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A new federal rule effective May 1, 2011, vastly strengthens protections for Social Security, SSI, VA, federal retirement checks, and certain other federal benefits from seizure by creditors. Heretofore, in theory such benefits were protected, but not in practice. Under the current rules, creditors could seize the consumer’s bank funds and it was up to the consumer to hire an attorney to challenge the seizure or garnishment. Needless to say, hardly any consumer successfully challenged the seizures leaving many consumers unable to pay the rent.

The new rule requires all banks and credit unions to determine whether exempt federal benefits have been electronically deposited within the past preceding two months. If so, the bank must protect the money deposited in that period. Under the new rule, the consumer need not take any steps to assert an exemption. The bank has an unconditional obligation to make the protected money available to the consumer. The bank is even prohibited from complying with any state order to pay the protected funds to the creditor.

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Over at “Surviving and Thriving,” Donna Freedman recently blogged about her experience lending money to a friend. Her post resonated with me as I have had a similar experience. So while we talk a lot about different types of loans in the world of personal finance–be it car loans, mortgages or payday lenders–we often neglect to discuss one of the most common lending practices: the personal loan.

Ben Franklin is quoted as saying, “Neither a borrower nor a lender be” and I’m inclined to agree with him. I’ve been on both sides of the coin and it’s not an easy situation to be in. Having borrowed $5,000 from my father to help fix up a newly purchased condo, there was always an undercurrent of judgment. Although I do remember laughing when my father visited me post renovations and looked down at my shiny, new hardwood laminate funded by his money and said, “Hello, floor!“

Still, I was mighty happy to pay off that debt.

On the other side of the equation was the time I lent over $500 to my hairdresser whose husband had gone off on an alcoholic binge and had left her with two small kids and only half the money she needed to pay the rent. Read full post…

Guest Post: Credit Karma

Picking your next credit card is a lot like shopping for a new outfit.

You could shop according to a familiar name brand, like Discover or Chase. Or shop according to credit card typerewards, travel, low interest, secured, and morethe way you’d shop at specialty stores for a specific garment.

Or you can shop according to your credit score range, sort of like shopping by department stores that fit your budget. You go to Target, because you know you can afford their mid-range offerings. If you can afford to live lavishly, you shop Neiman Marcus.

Likewise, shopping according to your credit range gives you the most diverse selection of options that have one, important thing in commonthese cards are in your reach. The cards recommended for your credit range are the cards you have the biggest chance of approval for.

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IRS has changed its rules concerning the filing of tax liens against taxpayers, which IRS reports to the credit reporting agencies. Tax liens dramatically reduce credit scores. It has been difficult to get the tax liens off one’s credit reports even when the lien is paid.

The changes are described in Kathleen Pender’s column in today’s SF Chronicle.

She reports IRS has announced changes to its tax lien policy that will help people with tax debts “get a fresh start.” One of the biggest changes is that people who pay their tax debt in full or enter into a direct debit installment agreement can ask to have the tax lien withdrawn. Once that is done, the taxpayer may ask the credit bureaus to remove the record of the lien from his or her credit report.

Formerly, the tax lien would remain on the person’s credit reports even though it was paid in full.

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Jerry Edgerton of CBS MoneyWatch asks, “If you have a mortgage, you have probably considered refinancing it at a lower rate. But what about your car loan?”
Edgerton continues to explain the benefits of auto refinance for those who have financed their car with a dealer since interest rates are often marked up. He also explains the crucial relationship between one’s interest rate and one’s credit score:
“Like original new car financing, refinancing is all about your credit score. Go to annualcreditreport.com, look over your report and take the paid option to get your score. (Avoid sound-alike sites that just want to sell you a monthly credit monitoring service). That will tell you what kind of interest rate you qualify for.”
Edgerton also advocates for services like MoneyAisle.com, “which will refer you to banks or credit unions interested in refinancing loans. MoneyAisle has the advantage of showing you an offer based on your credit rating without actually applying for the loan. Read full post…

Surveys by the Consumer Financial Protection Bureau have found that the nine largest credit credit card banks represeenting 90% of the market have stopped hiking interest rates on customers’ existing balances, reduced penalty fees and all but eliminated overlimit charges as a result of the CARD Act enacted last year.

The CARD Act was passed to prevent vulnerable consumers from paying exorbitant interest rates and fees.

The Act allows banks to raise rates for new purchases and one bank periodically reviews accounts to do just that, according to the report. Five others raise rates on delinquent customers, and another bank is testing the practice.

The CARD Act sets new restrictions on late fees capping them at $25 for the first violation and $35 for the second not to exceed the minimum payment due. That has reduced late fees by 50%.

The law forbids issuers from charging over-limit fees to customers unless consumers opted in to the service. That has virtually eliminated the practice.

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