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Money Management International Improving Lives Through Financial Education
SUCESS NewsletterFinancial Education Newsletter
Follow these hints and this credit recovery strategy might put you back in good standing.

The Debt Advisor

by Steve Bucci

Dear Debt Adviser,

Please explain how to use "payment for deletion," or PFD. My grandson can now pay off his debts with a collection agency for the full amount. How can he make sure the collection agency will send a PFD letter to the credit bureaus so his credit report looks good again?
-- Julie

Dear Grandma Julie,

Times do change. My grandmother would have whacked me with her wooden spoon if I owed money and it went to collection. Of course, then she would have hugged me and said, "Don't do that again." Since wooden spoons are out of fashion now, what is to keep a young man with a spotty payment record on the straight and narrow? Let me suggest his credit report might be just the thing.

Asking a collector to delete an accurate entry from a credit report may teach your grandson the wrong lesson. Yes, he made a mistake, but the level of discomfort he'll suffer from a dinged credit report and credit score may prove to be a substantial incentive for him to use credit more wisely in the future and save him from a worse fate later on.

In the event there were extenuating circumstances and either the wooden spoon or the negative credit report incentives are inappropriate, here are some things to consider. The key to negotiating with collectors is to get all terms for payment in writing and in advance of sending any money. Using the leverage of making payment in full only works so long as he keeps the leverage -- the payment -- until he receives the offer to delete the account from his report in writing. Once he makes the payment, his leverage is gone and the collector is not going to work with him to have the account removed.

My suggestion is for your grandson to write to the collector, offering to make payment in full as long as the account is deleted from his credit reports at each of the three major credit bureaus. In the letter, explain in writing that he will immediately send the full amount due once the collector confirms the terms of the payment agreement, including that the account will be deleted. It is likely that the collector will balk at putting the agreement in writing, but your grandson can ask.

Once he receives the agreement in writing, your grandson should pay the full amount owed. He will then need to check his credit reports to assure that the collector follows up on deleting the account as agreed. I would wait at least 30 days before checking the credit reports to allow the collector time to notify the credit bureaus. If the collector does not follow through, then your grandson would need to contact an attorney to review his rights, regarding the written agreement between the two parties.

Should the collector be unwilling to fudge your grandson's record, he has the choice of paying what he owes or continuing to deal with the collection activity. If the accounts are 180 days or more past due, the item cannot cause much more damage to his credit score unless it results in a public record being entered for a court summons and possibly a garnishment. Don't overlook the fact that a collector can only be held responsible for what the collector reports to the bureau. Any reporting that was done prior to the account going to the collector will remain on his report for seven years since it was entered by the original creditor.

Regardless of credit scoring implications, not paying what he owes will complicate his future. Should he want to access credit in the near future, change jobs or rent an apartment, anyone who pulls his credit report will want to see that he paid what he owed, regardless of the age of the account.

Good luck!

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of "Credit Repair Kit for Dummies."

Resolutions eBook

New Beginnings

The MMI Guide to getting your fianances in order for the New Year

As a new year approaches, we look to the past and forward to the coming year and reflect on the changes we want to make in our lives. With January 1st as an easy starting point, we resolve to follow through on those changes we decide are the most important to us.

Frequently we hear about people’s resolutions to lose weight, clear clutter, get organized or get out of debt. In fact, these resolutions do not need to be separate commitments, but might be more easily achieved in combination. For example, losing weight and trimming the fat off your budget might be accomplished with the same starting philosophy. A resolution of clearing clutter might include a component of reducing financial clutter as well, thereby helping you achieve your goal of getting out of debt.

We are also used to hearing the old story of a resolution that didn’t make it past the month of January. Most often the reason for a resolution’s failure was that the resolution was not realistic: it was either too broad, too aggressive or there were too many of them competing for your attention at the same time.

In this guide to getting a grip on your financial life for the New Year, we hope to present you with viable ways to clear financial clutter, set up systems to accurately track your finances, set realistic financial priorities and goals, and be successful in moving toward a healthy financial life in the New Year.

Download the New Beginnings eBook

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The goal of our highly trained professionals is to arm you with the knowledge necessary to take control of your financial situation. Our online seminars stress the development of skills that can assure long-term success. You will gain the peace of mind that comes from improved spending habits, increased savings, and the wise use of credit. Take the first step toward financial wellness by enrolling in a web seminar today!

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Disaster preparedness

by Kim McGrigg

MMI Community Manager

The Haitian earthquake tragedy serves as a reminder for each of us to review how prepared we are for a disaster. Historically, flooding is the nation’s single most common natural disaster. While earthquakes are often thought of as a West Coast phenomenon, 45 states are at a moderate to high risk of quakes. Some disasters, such as hurricanes or tornadoes, can provide us with a degree of advance warning, while others happen in the blink of an eye.

A disaster plan should include financial readiness because, in an emergency, the last thing a person needs to worry about is finances. No one has ever regretted being prepared in advance when they had to vacate their home and make split-second decisions, sometimes life or death ones. To be safe, consider the following financial tips when formulating a financial disaster plan:

  • Have an overall checklist in place before the emergency strikes, and if possible, review it before leaving your home.
  • Gather all financial records in one spot at home and one off-site. Consider a fireproof safe for home which contains copies of documents, with the originals stored in a safe deposit box. Everyone who lives in your home may not be there when the disaster strikes. Therefore, it is necessary to inform all family members of your plan, where your “go-box” or safe is located, and instruct them that they are to bring it with them when evacuating.
  • Inform a trusted friend or family member where documents are located. Someone outside of your residence should be aware of the off-site location where your documents are housed.
  • Copy the front and back of all credit cards, debit cards and ATM cards. You will need this information for ease in contacting the issuers.
  • After the event, call the credit card companies and alert them to expect purchases outside of your normal charging pattern. You do not want to have the use of your credit cards compromised due to purchases being made in a different city or state.
  • Include a spare set of checks in your go-box. You want to be able to access money from your bank, and not totally rely upon credit cards or your ATM.
  • Keep an amount of cash on hand to sustain you short-term. If electrical power is lost, ATMs will not be working, thus having cash is critical.
  • Make a list of all financial institutions with which you do business, including brokerage houses. Be sure to include contact information and account numbers.
  • Have the contact information of your insurance agent as well as the policy in hand. This will be immensely helpful when making a claim, and put you near the front of the line. To avoid any unpleasant surprises, have an annual insurance check-up to confirm that you fully understand your coverage and deductibles. An emergency is no time to find out about unforeseen gaps in your coverage.
  • Have a complete household inventory in an offsite location. Pictures or videos will make claims much easier, and the last thing you want to do under stress is rely on your memory.
  • Have utility company information available in case you want to stop some bills. If your residence is uninhabitable or totally destroyed, notify utility companies and other service companies, such as the phone company, so they can stop billing immediately. Often times a utility company will transfer service to a new address and waive initial connection charges.
  • Protect your identity. Notify the three credit bureaus (Equifax, Experian, TransUnion) that you have been affected by a man-made or natural disaster. By placing a fraud alert on your accounts, creditors must contact you before opening any new accounts or making changes to existing accounts. This also will help to avoid becoming a victim of identity theft, as crooks seems to thrive on distressed individuals. With mail interrupted, it could be months before you even knew that charges were being added to your accounts.

If you are displaced for a period of time, your income may be interrupted. Review your financial situation and develop a realistic budget to cover the time it will take to recover. Determine what obligations can be regularly paid until the financial picture improves. If all known expenses cannot be covered, contact creditors and try to negotiate a payment plan. While many will be willing to accommodate the request, starting the conversation is the first step. A certified credit counselor also can help contact creditors and negotiate an appropriate payment plan on your behalf.

This content was provided by The National Foundation for Credit Counseling (NFCC) . Money Management International is a member of the NFCC.

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About Money Management International

Money Management International (MMI) is a nonprofit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or Spanish. To learn more, call
800-762-2271 or visit

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