Identity theft: How to prevent such fraud

Identity theft, which is now an increasing crime across US, is the stealing of personal information of the victim like the social security number, date of birth, maiden name of your mother, your complete address or your credit card number. With the help of this personal information, the identity thief can operate the victim’s bank accounts, transfer balances from one account to another, apply for a new line of credit or a credit card, and create an account with utility companies in the name of the victim or to rent an apartment in the name of the victim. The thief may use your social security number to get a driving license in your name with changed picture and address claiming that he has changed his place of communication, so that the credit card gets delivered in his address. But due to the link of the credit card with your social security number, the debt will be listed in your credit report for which you will suffer from low credit score.

Among the most numerous ways of getting access to your identity. The popular among them include stealing mails from your mailbox or obtaining old credit card and utility bills from the paper bins which you throw away carelessly in those bins. The thief may also steal your purse to get your credit card and other personal details and use the information to take financial advantage. So the first step towards your security is to keep the personal information out of the reach of outsiders. Another thing you may do is to destroy the old bills into numerous pieces before throwing them in the bins so that the information cannot be retrieved from those bills.

So to prevent identity theft, the first thing is to become aware of the fact of how to use your personal information. You should always remember your social security number, date of birth and passwords and never write it down somewhere and carry with you. Moreover, you should immediately report any loss of your credit card to the credit card company so that they can lock your card. Although the maximum liability for unauthorized use of your lost credit card under the Federal laws is $50, you should report the loss immediately without any delay to prevent identity theft.

Now if find your identity already stolen and the thief has taken financial advantage from it, you should immediately report it to the Federal Trade Commission by filling up the identity theft complaint form online and register with them as a new victim of identity theft. You should also update the complaint by calling them at their hotline number 1-877-438-4338 even if you have filed the complaint online. Next, you should take the copy of the complaint form with your photograph and identity proof to the local police and file a complaint there and inform the creditor that you have been a victim of identity theft.

Now if at point of time you become aware of the fact that you identity (social security number, or your credit card number) is stolen, you can immediately place a fraud alert service with any one of the three credit bureaus. Once your place the alert service with any one of them, the other two bureaus would be reported immediately and the creditor will verify by calling you up before opening a new line of credit in your name. The fraud alert service is provided by the bureaus free of any charge and can be activated by calling any of the three bureaus (Experian: (888) 397-3742, Trans Union: (800) 680-7289 and Equifax: (800) 525-6285)

Financing your education through Federal Student aid program

Most students opt for student’s loan either for their academic course of study or for their professional studies. However, for availing such loans there are two options available to them – firstly, they can get loans from private financial institutions and secondly, they can go for Federal students aid program. If you want to go for education loans with private financial institutions, you need to provide a guarantor for the loan. However, such a guarantor may not be required if you go for federal students aid program. This Federal aid program is in fact the largest source of student’s aid in US and provides over $80 billion per year in the form of loans, grants, and work-study assistance.

Several factors are taken into account while determining your eligibility for the Federal student aid program. This aid is mostly based on your financial need and is only intended to finance your education. To become eligible for the loan you should be a US citizen, have a valid social security number and should not be default on a previous Federal student loan. After you complete your graduation you get a grace period after which you need to start repaying your loan. This grace period is six months for a Federal or a Direct Stafford loan and nine months for a Federal Perkins loan. If you have received a Federal or a direct loan, you can choose from among the repayment plans. However, if you have received a Federal Perkins loan, there is only one repayment plan and you have to pay back the loan by this repayment plan only. Federal Perkins loan has to be repaid within a period of ten years only. Your monthly repayment will depend upon the amount of your loan and the time you take to repay back the loan.

The loan provider will provide you with all information about your repayment including the date from which your repayment begins. You should make regular repayment on your student’s loan once you repayment date starts else you will be considered delinquent as per the terms of the promissory note. Now once you become delinquent, the three credit reporting agencies may be reported about your delinquency which will be reflected in your credit report and lower your credit score. If credit score decreases, you may have problem getting loans at competitive rates for purchasing a home or a car. With a low credit score you may become ineligible for getting an additional federal student’s loan. Moreover, you can be sued to the court and judgment can be brought against you to recover the outstanding debt including late fees, through garnishment of your wages.

Bankruptcy: Chapter 7 vs Chapter 13

The term “Bankruptcy” refers to a legal process by which a person who cannot afford to pay back an outstanding debt is either exempted from paying it back or are given a new payment plan so that he can afford to pay it back depending upon the debtors financial condition. In US, it is a federal court process to help debtors to give a fresh start in their finances by avoiding the previous debts through an order of the Federal court. Once bankruptcy is filed in a federal court, the creditors have to stop collecting the debts. Moreover, by filing bankruptcy, all pending foreclosures, garnishments and other court orders can be stopped temporarily. One cannot file a bankruptcy if a bankruptcy petition has been dismissed in the preceding 180days.

There are different types of bankruptcies of which Chapter 7 and Chapter 13 are the most important. It is not always possible to choose among the types of bankruptcies you intend to file. If you want to file a bankruptcy, you need to approach the Federal Court and file a list of outstanding debts and assets and the federal court generally decides the type of bankruptcy you can file. However, under the new bankruptcy law, it is not easy to qualify for bankruptcy because if you have an income above the median income level, you need to undergo a 180 day credit counseling before filing bankruptcy.

Most people prefer to file a Chapter 7 bankruptcy. Chapter 7 bankruptcy is also known as “liquidation” or “straight bankruptcy” since under such a bankruptcy, the debtor requests the Federal Court to discharge your outstanding debts. Under such a bankruptcy, the Federal Court may sell off a portion of you property and pay off some of the outstanding debts and as a result the debts listed under the Chapter 7 bankruptcy gets exempted. However, it should be noted that not all of your personal property can be sold under Chapter 7 bankruptcy. Some of the items that are exempt from attachment under this bankruptcy include household appliances, vehicles, clothing, jewelry up to certain limit, pensions and social security benefits. Hence, this type of bankruptcy is filed if the debtor has no assets to lose.

Chapter 13 bankruptcy is also known as a “debt adjustment” bankruptcy and it requires the debtor to pay back the outstanding debts by a repayment plan from his present income. Under Chapter 13 bankruptcy, you need not hand over the assets to discharge your debt and you may pay back the outstanding debt within a 3 to 5 year period from your monthly income.