Identity theft is rampant in this country, and we’ve previously reporting on ways to reduce the risk of identity theft.  But we’re always looking for an easier way to get things done.

Technology has made life in the 21st century a breeze in comparison to the lives our grandparents lived.  The Internet has been the driving force behind much of this.  It has revolutionized almost every aspect of life, from how people get their news to how they shop.  Of course, every new marvel has a dark underbelly and the Internet is no different.  With all those names, social security numbers, and credit card numbers floating around the web, it’s no wonder that identity theft has skyrocketed in recent years.  This doesn’t mean you have to be another helpless victim, though.

Here’s one simple way to prevent identity theft from happening to you.

Empty your wallet.  Yes, it can be that simple.

A lot of people carry a driver’s license, a social security card, multiple credit cards, a medical insurance card, and the list goes on.  If you are one of these people and your wallet is lost or stolen, the thief now has access to all that information which he can pass on to others.  Simply removing your social security card makes identity theft much more difficult.  By reducing the amount of identifiable material you carry, you reduce the scope of damage the thief can do to your credit.

All those cards that are now free of your wallet should be locked away in a secure place, like a locking filing cabinet or a safe.  You should also place anything else with your information on it in the same place.  Burglars won’t just take your television and stereo, they could take your identity if you’re not careful.  If you don’t need to keep something with your information on it, shred it.  It’s best to use a cross-cut shredder.

Never just throw that stuff away.  You never know who is going through your garbage.

While no one is ever completely safe from identity theft, a few simple steps can greatly reduce the chances of it happening to you.

Credit card company raise your interest rate without notice, pulling the rug out from under you?  If so, you may be in luck.

Boston.com reports on a bill currently pending in Congress would stop credit card companies from just deciding it’s time for them to get more money by raising your interest rates and fees. The terms that you were told when you first signed the contract for the card (perhaps minus some exceptionally fine and vague print, or a flat-out “any time, any reason” policy) would be enforced and maintained if the bill passes.

Most are beyond enraged when they find that their debt will soon be significantly increasing as they notice their interest rate has suddenly jumped. With only about 40% (according to Ben Woosley, director of research at CreditCards.com) of consumers paying their balances in full every month, chances are good that you’re in the angry majority.

If the bill passes, it will also make credit card companies mail statements 25 days before payment due dates, as opposed to the current minimum of 14 days.

Credit card debt is almost twice what it was in 1996, nearing one trillion dollars. If it passes, this bill would likely reduce the pace of increase in debt levels, which would lighten the burden on your wallet.

A Credit Repair Organization (CRO) is an organization (or and individual) that provides or offers to provide services improving a consumer’s credit record, credit history, or credit rating for a fee.  A company can also be considered a CRO if it provides advice or assistance to a consumer on how to improve their credit.

Non-profit credit counseling organizations, creditors trying to restructure a consumer’s debt to it, and banks and credit unions are not CRO’s.

The Federal Credit Repair Organizations Act provides for very specific disclosure requirements before a CRO can provide services, including the need for a written contract, and a three-day right to cancel the agreement.

The following articles discuss the risks associated with CRO’s:

Credit Repair:  Beware of Predators!

Credit Repair:  What They Don’t Tell You

Credit Repair - Watch Out!

Tighter restrictions to qualify for credit following the sub prime loan disaster has slowed the Hurricane Katrina recovery process for the city of New Orleans.

This is the finding of PolicyLink, a California based research group that analyzed data from various government-funded rebuilding subsidy programs targeted at assisting New Orleans residents in their rebuilding efforts following Hurricane Katrina.  In a recent study entitled: “A Long Way Home:  The State of Housing Recovery in Louisiana 2008,” PolicyLink found that the tightening national credit market is making it increasingly difficult for homeowners and landlords to secure loans needed to rebuild.

In a recent interview, Annie Clark, a PolicyLink research associate and a co-author of the report, told New Orleans City Business newspaper: “The standards for traditional loans have risen because of the credit crisis.”

The City Business article notes that New Orleans is a particular issue because for 80% of those who received government funded financial assistance the funds alone are insufficient to complete repairs, leaving many houses boarded up and unoccupied.

The study recommends that New Orleans, along with federal and state governments and work to create new grant and loan programs to assist those that will no longer qualify for a home loan.

Does a creditor receiving payments in a Chapter 13 bankruptcy have to update the consumer’s credit report to show that the balance on the loan is being paid off?  In a recent Wisconsin bankruptcy ruling, the court came out on the side of the consumer.

In the case of In re Luedtke, the debtor had filed a Chapter 13 bankruptcy case showing a automobile loan from the University of Wisconsin - Oshkosh Credit Union.  Though the debtor was paying the claim through her Chapter 13 Plan, the post-petition payments were not being credited on her credit report.

Mrs. Luedtke tried to refinance her mortgage so she could pay off her Chapter 13 Plan, and claimed she was unable to complete the refinancing due in large part to the incorrect information on her credit report.  Although she requested correction of the report to the credit union, her request was denied.  She did not, however, report the allegedly inaccurate information to the CRAs.

So Mrs. Luedtke went to court, claiming that the Credit Union must report the loan as modified by her Chapter 13 plan and should report as current payments the Debtor makes on the loan under her plan.

This is a rare sort of case because most decisions hinge on whether reporting a balance due after a bankruptcy - not during an active one - is a violation of the U.S. Bankruptcy Code.  And though the argument makes sense, it’s not one that many lawyers have made.  After all, most consumer are concerned about their credit report after bankruptcy.

The bankruptcy court looked to a number of cases involving violations of the discharge order - including a few of my cases on the subject - and found that the Credit Union did violate the confirmation order by its affirmative reports to credit reporting agencies.

Just as a creditor can violate the discharge injunction for deliberately refusing to submit accurate information, the confirmation order prevents those same actions during the course of the  Chapter 13 case.  See McKenzie-Gilyard., 2008 U.S. Dist. LEXIS 50262. When the Credit Union reports that the Debtor owes amounts according to the original loan, those reports are not accurate, and violate the confirmation order.

There is a take-away to this case, and a practice tip for all lawyers who handle Chapter 13 bankruptcies.  As the court states:

Moreover, the Credit Union correctly notes that neither the plan nor the order confirming the plan expressly requires the creditors to report plan payments to CRAs.  In a plan which depends on a balloon payment at the end in order to satisfy the claims, such a provision would be wise.  On the other hand, the confirmation order should not have to tell a creditor whose claim has been reduced or payment stream altered to report the correct amount and payment history to the CRAs; the creditor is bound by the confirmed plan to the new provisions, and if the creditor is going to report at all, the creditor should report the pendency of the bankruptcy or the history of the payments under the plan.

A copy of the decision can be found here.

The idea that giving a tax credit to first-time home buyers would enable significant numbers of families to enter the housing market, stimulating a faltering real estate market, was probably a pipe dream from the outset.  In practice, very few people families would receive enough cash through the credit to make buying a home feasible.  In any case, the “credit” is really only an interest-free loan from the IRS which must be repaid, either through increased taxes in subsequent years or from proceeds of the sale of the residence.

The maximum amount of tax “credit” is $7500, based upon 3.7% of the national median home price of $219,000.  However, the Federal Income tax liability for a median-income family of four using only standard deductions ranges from $3000 - $4000.  This puts the credit in perspective as an economic engine for the homebuilding industry.

The Foreclosure Prevention Act of 2008 allows the IRS to recapture the “credit” over 15 years at 6 2/3%, or $500 per year on a $7500 advance. These are favorable terms; however, if the homeowner’s finances deteriorated, he or she would still be committed to paying this amount. The provision for accelerating the remaining principal upon sale of the residence could present additional problems if the home is sold in a declining market.

An alert for a fraudulent scheme has been posted by the Administrative Office of the U.S. Courts. Several Spanish speaking individuals were contacted by telephone by someone who claimed that there was money owed to pay the debt of another person. The potential victims were informed that there would be a court hearing, and they were given a time/date for a hearing at the Utah Bankruptcy Court. The caller apparently requested that a credit card number be provided for immediate payment of the debt, but these individuals refused to provide a card and showed up for the hearings instead.

According to the notice, there was no indication that Spanish speaking individuals are the only ones being targeted, nor that the scheme wasn’t occurring elsewhere. There was nothing that indicated that this scheme was limited to bankruptcy court either, but it makes sense that people who may be less familiar with the US legal system may be targets of a scheme like this.

As with any private information, never give out your credit card number to someone that you don’t know, and always verify facts when contacted regarding payment of unknown debts or suspicious court dates. If you are contacted by anyone with similar facts, have been a victim of this scheme or have any information you should contact the Supervisory Deputy U.S. Marshall Jim Phelphs at Jim.Phelps@usdoj.gov

by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer

“If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” Thomas Jefferson

“My name is Todd Davis.  My social security number is….  I’m Todd Davis, CEO of LifeLock, and yes, that’s my real social security number*. Identity theft is one of the fastest growing crimes in America, victimizing over 10 million people a year and costing billions of dollars. So why publish my social security number? Because I’m absolutely confident LifeLock is protecting my good name and personal information, just like it will yours. And we guarantee our service up to $1 million dollars.”

In an article entitled “Fraud-prevention pitchman becomes ID theft victim“, CNN reports that Lifelock CEO Todd Davis is being sued by customers because his service didn’t work and he knew it wouldn’t because Mr. Davis has been a victim of identity theft.  The article cites that Mr. Davis acknowledges that in 87 instances in which people have tried to steal his identity…one succeeded:  a guy in Texas duped an online payday loan operation into giving him $500 using Davis’ Social Security number.  The article goes on to say that Mr. Davis said it is possible that driver’s licenses have been issued to other people in his name.

As Carmen Dellutri said in a post Fraud Alerts Under the Fair Credit Reporting Act Create Lawsuit, “we are going to keep our eyes on this one and see where it goes.”