Coping with change

COPING WITH
CHANGE
GEORGIA DEPARTMENT OF LABOR
Michael L. Thurmond, Commissioner
Equal Opportunity Employer/Program Auxiliary Aids & Services Are Available Upon Request To Individuals With Disabilities

The Challenge:
Change of any kind can be difficult but the stress of job loss is often overwhelming. The Georgia Department of Labor and Consumer Credit Counseling Service want you to know that you are not alone during this transition time. There are community resources available to assist you. This step-by-step guide is specifically designed to help you manage your money while you are unemployed. It will also help you: l Move beyond the negative emotions attached to losing
a job l Survive what appears to be a money crisis l Learn to deal with change
The rest is up to you. To meet this challenge successfully, you will have to supply the necessary ingredient: commitment.
COMMITMENT
"Until you are committed, there is a hesitancy, a chance to draw back. Always ineffectiveness. The moment you definitely commit yourself, then providence moves too. All sorts of things will occur to help you that would otherwise never occur."
Unknown
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The Solution:

Step 1: The Spending Plan
Use the spending plan below to evaluate your financial situation. List your fixed monthly expenses and average the variable or flexible expenses in the column under "Current Spending." Subtract these expenses from your total family income. Is there a gap?
Take heart. Read the following pages for information and suggested steps to reduce the deficit and develop a new spending plan. Remember to concentrate on separating wants from needs and use your income to provide the necessities first. Unsecured creditors are the last priority in a time of financial stress. A separate section will address these obligations.

TOTAL MONTHLY INCOME Unemployment benefits Spouse's salary Part-time job Interest, dividends Social security, disability, child support, alimony, etc.
Total income:

TAKE HOME PAY

TAKE HOME PAY

MONTHLY EXPENSES SHELTER
Rent, mortgage, home equity loan, condo fees, insurance, property taxes Home and yard maintenance, alarm system Electricity, gas, water, garbage Telephone, mobile phone, pager FOOD Groceries, cleaning supplies, beverages, paper products Food away from home, lunches at work and school TRANSPORTATION Car payments, public transportation Gasoline, oil changes Repairs, maintenance OTHER BASIC EXPENSES Child care, child support School expenses, tuition, supplies, special lessons (music) Medical and dental payments, prescriptions Insurance: life, medical, renter's Haircuts, personal care, laundry, dry cleaning Clothes, shoes, accessories Cable TV, newspaper, magazines, computer on-line charges Entertainment, sports, hobbies, tapes, CDs Club, health club, union dues, associations Personal expenses, tobacco, liquor, beer Contributions, charities, church donations Gifts, birthday, anniversaries, weddings, graduation, holidays Allowances, postage, checking account Vacations, family visits during holidays Pet care OTHER EXPENSES
Total expenses: Additional income needed (income - expenses):
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CURRENT SPENDING

PLANNED SPENDING

Suggestions for developing your spending plan

Rent or Mortgage Payments

l Let your landlord know about your situation immediately. Try to negotiate partial payments for a few months. It usually costs the landlord money to change tenants so the landlord may be willing to work with you. You may be able to do some maintenance work in place of a portion of your rental costs.

l You may want to look for less expensive housing but be realistic and remember to include moving expenses, deposits and family adjustments as you calculate costs. Consider moving in with family or friends and sub-leasing if you can't break your lease. Consider getting a roommate or renting out a room in your apartment.

l Call your mortgage company immediately and work out a payment plan. Some lenders may allow skipped payments or partial or interest-only payments for one to six months. Generally the creditor does not want to foreclose on the mortgage because of the costs involved in the process.

l Check your escrow account. If it contains more money than

needed to pay property taxes, the bank or mortgage company must refund any excess beyond a two month cushion. l If you miss three or fewer mortgage payments and then return

"Do what you can with what you have, where you are"
Theodore Roosevelt

to work, ask your mortgage company if you can set up a

"forbearance plan" whereby you can pay one and a half month's mortgage until you catch up. Catch up on the

principal first; then catch up on the penalty charges. A lender can't foreclose over late charges.

l If your mortgage is federally insured by FHA, HUD, FmHA, or VA, call the insuring agency immediately to determine what options are available to you.

l Contact your Homeowner's Association immediately to work out a payment plan if you get behind with your dues. The Association can put a lien on your property or initiate foreclosure against you if your dues remain unpaid.

l You may also think about selling your house, but there are many things to consider. You may not be able to sell the house quickly, or you may not be able to make a profit on the sale of the your home. Furthermore, rent may be higher than your mortgage and moving can be expensive.
l Be a do-it yourselfer around the house. Go to your local library for how-to videos, books, and magazines. Instead of throwing money at problems, discover the pride and pleasure of learning new skills.
l Empty-nesters, consider renting out unused living space in your home. Extra money, reduced housework and built-in house-sitting are some of the rewards.
l If all else fails and foreclosure appears imminent, attempt to sell your house immediately or consider voluntarily giving the house back to the lender if you have little or no equity.

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Money
l Pay attention to how you spend your loose change. Limit the amount of cash and coins you carry, and you'll plug one of the biggest financial leaks in most Americans' pockets.
l Have only one credit card, and make it a card, with no-fee and low interest rate. You'll simplify record keeping and bill paying and save trouble if your wallet is lost or stolen. Except in true emergencies, don't charge anything unless you can pay the bill off in full as soon as it comes due.
Telephone, TV Cable, On-line Services
l Separate wants from needs: l. Remove all unnecessary features from your phone (i.e. call forwarding, call return, etc.) Ask
the phone company about special rates for local limited calling programs. Or, cancel your phone service and get a voice mailbox. 2. Slash long-distance charges, use a cell phone for long-distance calls, when applicable to your plan. Remember to stay within your minutes and plan specifications. Have family and friends call you. Use e-mail, write letters instead of calling. 3. Cancel your TV cable service or at least remove premium channels. 4. Eliminate on-line computer services and cut back from unlimited use to minimal use to check e-mail.
Utilities: Gas, Electricity and Water
l Commit to using less electricity, gas and water to lower your bills. Turn off the lights and TV when not in use. Replace 100 watt light bulbs with 60 watt bulbs. Run the dishwasher, washing machine and dryer only when you have a full load; use cold water and air dry clothes when practical. Set the thermostat at 68 degrees in winter and lower the thermostat on your hot water heater to 120 degrees. Close the vents in rooms you don't use. Use fans instead of air conditioners in the summer.
Many churches and social service organizations have emergency funds available to assist in paying utility bills. (Call United Way for the names of organizations that might provide help.)
Income Tax
l You can negotiate an installment agreement with the IRS. If you owe under $10,000 it's a fairly simple process. They require the debt to be paid off in three years, and will accept a monthly payment of 1/36th of the balance or $25 - whichever is greater. If the debt is over $10,000, financial statements will be required.
l If you are unable to afford an installment agreement, make an "offer in compromise." This means you make a lump sum offer to the IRS to settle what you owe.
Health and Life Insurance
l Check to see if the health insurance provided by your former employer can be continued under COBRA. Find out what the premium would cost and who is responsible to pay it. You might obtain temporary insurance through a "major medical" insurance plan that would pay at least for emergency hospitalization. These plans have lower payments but higher deductibles.
l Using the Yellow Pages, call health insurance companies and ask about health insurance for the time that you are unemployed. The policy may be less expensive than COBRA.
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l Reduce the cost of health insurance. Raise your deductible to $1,000 and invest the money you would have spent on premiums in an emergency fund.
l Determine what low-cost community services are available for routine medical concerns. Colleges that provide dental hygienist training may offer free cleaning and examinations. Check to see if you qualify for Medicaid.
l Don't waste money on life insurance. If you're single and have no dependents, you definitely don't need life insurance. If you're married with no children and two incomes, you may not need it. Children, unless they're child stars or prodigies who contribute to the family income, do not need life insurance.
Kids
l Children will understand the Magic Words, "We can't afford it."
l Shop without the children as often as possible. Limit their exposure to tantalizing products and reduce their contribution to the family's impulse buying.
l Foster good feelings about buying second-hand. Take kids to yard sales and thrift stores, and give them money to spend however they like.
l Include kids in family financial discussions. They don't need to know all the details, but knowing the generalities will make them more cooperative and less demanding. It will also help them learn about managing money.
l Teach kids that saving energy has rewards beyond the environmental. When the electric and water bills go down due to the kids' help in turning off lights and water, show them the savings in paper money, and spend some of it as a family treat.
Transportation
l Ask your lender if they have a plan that allows you to skip one or two payments and put them at the end of the loan. This is called "extending the loan." If they do, they will probably charge you a minimum fee and perhaps the interest. Or see if the loan can be rewritten for lower monthly payments, either temporarily or permanently. This will, of course, increase the total finance charges you pay for the loan.
l If you are thinking about selling your car, be sure it is worth more than what you owe. Perhaps you can give the car back to the lender. However, if the vehicle is worth less than the outstanding loan balance, you are still liable for the remainder (deficiency balance) that is owed on the vehicle and it may be reported on your credit report as a voluntary repossession. Furthermore, if your car is leased, and you cancel or default on the lease, you may be liable for a large penalty. Check your contract carefully.
l Lower the premium cost on your car insurance by reducing your coverage, or by increasing the deductible on collision and comprehensive coverage. If you are still making payments on your car, contact your lender first. If you own your car outright, you may consider dropping collision and comprehensive coverage altogether until you have more income. Liability coverage is required by state law and cannot be dropped. Examine your policy closely for other items that will cut your costs -- such as discounts for safety features (air bags, anti-lock brakes) or medical coverage that duplicates your health insurance.
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Transportation cont.
l Consider switching to a monthly payment plan option for your insurance especially if you have a six month payment coming due. It's often easier to pay a smaller amount each month than a larger amount every six months. You may pay a small fee for this service.
l Consider registering your car as non-operational and taking public transportation. Your insurance, as well as your DMV registration, will decrease substantially.
l Learn to do simple maintenance and repairs on your vehicle yourself, or trade services (barter) with a friend who can.
l Sell your second (and third) vehicle, and maintain, insure and otherwise pay for one.

Food

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Plan all meals including lunches for children and working family members. This

planning takes a little more time, but the more organized you are, the less you shop; and the

less you shop, the more time and money you save.

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Shop only once a week and don't go grocery shopping when you are hungry.

Make a list of essential needs and buy nothing else. Bring only enough money to pay for things

on your list. Buy store brands. Use coupons for special items and shop at stores that double

coupons.

l Stock up on great deals, and store them for maximum preservation time. Flour keeps well in the freezer. Milk freezes up to three months. Chop and freeze bags of celery, onions and carrots when on sale. You'll save money and meal preparation time.

l Cut back on meat. Have two or three meatless meals a week. Eat more pastas, cheese, rice and beans. Use leftovers for lunch and other meals. Avoid convenience stores and convenience foods which are always more expensive. Eliminate snack foods, soft drinks and desserts. Shop "day old" bread stores to save 50% or more on baked items. Buy in bulk when items are on sale or buy from a local "farmer's market." A great way to systematically reduce your meat consumption is to serve stir-fries, casseroles, and soup entrees twice as often as you do now.

l Use food already on hand in your cabinets and freezer. If you have separate freezer, use the food in it and unplug it when it is empty to save energy costs. Stop eating out. Instead, grill in the back yard, make your own pizza or have a picnic in the summertime.

l Eat more cheaply, and you'll probably have a healthier diet automatically. The healthiest foods cost less than 80 cents a pound (potatoes, grains, fresh local fruits and vegetables.) The expensive meats and snack foods take from your pocketbook and add to your waist line and cholesterol count.

l Use tap water. According to studies, it's as good or better than bottled water in almost all American households. So bottled water and filtration systems are probably a waste of money. Bottle your own water (with lemon slices to improve its flavor if necessary) and chill it. To remove chlorine taste, leave an open pitcher of water out on the counter for several hours.
l Grow your own food. See if there's a program in your area that gives you a garden plot to use. These usually come with free water, mulch and Master Gardeners to advise you. Get on a waiting list if you need to.

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Health and Happiness
l Sit down and make a list of 25 things you like to do that cost little or no money, and keep it where you can see it every day. Stop equating the amount of fun and pleasure with the amount of money you spend to get it.
l Volunteer to feed the hungry, care for the suffering, visit the lonely or mentor a child instead of spending your time and energy buying and taking care of stuff.
Shopping
l If you really enjoy shopping, you don't have to give that up. "Shop around" are the watchwords of the thrifty, so your love of shopping will be an asset.
l Diapers - cloth or disposable? Don't be confused by the hype. Folding your own wins every time for both saving money and protecting the environment. Using cloth diapers could cost about $25 a month while saving just 30 minutes of your time per week. Don't be taken in by claims that biodegradable disposable diapers are environmentally sound; it's not true.
l Learn this mantra: "It's not a bargain if I don't need it." l Go on a treasure hunt in your own house! Whether it's a vase or a blouse that you think you need, look and see
if you can find something you forgot you even had.
l Set cost limits for yourself. If you've decided you really need to buy an item over a certain price, (you set it -perhaps anything over $15), promise yourself to check two thrift stores first to see if you can find it there.
l Shop by mail-order. It's a great way to save time, fuel, and money. But avoid the companies that make up the cost of the glossy catalogs by charging twice as much. About 94% of these catalogs go unused into the waste stream; don't be one of the 6% who pay more to make this practice profitable!
l Buy only the clothes you need or buy secondhand items. You can easily cut clothing expenditures in half. The average American family of four spends about 10% of its annual income on clothing.
l Before you buy, always ask yourself: l. Do I really need it? If not, do I really love it? 2. Is it worth the time and money to dust, store, clean, or otherwise maintain? 3. How many hours will I have to work to pay for it? 4. Could I borrow it from a friend, neighbor, or family member? 5. Is there anything I already own that I could possibly use instead? 6. Are the resources that went into it renewable? 7. Is the product socially and environmentally friendly? (not made by child labor or virgin timber) 8. Can I recycle it when I'm through with it? Or will it help clog a landfill?
l Keep that list in your purse or wallet.
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Entertainment and Gifts
l Limit entertainment. The average family spends close to 10% of their income on entertainment -- movies, video rentals, cable TV, CDs, hobbies, sports, toys and other recreation. Have "pot luck" dinners with family and friends.
l Have family "game nights" instead of going out. Or if you do go out, go to matinees. Sell season tickets. Eliminate vacations and holiday trips to visit family members, unless you can make then as inexpensive as staying home.
l Stay away from malls. The average American visits some kind of mall at least twice a week. It's easy to spend money on impulse when browsing at a mall. Too many people have the notion that shopping is a form of fun or entertainment. Shopping is an expensive and serious form of family business. Look for a cheaper form of amusement.

l For holidays and birthdays, give personal "gift certificates" -- a baby-sitting certificate, a certificate for a specially cooked dinner, a certificate to wash someone's car or their dog or clean their house. Or, make things such as crafts or cookies. Look for "gifts" at yard sales or have a yard sale to get extra money for holiday gifts.

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Other gift ideas include giving something old, like a family heirloom or other

cherished item. Write a book for your child or family members using old photographs as

illustrations. Consider giving family members gift you would need to purchase for them

anyway: socks, underwear, clothing, a new book bag, tennis shoes, sweater, etc.

l

Celebrate holidays, but ignore the calendar and declare "one week later"

holidays. You'll save 50-75% on many seasonal foods, gifts, and decorations. If you go out to

celebrate (Mother's Day, Valentine's Day), going even one day later than the hordes will ensure better food and

service. Be sure to celebrate Buy Nothing Day, the day after Thanksgiving. Look up adbusters.org.

l Become a regular at your local library. Waiting for you there are free movies, compact discs, books, magazines, newspapers, books on tape, videos, computer classes, access to the Internet, tax information, legal information, job information, storytellers, and homework help for children, free meeting rooms and more. If the book or article you want isn't there, the inter-library loan program will get it for you free. Libraries save you money, time, clutter and resources, and get you out into your community.

Other Sources of Income
Changing spending patterns may still leave you short. So here are a few ways to get some additional money to help you until you get back to work:
l Working part-time in a job that does not interfere with your job searching responsibilities.
l Sell your skills. Do you have any real skills like typing, doing taxes, taking wedding photos, drawing or illustrating, cake decorating giving music or dance lessons, tutoring students, or just about anything else?
l Have a yard sale. Clean out your attic, your garage and closets. You can earn money selling such things as books, clothes and toys, as well as valuables that you no longer use (baby furniture, power tools, musical instruments, old books, etc.)
l Collect old debts. If anyone owes you money, now would be the time to ask for it.
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The Solution:

Step 2: The Creditor Action Plan
Now that you have evaluated your finances and made necessary changes in spending, there will be, hopefully, money remaining to address obligations to creditors not listed in your budget. Complete the form below to determine if your spelling plan will allow at least minimum payments to each account.

Creditor
Credit Card America

Account Number
xxxx-xxxx xxxx-xxxx

Creditor Action Plan

Minimum Balance Monthly Owed Payment

Due Contact Date Person

$5000

$150

5th

Sam

Jones

Address

Phone

123 1st Street 800-555-1212 Credit Town, USA

Total
If you are able to make at least minimum payments, do so. It is wise to stop using credit cards for the time being. Put your credit cards in a plastic jug of water and put it in your freezer! Freeze your credit and remove temptation.
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If you cannot make even the minimum payments, it's time to take action:
Don't wait -- contact your creditors immediately. Creditors appreciate hearing from you before you start missing payments. They are usually willing to work out payment arrangements to fit your budget. Call and write to explain your situation. Keep a record of each telephone conversation with the name of the person you talked to, and always follow up with a letter. Use the sample letter below as a guide and make sure to send it certified mail and request a return receipt. This will ensure that you communicate clearly with your creditors and have a record of your proposals.
Be realistic...don't promise more than you can reasonably pay. Remember, your first priority is keeping current with basic necessities such as housing, food and utilities, as well as secured creditors.

Sample letter from a consumer in financial
difficulty

Date:
Re: Your Name Your Address Account Number
Dear Creditor: Due to a (layoff, disability, financial crisis) my income has been reduced and, as a result, I am experiencing financial difficulty. I have analyzed my current financial situation to determine how to best allocate my drastically reduced resources and have made a strict budget for my expenses (with the help of CCCS or other agency, if appropriate to mention).
In order to meet my necessary living expenses and make my creditor payments, I am asking each creditor to accept a reduced payment for the next (three, six) months. I would appreciate your cooperation in making the payment plan work. In place of the regular payment of ($xx), I request that you accept payment of ($xx) per month during this emergency. I will pay before the (xxth) of the month. I will add no further debt until my financial situation improves.
You can be sure that I will increase payments as soon as possible to bring my account current. If there are any changes in my situation, I will notify you immediately.
Sincerely,

l Keep your SPENDING PLAN and CREDITOR ACTION PLAN handy by the phone so when creditors call you can refer to your plan. Ask them if they received your letter and let them know your situation hasn't changed. A creditor may attempt to pressure you to pay more on your debt. Don't promise payments you cannot make. Be honest and courteous.
l Update your creditors every 30-45 days on the status of your situation. Don't ignore bills and past-due notices. Most creditors will work with you if you are willing to communicate with them.
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Student Loans
l Contact the Georgia Higher Education Assistance Corporation at 1-800-776-6878 or 770-724-9000. They will consolidate student loans which are in default. They also have a payment program based on income. Also, call Sallie Mae at 1-800-524-9100. Ask for a Flexible Payment Option. Depending on the kind of loan you have, you may be able to set up an extended repayment schedule, a graduated repayment schedule or an incomecontingent repayment plan. Note that these options could be very expensive in the long run.
l Request a hardship deferment by calling the current holder of your loan (if you don't know, contact the bank or college from which you initially borrowed the money). Student loans that are not in default can be deferred for a maximum of three years due to disability, unemployment or other economic hardship.
When you reduce or stop making payments, each creditor may have a different policy for handling delinquent accounts. Some of the following may happen:
l Vital services such as gas, electricity, water or telephone can be shut off, requiring a reconnection fee and deposit to be started again. Car, house, health and life insurance policies may be canceled.
l Late charges may be added to your account and interest charges will be added that will increase your debt. Accounts may be reported as delinquent after 30 days of nonpayment. These missed payments may negatively affect your credit report.
l If you stop communicating with your creditors or if they are not satisfied with the amount they are receiving, your account may be turned over to a collection agency which works on behalf of the creditor to collect money on delinquent accounts. Since collectors make a percentage of the money they collect, they may be more aggressive than the original creditor and less willing to work out a repayment plan with you. Furthermore, they may add on collection fees. You are better off if your debt stays with the original creditor. Don't wait until the debts are turned over for collection to communicate with your creditors. However, if a debt goes to a collection agency, ask the original creditor if they will take back the debt so you can pay them directly.
l A lawsuit may be brought against you and, if a judgment is taken, your wages and bank account may be seized and a lien placed on your current or future property. A creditor can receive up to 25% of your take home income. Child support can take up to 50% and the IRS can leave you with a little over $100 per week. (Only one creditor can garnish your wages at a time.) Note: Unemployment, welfare, disability payments, social security and other public benefits are "judgment proof" and cannot be taken to satisfy a debt unless they are deposited into a checking or savings account. Writing a letter to a creditor and explaining your judgment-proof status may convince the creditor not to sue you.
l The Fair Debt Collection Practices Act prohibits third-party debt collectors from harassing, oppressing and abusing you. They may also not threaten to sue you (unless they intend to do so), threaten to take your property without the right to do so or threaten to throw you in jail. Using false statements is also prohibited--such as implying that they are attorneys or that they work for a credit bureau.
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The law further specifies that collection agencies may only contact you between the hours of 8:00 A.M. and 9:00 P.M. The collector may not contact you at work if your employer disapproves and you may even ask them not to call you at all if you notify the debt collector of this in writing. Realize, however, that if you cease contact with the collector, they may take legal action against you. Finally, while they may call a neighbor or family member to determine your whereabouts, they may not tell them that you are behind on your debts.
If you have a complaint concerning a collection agency which has violated the law, contact the Federal Trade Commission, 1718 Peachtree Street, NW, Suite 1000, Atlanta, GA 30367, (404) 347-7046, or FTC Headquarters, 6th and Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 326-2222.
What is a Credit Report?
A credit report is like a report card. It shows your performance regarding your borrowing history. Its purpose is to help creditors make intelligent decisions about how you will perform if they lend you money. A good credit report will help you borrow money more cheaply, rent an apartment, open a checking account, and even get a job. Therefore, it is important to protect your credit report by taking whatever steps you can.
This would be a good time to get copies of your credit report from all three credit reporting agencies and correct any errors that could adversely affect you. By Georgia law, you have the right to request two free copies a year. Use the information below to obtain your free copies. When you get a copy of your credit report, you will also receive a form to fill out and mail back in order to correct mistakes. Only errors can be corrected. There is no way to remove accurate information, so beware of "credit repair" schemes.

l Equifax Credit Information Services* P.O. Box 105873 Atlanta, GA 30348 1-800-997-2493 www.equifax.com

l TransUnion Corporation* Consumer Relations Division P.O. Box 1000 Chester, PA 19022 1-800-888-4213 www.tuc.com

l Experian** P.O. Box 2104 Allen, TX 75013-2104 1-888-397-3742 1-800-972-0322 (hearing impaired) www.experian.com

* The fastest way to get a copy of your credit report from Equifax and TransUnion is to call the number listed above and respond to their automated phone system. If they have your correct address on their computers, you do not need to send in any documentation to prove who you are. They will simply mail your credit report to the address in their computer. If your address is different from the address on their computers, you will have to mail them a Credit Request form with identification.
** Experian requires a written request to order a copy of your credit report.
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C C CONSUMER CREDIT
C S COUNSELING SERVICE

Credit Report Request
Georgia residents: to get free copies of your credit report, fill out this form. Then make three copies and mail to each of the credit reporting agencies below.

To:
(Name of Credit Reporting Agency)

Date:

Please send me a FREE copy of my credit file as provided under the laws of the State of Georgia.

(Print or type only)

Daytime message/phone: ( )

Home Phone: ( )

Full name:

Current address:

(as it appears on credit applications or accounts)

Apartment:

(P.O. Box if different from street address)

City:

State:

Previous addresses during the past 5 years:

Previous address:

(as it appears on credit applications or accounts)

Zip:

Apartment:

(P.O. Box if different from street address)

City: Previous address:

State:
(as it appears on credit applications or accounts)

Zip:

Apartment:

(P.O. Box if different from street address)

City:

State:

Zip:

Personal Information:

Date of birth:

Marital Status:

Birth name:

Social Security number:

Signature:

Enclosed is a photo copy of my DRIVER'S LICENSE with my current address, or UTILITY BILL, or STATE ID, or MILITARY ID.

CREDIT REPORTING AGENCIES

Equifax Credit Information Services P.O. Box 105873 Atlanta, GA 30348 1-800-997-2493 www.equifax.com

TransUnion Corporation Consumer Relations Division P.O. Box 1000 Chester, PA 19022 1-800-888-4213 www.tuc.com

Experian P.O. Box 2104 Allen, TX 75013-2104 1-888-397-3742 1-800-972-0322 (hearing impaired) www.experian.com

00-129 Revised 08/99

Improve Your Credit History
There is nothing you can do to erase or repair "bad credit" from a credit report. However, by following the process described below, you can work to improve your credit history from this point forward.
The myth of "credit repair" Consumer Credit Counseling Service (CCCS) offers free, confidential budget counseling. Counselors can assist you in interpreting your credit report. If you are having difficulty getting credit, ads that promise to "fix" your credit history or clean up your credit report may sound like the answer to your problems. Learn what is legal.
Your credit record After you review your credit report, contact the credit bureau if you find inaccurate information in your file. By law, the credit bureau must investigate your concerns and must remove incorrect information. However, if the information is accurate, no one can require the credit bureau to remove it - unless it's outdated. If you have been late paying your bills during the last seven years, the law permits the credit bureau to tell creditors about your payment history of late payments. Bankruptcy may be reported for 10 years. That is the law. If anyone tells you that they can remove negative but accurate information from your file: don't believe it.
How to correct mistakes in your credit report The credit bureaus are required by law to explain your report to you if there is something you do not understand. If there are mistakes in your report you are responsible for explaining the error in a written statement to the credit bureau. The bureau, in turn, will contact the creditor whose reporting is in question for validation of the information. That creditor will modify your credit report with the credit bureau. If unverified by the creditor, the inaccurate information must be removed.
ONLY THE CREDITOR HAS THE POWER TO CHANGE REPORTED INFORMATION ON YOUR CREDIT REPORT.
Will working with CCCS affect my credit record? CCCS does not report to credit bureaus. If you choose to repay your creditors through the CCCS Debt Management Plan; 1) Your creditor may report your account as "past due" until your total balance is paid, or, 2) Your creditor may bring your account current after receiving payments through CCCS, or 3) Your creditor may report your account as "under budget counseling", or 4) Your creditor may report nothing at all to the credit bureaus.
For a free counseling appointment: 404-527-7630 or 800-251-2227 Telephone counseling available www.cccsatlanta.org

Add a 100 Word Statement to your Credit Report
By Federal law, you are allowed to write a 100 word statement explaining your hardship and have the statement entered into your credit report. In fact, the credit reporting agency is also required by law to help you write that statement if you need help.
If you've fallen behind on your payments, put a 100 word statement in your credit report explaining that you lost your job. Tell everyone that you are not a deadbeat, you had a legitimate reason for falling behind. Don't send the statement until after you start your new job so you can be specific about unemployment dates. Here are some tips for writing your statement:
l Be sure to include your complete name plus your Social Security number.
l State that you lost your job. Give the name of your old employer, the date you were laid off, and explain that you were laid off due to a payroll cutback, plant closing, merger or any other legitimate or compelling reason.
l Explain that the job loss placed you in severe financial hardship; acknowledge responsibility for each of your bills and explain the good-faith effort you have made to pay each bill, despite your hardship.
l State that you are now re-employed: that you will resume making full monthly payments, and that you will make every effort to pay those payments which are in arrears. If you are receiving help from Consumer Credit Counseling Service, mention that they have helped you develop a repayment plan. Lenders like to see that you're taking your responsibilities seriously--and help from CCCS means you're serious.
l Sign the letter and send it to all three credit reporting agencies via certified mail with a return signature card.
l In the future: make your payments, make them on time and make them in the amount stated. Your credit report will show, month by month, whether you are living up to your promise.
Debt Consolidation Loans and Car Title Loans
In times of financial turmoil, a debt consolidation loan can sound like a very tempting offer. Many companies will encourage people to borrow money to "consolidate their bills." This means that the loan company will pay off the individual bills you owe and write a new loan for you so you can pay them one lower monthly payment. Consolidation loans are typically not helpful, as most consumers have more debt two years after they consolidate, because they don't change spending habits. Don't consolidate interest-free debts, such as medical bills. Do close all accounts to keep from getting overextended. Beware that car title loans usually charge extraordinary high interest. Furthermore, if you are not able to keep up the payments, you will lose your car.
Severance Pay
l If you have been fortunate enough to receive severance pay, avoid any temptation to spend it as if you've just won the lottery! There is a tendency to temporarily fix a hurt by saying, "I deserve this after all I've been through!" Avoid the temptation to go on a shopping spree or take a vacation. Hopefully, you will go back to work shortly, but always be prepared for the long haul. Consider this as income and budget it wisely. There are inexpensive ways to pamper yourself.
15

The Result:
We can't control what has happened in the past. We can only control how we deal with it. If you have followed the steps in the previous pages, you are moving toward getting your financial house in order: Congratulations! We wish you the best of luck.
"When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us."
-- Alexander Graham Bell
Remember, you are not alone. Help and support from CONSUMER CREDIT COUNSELING SERVICE are just a phone call away.
l The people at Consumer Credit Counseling Service (CCCS) understand your situation and are available to help you. CCCS is not a lending institution, charity or government agency. We are a private, nonprofit, community service agency supported by voluntary contributions from creditors and community minded companies and individuals. We will act as liaison between you and your creditors to work out a payment schedule that is fair to your creditors and takes your special circumstances into consideration.
l CCCS counselors can help you with your budget or answer questions about how to work with creditors, collection agencies, pending garnishments, the IRS or credit bureaus.
l In the Atlanta area, call (404) 527-7630. Outside of Atlanta, toll-free at 1-800-251-CCCS. Outside Georgia and nationwide, call 1-800388-CCCS for the phone number of the CCCS office nearest you. Hearing impaired TTY number is 770-716-7666 (Atlanta area).
l Visit our Website at www.cccsatl.org. Online counseling is provided free on the Internet.
16

CONSUMER RESOURCES
Legal Aid offices help individuals who cannot afford to hire private lawyers. Check the telephone directory to find the address and telephone number of the Legal Aid office near you or write: National Legal Aid Association, 1625 K Street NW, 8th Floor: Washington, DC 20006 or call: 202-452-0620.
The Federal Trade Commission can tell you your rights under the Fair Debt Collection Practices Act which limits what debt collectors can do in contacting you. Write: Federal Trade Commission, Public Reference Section, 6th and Pennsylvania Avenue NW, Room 130, Washington, DC 20580 or call 202-326-2222. Web site: www.ftc.gov.
Contact the American Association of Retired Persons (AARP) for programs and materials on housing, insurance, funeral practices, eligibility for public benefits, transportation and consumer protection issues. American Association of Retired Persons, Consumer Affairs Section, 601 E Street NW, Washington, DC 20049 or call 202-434-6030.
The IRS (Internal Revenue Service) can be reached by looking in your telephone directory under "U.S. Government Treasury Department, Internal Revenue Service" or call 1-800-688-9889. Web site: www.irs.utreas.gov.
The Social Security Administration can give you information about your benefits. Call: 1-800-772-1213.
The Georgia Office of Consumer Affairs can assist you with stopping telemarketers and mail solicitation by calling Georgia No Call 1-877-426-6225 or 404-656-1762 or on the web at www.gandsaw.com.

Consumer Credit C C
Counseling Service C S
Suite 1500 100 Edgewood Avenue Atlanta, GA 30303-3026
(404) 527-7630 (800) 251-2227 E-mail: info@cccsatl.org www.cccsatl.org
ACCREDITED
COUNCIL ON ACCREDITATION OF SERVICES FOR FAMILIES
AND CHILDREN, INC.
MEMBER
NFCC
DOL-4408 (R-01/05)