Consumer Information

1. Be selective. Avoid carrying more than one or two cards.
2. Lenders are aggressive and they may have a lot of information about you, including a marketing profile that shows your spending habits. They are looking for people who will run up big balances. Just because a company is offering you credit does not mean you can afford it!
3. The interest rate is important, but a low rate may not be a good reason to accept a card. Sometimes there are other costs, such as annual fees, so that credit which appears cheaper is actually more expensive.
4. Beware of temporary “teaser” rates. Often they are good for only a short period with a higher rate thereafter. The permanent long-term interest rate matters the most.
5. If your rate is “variable” instead of “fixed,” make sure you understand how it may change.
6. Beware of juggling cards and transferring balances. Paying off one card with another card that has a temporarily lower rate may not be helpful in the long-run and can negatively affect your credit record.
7. Investigate whether late payment or penalty interest rates may be charged if you make a late payment or miss a payment.
8. Always read the disclosures and the credit contract.
9. Understand your credit card’s billing method.
10. If you do not like a card, cancel it!

Q. What if I need a new credit card to buy Christmas gifts?

A. Beware of ordering credit cards that are beyond your means. Banks will issue credit cards regardless of whether you can actually afford to make the monthly payments. They will consider your home and other assets when deciding whether to give you a card, but that does not mean you will be able to afford the payments. Also, banks may offer a low “teaser” interest rate, but then raise it significantly.

Q. My favorite niece wants me to co-sign her credit card application. I would like to help her out. Is that okay?

A. Don’t do it! You will be held solely responsible for all purchases your niece makes, even if you are “only a co-signor.”

Q. I can’t find my credit card. If it was stolen, will I be responsible for the purchases?

A. You should report the loss or theft of a credit card to the bank as soon as you become aware of it. If you report it promptly, you should not be required to pay for more than $50 of the unauthorized purchases.

Q. I lent my credit card to my son so he could buy some toys for my granddaughter. But when I got the bill, I saw that he had also used it at restaurants. Can I report the restaurant bills to the bank as “unauthorized purchases?”

A. If you lend your credit card to someone for a particular purpose, and they use it for some other purpose, you may still be held responsible for ALL of the purchases made. Never lend your credit card to anyone for any reason.

Q. I would like to stop using my credit cards. Can I just tear them up?

A. Yes, but you should also notify the bank, in writing, that you wish to close out your account. If you still have a balance the account will remain open but you may request that no further charges be authorized. After you have paid off the card you should order an inexpensive personal credit report from a credit agency such as Equifax, to make sure that your credit history is accurate.

Senior citizens living on a fixed income often find themselves overextended with credit card debt. This can be very stressful, particularly if you have always had a good credit history. Credit card solicitation seems to be at an all-time high, and may be hard to resist in facing the high cost of living. If this sounds familiar, ask yourself these questions:

1. Are you feeling harassed by debt collectors? If your account has been turned over to a debt collection agency, you can send them a letter telling them not to contact you. This will not erase your debt or stop any court action against you, but should stop the harassment.
2. Are you still using your credit cards? If so, destroy them!
3. Do you own more than $500 worth of property? Do you receive income other than social security? If the answer to both questions is “no,” you may be “judgment proof.” That means that even if a creditor sued you he would not be able to take any of your property.
4. Do you have a job? If you are employed and a judgment is entered against you, the creditor may be able to obtain up to 15% of your wages directly from your employer. However, if you work part-time and your wages are minimal, the creditor may not be able to obtain any of your income.
5. Do you owe your bank money? Generally, your creditors may not touch your social security. If you bank at an institution to which you owe money, however, you should change your account to a different bank. Otherwise, the bank may attempt to withdraw funds directly from your account to pay your debt.

• Congress created the Fair Debt Collection Practices Act to protect consumers from harassment. It only applies to “debt collectors” — usually companies or attorneys whose business it is to collect another company’s debts for a fee. It does NOT apply to creditors collecting their own debts. Under the Act, debt collectors may not:
• Contact you at unusual or inconvenient times and places (for example before 8 a.m. or after 9 p.m., or at your workplace if prohibited);
• Contact you if the debt collector knows you are represented by an attorney;
• Communicate with third parties about your debt (other than your attorney, the creditor’s or collector’s attorney, a credit reporting agency, your spouse, and codebtors);
• Communicate with others in an attempt to locate you unless certain requirements are met;
• Engage in harassing/abusive conduct, such as using profane language;
• Use or threaten violence or criminal conduct;
• Continually call you with the intent to annoy, abuse, or harass you;
• Contact you without disclosing their name and the company for whom they work;
• Misrepresent the imminence of a lawsuit or their intent or authority to sue.

Bankruptcy is a legal proceeding which allows you to get a fresh financial start when you cannot pay your debts. It can help you eliminate your debts (called “discharge”), stop foreclosure on your home to allow you to catch up on payments, or prevent repossession of your car or other property. It cannot, however, cure every financial problem, and it is not always the best option. In bankruptcy, you usually cannot eliminate debts to “secured” creditors (creditors who have a mortgage or other lien on your property as collateral for a loan).There are two types of bankruptcies for individuals: Chapter 7 and Chapter 13. Chapter 7 is known as “straight” bankruptcy or “liquidation.” Most debts are discharged but you may have to give up property which exceeds the Delaware exemption limit of $5,000 ($10,000 for a couple). In a Chapter 7 case, your debts are wiped out in exchange for your giving up non-exempt property. Property that is non-exempt is sold, although in many cases all of the petitioner’s personal property is exempt. A home with little equity may also be exempt.Chapter 13 is known as “debt adjustment.” It requires you to file a “plan” to pay past-due and current debts over a three to five year period. A Chapter 13 case allows you to keep valuable property such as your home or car if you can make “plan” payments to repay what is overdue and stay current. If your income is very limited, you may not have enough to fund a plan.Bankruptcy will affect your credit, but it is unclear to what extent. If you are behind on your bills, your credit may already be bad. Bankruptcy may not make things any worse.

Congratulations On Buying A New Car!

The good news is that you have a new car; the bad news is that your are paying an interest rate 5 percentage points above what you should be paying. What went wrong? You may be a victim of “Yield Spread Premium.”

Although it sounds like a new brand of margarine, this premium is actually bonus money a person receives for helping you obtain financing that is not in your best interests.The average buyer does not have enough money to pay cash for a car. The salesman knows this and after getting the buyer to focus on a particular vehicle, he will quickly launch into a discussion about financing. If he is a good salesman, he has already won the buyer’s trust. The salesman may ask the buyer to fill out a credit application. After that he may fax the information to a financing company — maybe even a company owned by the car dealership. The financing company may say, “Based on the customer’s credit history, we can offer a rate of 9%.” The salesman may then go back to the buyer and say, “I can offer you a fabulous credit package at 14% interest, which is a great rate.” If the buyer accepts, the salesman receives a financial bonus for convincing the buyer to accept the higher interest rate.

Luckily, you can prevent this from happening. If you are buying a car, or a mobile home, or obtaining home repair services, ARRANGE YOUR OWN FINANCING. The most effective way to do this is to explore financing ahead of time. Go to several reputable lending institutions and find out what you can afford and what interest rate they can offer you. Go into the dealership and tell them you don’t wish to discuss financing until you settle on a price. After you have a price that satisfies you, explain that you already have your own financing.

If you follow this strategy, it is also less likely that you will be a victim of a high-pressure sale.

The basic question to ask yourself about life insurance is whether you need it at all. Consider the reasons why you bought the policy in the first place, and then question whether you still need it. Do you want your income increased now, or do you want more money to go to your beneficiaries when you die? If you have a modest income and you are spending a significant portion of it to maintain your life insurance, consider dropping it.

Be Careful! Don’t allow an agent to scare you into purchasing insurance immediately without a chance to think it over. If you decide to drop your insurance, don’t allow an agent to scare you into keeping it. Never pay cash or make a check out to an agent. Checks should be made out to the insurance company. If you have several policies, pay the premiums on them separately, rather than in one lump sum. Otherwise, the insurance company may not apply your money toward the appropriate premium. Beware of agents who say they are affiliated with the government or Medicare. Insurance is confusing. Ask a lot of questions. If you can’t seem to get the answers, you should be worried!

1.  “Term Insurance:” This type of policy covers you for a specified number of years, during which you pay premiums. If you die during that period, your beneficiary collects the face value of the policy. Generally, term policies are renewable up to a certain age, such as age 65, but after that they are often too expensive to maintain.
   2. “Whole Life:” This type of policy covers you for your lifetime, as long as you keep paying premiums. It will also accumulate “cash value,” a kind of savings reserve that you can borrow from while you’re still alive. Such borrowing, however, will reduce the value of your policy.

While a lot of people are very nice and only want to help others, some people will abuse friendship by stealing from the people they are supposed to be helping. Stop and look at your situation, and that of your friends and family.If you see signs of financial abuse, you can contact Community Legal Aid, Adult Protective Services, the Attorney General’s Office, or the police for help.

• Do you manage your own money and property?
• Can anyone else withdraw money from your bank account?
• Have you noticed money missing from your bank account?
• Are checks missing from your checkbook?
• Can you obtain cash when you need it?
• Has anyone had you sign something you don’t understand?
• Are belongings missing from your home?
• Has anyone asked you to add them to your deed?
• If you have a power of attorney, does your agent do things you don’t want?
• Does your paid caregiver make you pay extra for services?

On January 28, 2000 the Delaware Telemarketing Fraud Act was signed into law. Among other things, the law provides that most people and businesses who sell things over the phone must first register with the Consumer Protection Unit of the Department of Justice. The new law provides that if someone calls you on the telephone and sells you something, you may be entitled to cancel your purchase. In most cases the sale will only be considered final seven business days after you receive a written notice of your right to cancel. This notice must contain specific language. In part, the notice must say:

You, the purchaser, may cancel this transaction without any penalty or obligation at any time prior to midnight of the seventh business day after receipt of this notice. If you cancel, any payments made by you under the sale will be returned within ten business days following receipt by the seller of your written notice of cancellation…”

In order to cancel a transaction, you must mail or deliver written notice to the seller at the address given in the notice. If you try to cancel the purchase over the phone, you will likely be unsuccessful.

The new law further provides that if you tell a telemarketer, either over the phone or in writing, that you do not wish to be contacted by them anymore, they are forbidden to call you again for at least 10 years.
Telephone “Slamming”The competition between long-distance telephone service providers is fierce. You have probably received mailings and/or calls from sales representatives telling you why you should switch long-distance carriers. Some providers may try to entice you with a special incentive, such as free calling or a rebate. Occasionally a provider may switch your long-distance carrier, or the types of services you receive, without your permission. This is known as “slamming.” Slamming is against the law.If someone calls you on the phone and asks you to switch carriers, it is best to request something in writing. If you receive written materials, which may even include a check you can cash, always read the fine print — including the print on the back of the check. Make sure you are not signing up for services you do not wish to receive.If you discover that your long-distance provider has been switched without your permission, contact your local phone company and ask to be reconnected to your preferred provider. Explain that you did not order the disputed service and that any charge for switching companies should be taken off your bill. Next call your preferred long-distance provider and report the illegal switch. Ask to be reconnected to your preferred provider for free.You should also call the long distance phone company that tricked you and tell them that all of their charges within 30 days of the switch should be removed, and all of the calls after that should be recalculated based on your preferred provider’s billing rates. (If you have already paid your bill, the company that slammed you must forward your payments to your preferred provider. You should get a refund of any amounts over what you would have paid your preferred provider.)Slamming problems may be reported to the Federal Communications Commission (FCC) (1-800-CALL-FCC). To verify your phone provider, you may call 1-700-555-4141 (and 1-302-700-4141 to verify your provider for local toll services).

If an offer to purchase a time share or campground resort package in a warm place sounds good to you right now, think again. You may be solicited to make such a purchase, only to later find out that your “investment” is virtually worthless.

Delaware has laws to protect consumers from unscrupulous solicitations for time share and campground resort purchases. The law applies to these types of contracts if they are signed in Delaware, even if the property is located elsewhere. The most important thing to remember is that if you make such a purchase you have 5 business days from the signing of the contract in which you may cancel the contract. The cancellation will only be effective if you put it in writing and send it by certified mail to the address listed in the contract. If you do this, you have the right to receive, within 15 days, a full refund of any money you paid.

You may be told that if you visit the time share property you will receive a “gift” or something of value. It is unlawful for someone to offer you this unless they give you certain information in writing. This information includes, among other things, the address of the time share plan or campground resort, the retail value of the item they promise to give you if you visit, and any restrictions or qualifications that must be satisfied before receiving your “gift.”

Some entities have become aware of these laws and have already developed ways to get around them; for example, by making sure their package does not fit within the definitions of “time share” or “campground resort.” If you are considering purchasing a vacation package, you should feel free to ask a lot of questions and even retain a lawyer to review the contract. Do not feel pressured to make a hasty decision you may later regret.

At year-end it is not unusual to receive telephone calls asking you to give money to a charity or fraternal order of some kind. You have the right to say no, and you do not have to remain on the phone. If you are considering giving money, make sure you ask a lot of questions first. You should feel free to ask the solicitor to send you the donation request in writing. Delaware has a law to safeguard the public against fraudulent and misleading charitable/fraternal solicitations.The law states that charitable/fraternal solicitations may not take place after 9:00 p.m. or before 8:00 a.m.The law further provides that the caller who is asking you for money must:

• Identify himself by name before soliciting you;
• Identify himself as a professional solicitor (i.e., as someone being paid to call and ask you for money), if that is the case;
• Identify the organization for whom the caller is requesting money;
• Upon request, reveal how much of your donation will go to the charity.

The caller is not allowed to use the term “police,” “law enforcement,” “trooper,” “rescue squad,” “firemen,” or “firefighter” unless the caller is employed by a bona fide police, law enforcement, rescue squad or fire department, or such entity has authorized the use of these terms.