Zombie Debt
A haunt from the past?

Home mortgages are not the only notes that have been 'bundled' and sold - and resold - on the market. Bad debts of all sorts are 'bundled' up by banks, credit card companies and others and then sold to collection agencies. It's a last ditch attempt by the lender to negate some of the losses sustained on debts written off the books, generally for pennies on the dollar.

You can not really fault the companies for trying to recoup the losses, but often accompanying data about the losses isn't included, or if it is, then fails to be transfered with the package if its resold to a 2nd collection agency. Now it becomes a potential nightmare for the consumer.

A typical scenario might read like this
Years ago, Joe made an online purchase while sitting with his latte mocha at the corner coffee shop, on his laptop. Unknown to him, the coffeeshop's wifi network was not secure, and the guy in the car outside was recording all the traffic over that network on his laptop. Shortly thereafter he used Joe's credit-card info to do some shopping of his own.

Being vigilant though Joe noticed on the next statement that he had not in fact ordered a new $900 sound system for his car and the credit card company agreed, cancelled the charges (and the card) and that was that... or is it??

Today the phones rings, with a collection agent on the line. This $900 debt that was never Joe's is now worth $7500, according to the agent, and just how would Joe like to structure the payments?? He has no record of the fraud report Joe submitted to the credit card company, and is threatening legal action.

Welcome to the nasty world of Zombie Debt.
Zombie Debt is an appropriate name for the problem, since it represents that which you thought was gone , dead and buried.

They are debts thought long gone. They may have been incurred by others in your name - identity theft - or perhaps settled in a bankruptcy, or whose time has simply run out by virtue of the statute of limitations. But they've been brought back to life by the collection agency.

Right now you're probably thinking - is this even legal?
Legal it is, though debt collectors are must play by the rules set forth in the Fair Debt Collection Practices Act, a law that gives the consumer specific rights.
While the debt might not be legally yours, Kent Anderson, a consumer debt lawyer notes that the collector will often " remind the debtor it remains a moral responsibility to pay the debt". Of course any info you tell them will be used to further their efforts(!).

This is a moment where understanding your rights is important.
The basic ideas are:
1. Realize that you have rights - Collectors may not threaten you, harass you or threaten to sue.
2. Don't admit or acknowledge the debt is yours; ask for information about the who, when and what of the debt, in writing. If the agency follows through - which is problematical since they may not have any supporting documentation - check it against your records, including your credit report. ( See Identity Theft: What to do if you’re a victim... and how to prevent it! for info on credit reports and how to obtain them)
3. Be pro-active about your finances - things happen at the speed of light today. Information about you and your finances is shuttled, transfered and sold every day. Check your credit report regularly!

Debt collection agencies have been with us for a long time, and are continuing to grow. Companies specializing in collections have seen revenues rise dramatically in the past few years, and it's big business. NCO Financial Systems, for example posted $936 million in revenues in the first three quarters of 2007, despite a federal action against the company (dalton). And anecdotal evidence points to a large number of people who pay even though the debt is not theirs!

Another Way to Guard Against ID Theft
Take A Hard Look... At Your Own Background

Checking your own background is an idea whose time has come, with the proliferation of electronic records kept, it seems, on every server. Prospective employers and credit issuers often run background checks on applicants, and so should you. In an age where there seems to be a copy of most everything in one server or another, information about yourself can turn up in various databases.

Not only can you spot clues of identity theft you can also spot factual errors that may preclude you from landing your next job or obtaining credit.

How possible is it for wrong information to be recorded somewhere about you that you're not aware of?

More likely than you think, and perhaps as off base as you can imagine! A recent study by the U.S. Public Interest Research Group found that as much as 79% of consumer credit reports had one or more factual errors. A close aquaintance of mine was shocked to discover that two trafffic citations issued in Southern California came up listing him as a 'sex offender'. This turned up in a background check for employment, and except for the curiosity of the potential employer, might never have been disclosed. Although the information seemed to be derived from the DMV database, after investigation it turned out to be a mistake on the part of the company performing the background investigation, and was relatively easily corrected... and he ended up getting the job.

Another check, this time of Social Security Numbers, found many that had been used by multiple people - not unusual when one considers that social security numbers (SSN) are now a condition of employment and the number of illegal aliens needing a SSN to land a job or obtain medical care benefits in the U.S.

Two ways of checking to see if your SSN has been compromised is to obtain your individual Social Security statement and check for more earnings posted to your account than should be. That could signal that another individual has used your SSN to land a job, with their earnings being credited to your account. Another method is to check the database of 2.3 million compromised SSN's and other identity information at www.StolenIDSearch.com. Their database information is obtained from compilations of lists numbers recovered in fraud investigations. Unfortunately, that 2.3 million only represents a fraction of the some 150 million pieces of data estimated to be lost to frauds, thefts and hackers.

Ongoing surveillance of your SSN might be a worthwhile option. The site www.identitysweep.com charges a small monthly fee to keep an eye out for you SSN, warning you if it turns up with someone else's name attached. And perhaps it goes without saying, but regular (three times a year) checks on your credit report can also reveal abuse of your name and credit.

Identity Theft

What to do if you’re a victim... and how to prevent it!

It can't happen to you...but it has. Your wallet is no longer in your pocket. Instead there's a growing sense of the realization that you’re been robbed; you fear the worse. But it doesn't have to be like this; read on to see how to thwart ID theft.

Hundreds of thousands of everyday people had their lives disrupted last year by a growing "white collar" crime: Identity Theft, according to the Privacy Rights Clearinghouse. Worse, the problem will only grow in the future; the government expects literally millions of people to be affected in the coming years.

The wallet picked from your pocket yields today’s thief much more than cash. Typically full of personal information - your credit card, bank card, ATM account or social security number, for example - the thief poses as you, running up charges, emptying your bank account, running up credit cards to the max. But there are defenses.

You Have What Identity Thieves Want...
Once the thief has access to this information, they may open a new credit card account in your name providing a "new" billing address. Given that the credit card bills will not go to your address, you won't be aware of any changes to your accounts. When the thief does not pay the bills, the credit card company will report this to your credit file. The thief may also open up bank accounts in your name and write bad checks, apply for services in your name or request a "replacement" card to be sent to a new address.

Depending on how the thief uses information found in your wallet or purse, it could take months or even years to learn you are a victim. And then, it might be because you were turned down for a mortgage or car loan.... based on a credit report that erroneously indicates that you don't pay your bills.

It can be tough to obtain loans, jobs, even affordable insurance rates...and worse, it can take years to clear your record.

An Ounce of Prevention...
Simple things may trip up the thief and prevent easy use, such as;

• When ordering up new checks, use initials for you first name (the thief won't know just how you sign your name)

• If you have a PO box, use it rather than your home address on your checks. Consider using your work phone rather than your home phone too.

• Though it probably goes without saying, never print your Social Security number on your checks.

• Do not give out personal information, such as account or credit card numbers, on the phone or over the Internet, unless you have initiated the contact. Identity Thieves could pose as credit union officials, Internet providers or credit card company representatives. Remember: If someone has a right to this information (such as your credit union) they should already have it...and shouldn't need to request it over the phone!

• Report lost or stolen checks immediately, and properly store canceled checks. Examine new checks to make sure none were stolen during shipment, and store them in a safe and secure location.

• Destroy unused financial solicitations before discarding them, and tear up other financial documents such as receipts or statements before discarding them.

• Carry only the cards (credit and ID) that you need to have with you; file others in a safe place at home. Do not carry your social security card with you.

• Guard your Automated Teller Machine (ATM) number, and treat your receipts with care. Leaving them behind or throwing them in the trash could leave them vulnerable to thieves, who could use them to access your accounts. Do not attach or write a pin number or social security number on anything that you are going to discard (e.g. a receipt)

• Make sure your mailbox is secure, and promptly remove mail when it's been delivered. Identity Thieves often raid mailboxes to obtain credit card offers and financial statements.

• Frequently check your credit report or subscribe to a credit monitoring service to check your credit file daily and be alerted of changes that can be an early warning of identity theft, such as new account openings or changes to your address.

A Pound of Cure
Next time you pass by the copy machine, spread out the contents on the glass; copy both sides of everything. This way you know exactly what the thief will have. It makes the next step of notifying the credit card companies that much easier.

Take that photocopy, and write down all the contact numbers for the credit cards. Found on the back of each card, those phone numbers will come in handy to notify the issuing company for each card.

If you are the victim, file a police report in the jurisdiction in which your wallet or purse was stolen. Chances are any investigation will be cursory at best, but it does demonstrate to the credit card companies that you were diligent after the theft.

But the single most important action to take is to call the three major credit-reporting bureaus below immediately; have them place a fraud alert on your name and social security number.

The three major credit bureaus are:*(see Note below)

Equifax 800-685-1111 or on the web at http://www.equifax.com/

Experian 800-379-3742 or on the web at https://scorecard.experian.com

Transunion 800-888-4213 or on the web at http://www.transunion.com

Social Security Administration Fraud Line 1-800-269-0271

To report fraudulent use to a credit bureau, call or write to the addresses below *(see Note below)

* Note! These links reside off the ATDFCU website, and are neither maintained nor verified for accuracy by ATDFCU.
The privacy and security policies may be different than those of ATDFCU.
ATDFCU is not responsible for the contents of these sites.
ATDFCU does not represent the third party or the member if they enter into a transaction.

With cases of Identity Theft growing by 40% each year, warding off this crime before it can ruin your good name will take a team effort of your credit union and you.

On-Line resources you might want to check out include:

Free-Credit-Report-Credit-Reporting-Agencies provides a combination of free / trail and paid credit reports for the three big CRAs; direct links to information and service sources.*
http://www.free-credit-report-credit-reporting-agencies.com/

Truecredit.com will provide your credit report (for a fee) and info on fraud.*
http://www.truecredit.com/

The FTC provides a FAQ (Frequently Asked Questions) list regarding what credit reporting agencies can and cannot do under the Fair Credit Reporting Act.*
http://www.ftc.gov/bcp/conline/pubs/credit/fcra.htm

The symbol next to documents indicates that the file is in Portable Document Format (PDF) which can be read by Acrobat Reader. If you do not have Acrobat Reader, you can download a copy now by selecting the appropriate option below or go to Adobe's Web Site at http://www.adobe.com/prodindex/acrobat/readstep.html.

Before downloading the MacIntosh Acrobat Reader, you need a program such as Stuffit Expander that can decode MacBinary files, Once you have this program installed, you can download Acrobat

Reader and Stuffit Expander will automatically decode the file.
For the most recent versions of Acrobat Reader & details about installation and troubleshooting, go to Adobe's Acrobat Reader download site.*(see Note below)

http://www.adobe.com/products/acrobat/readstep.html

* Note! These links reside off the ATDFCU website, and are neither maintained nor verified for accuracy by ATDFCU.
The privacy and security policies may be different than those of ATDFCU.
ATDFCU is not responsible for the contents of these sites.
ATDFCU does not represent the third party or the member if they enter into a transaction

ATDFCU does not use the Internet to collect any information about it's members