also qualify for tax-free treatment, so check with your accountant or tax attorney in this situation.

When a lender forgives debt, it is typically a taxable event. You would receive a 1099-C (Cancellation of Debt) and the income would be claimed on Line 21 on your personal 1040 income tax Form. (IRS Publication 525)

While mortgages for second homes and rental properties do not qualify for the exclusion, some or all of this debt might qualify for other exclusions if you are insolvent at the time the debt was settled.

Canceled credit debt does not have to be included in income if it was a gift, or if the individual is insolvent, or in a bankruptcy case. The exclusion for insolvency is particularly important in this case, because it will likely apply to borrowers with home equity loans or mortgages on second homes and rental properties, and will be helpful in this situation. This is an important point for borrowers whose property has dropped in value below what is owed on the mortgage.

According to the IRS, “A debtor is insolvent when, and to the extent, the debtor’s liabilities exceed the FMV (fair market value) of the assets. Determine the debtor’s liabilities and the FMV (fair market value) of the assets immediately before the cancellation of the debtor’s debt to determine whether or not the debtor is insolvent and the amount by which the debtor is insolvent.”  (IRS Publication 908)

The value of all of your assets and all of the liabilities you owe have to be calculated to figure out if you are insolvent, and by what amount, so as always, check with your professional accountant to see how you can best take advantage of these tax relief measures for exclusions of cancelled or settled credit  and mortgage debts.

REMINDER:

Corporate tax returns are due March 15th and extension deadline filing is September 15th

Personal tax returns are due April 15th and extension deadline filing is October 15th

As the U.S. and global economy continues to struggle and credit gets tighter, steady cash flow becomes more and more important to the survival of a business. One source that has been around for decades is accounts receivable factoring; also referred to as invoice factoring. This tool has become an important small business money management strategy.

Invoice factoring is not just for manufacturers. Many types of business owners, including Dentists, Chiropractors, and other healthcare providers have turned to this method to insure a steady stream of cash into their businesses.

Kent Harlan, owner of Ozarks Capital Funding has been a reliable resource for factoring for healthcare professionals for a long time, and has even written a book about it that makes this tool easy to understand.You can read his blog article Factoring For Medical Providers and check out his book to learn:

- How factoring can be better than bank loans

- The easy application process

- How fees are determined – you’ll be surprised

- The other services factoring companies provide that will save you money

- How your company can take advantage of the infusion of working capital from factoring

- How factoring companies communicate with your customers

- How to find out if you qualify before you apply

- Why utilizing a factoring broker is advantageous to you

If you are in the Dental industry, you should also visit Kent’s website focused on Dentists at www.dentalpracticecash.com

Credit report repair is more in demand than ever since the economy is on a long-term roller coaster ride, but finding the right credit repair service can be tricky. There are unscrupulous services out there that will take your money and deliver nothing in return.

As recently as a few months ago, the Federal Trade Commission (FTC) has been cracking down and charging criminal operations with accepting advance payments, which violates the Credit Repair Organizations Act (CROA), and deceiving consumers by promising to remove legitimately reported information from credit reports.

A good place to start your credit repair journey is to understand your rights under the CROA Credit Repair Organizations Act.

Pertinent Sections of the Credit Repair Organizations Act can be found in:

Section 404.4B – Prohibited Practices – Advance Payment – No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.

Section 405.a – Disclosures – You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. However, neither you nor any ”credit repair” company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for 10 years.

Any person or business who takes money in exchange for improving your credit must operate under the CROA. You must sign a contract for services and you have 3 business days from the contract signing date to change your mind and rescind the contract. In addition, the credit repair organization not ask you to sign any kind of form which waives your rights under the CROA. Any such waiver you sign is considered void and cannot be enforced by federal or state laws.

Organizations that violate the law can be sued for actual damages, punitive damages, and attorney’s fees. You can report violations to the FTC, your state attorney general, and file suit in your state within five years from the date the violation occurred (or the date you learned of the violation) to take legal action against the organization.

The charges brought by the FTC on dozens of credit repair services serve as a reminder that credit repair companies are often dishonest and the dishonest ones seldom produce any results. In the end, you’re out of your money and your credit still needs repairing.

If you are a consumer who has hired a credit repair company and had positive results, leave a comment about it so others can benefit.

Here are some additional helpful links: Credit Repair:

How to Help Yourself  http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm

How to Recognize a Credit Repair Scam http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm

Free Annual Credit Reports http://www.ftc.gov/freereports

How To Dispute Credit Report Errors http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm