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Entries in Money (75)

Sunday
Jun232013

What Happens to Student Loan Debt After Death?

JupiterImages/Comstock Images(NEW YORK) -- If the borrower of a student loan dies, is the spouse liable for that loan? The answer is: it depends.

With traditional loans, as long as the spouse is not listed as a co-signer or joint account holder, he or she is not legally liable for the debt -- unless you live in a community property state.

If you live in a community property state and your spouse dies, you're typically liable for your spouse's debt, regardless of whether your name was on the original loan or not. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska has an optional community property provision for couples who choose to opt into a community property agreement.

With student loans, however, the rules are a little different and a spouse's liability will depend on the type of student loan, whether or not you live in a community property state and your individual state laws.

If the student loan is a federally backed education loan, a spouse is safe from repayment liability. According to the U.S. Department of Education, if the borrower of a federal student loan dies, the loan is automatically canceled and the debt is discharged by the government. Unfortunately, private student loans do not offer the same liability protections.

With private student loans, on the other hand, liability in the event of a spouse's death will depend on the individual private lender's policies. With a private student loan, it would be a good idea to check with the private lender to find out if they offer any death discharge protections.

Sallie Mae's Smart Option Student Loan, New York HESC's NYHELPs loans, and WellsFargo private student loans all offer death and disability forgiveness policies, but that isn't the norm for most private lenders.

For most other private student loans, the lender will first attempt to collect from the borrower's estate. If there is no estate, it will attempt to collect from a co-signer if one exists, then it would fall to the spouse, but it will depend on the community property laws in your particular state. Many community property states offer exceptions for education debts so that the spouse isn't held liable for the debt unless they co-signed the loan.

If you live in a community property state, it's worth checking into the laws to confirm whether or not your state has an exception. However, if you're not a co-signer, and you do not reside in a community property state, you're off the hook.

As a final word of warning, you should also be aware that there may be tax repercussions on forgiven debts -- even on student loans that are canceled due to death or disability.

Copyright 2013 ABC News Radio

Sunday
Jun022013

Five Money Conversations to Have Before Marriage

Comstock/Thinkstock(NEW YORK) -- You finally found your soul mate -- someone who is sympathetic, nurturing, loving and caring. You're ready to tie the knot. But before you say, "I do," can you honestly say, "We did?" No, I'm not talking about that. I am talking about the talk. Not the one about sex and family but rather the one about money and credit.

Buzzkill? Reality testing? Yes. However, you both need to talk about:

What do your credit reports say, and what do they say about you?

What are your respective credit scores?

How much debt is each of you carrying?

What would your combined debts look like?

Is your fiancé a big spender or a saver?

If you're ready to take the big walk then it's time to have that talk and here's why it shouldn't be delayed until after the rings are slipped on your fingers and the limousine is racing to the wedding reception or the airport.

The sooner both of you discuss your personal financial preferences, credit standings, individual spending habits and joint future goals, the sooner you can identify and hopefully avoid major problems.

Most people recognize that money and sex are two major potholes that can trip up happily married couples and lead to a rocky road of conflict, distress and disputation. And, as you are now a couple, it's good to get into the habit of joint problem solving and negotiating so you can set the stage for a sustaining dialogue that fuels togetherness and intelligent conflict resolution.

Fact: The longer you can avoid plunging into debt and all of the traps that come with achieving instant gratification and overspending, the better you'll be prepared as a couple to save for the things you want, get ready for little bundles of joy, and build your retirement nest egg. In addition to the size of your investment accounts, the health of your credit is paramount.

Unfortunately, many couples enter a marriage with credit baggage. Like a suitcase that is so stuffed that all of the clothes can't be jammed into it, one spouse and sometimes both may have overspent in their previous lives, racked up significant debt and made mistakes that severely damaged their credit. While one partner's bad credit score won't damage the score of the other, it could inhibit their ability to jointly purchase a home or a car at an affordable price, and must be addressed as early in the relationship as possible.

It is important that when entering into the bonds of holy matrimony, each partner must commit to building a strong individual credit profile while building a solid joint credit history. That means keeping debt under control, cutting costs where appropriate, merging expenses with a prospective life partner to get the benefits of "economies of scale," making all payments in a timely fashion and not overspending. Here are some other useful tips:

- When planning the wedding, don't take on suffocating debt to stage the event of the century at the most spectacular venue in town. If you're paying for it because your parents or in-laws can't afford it, be sensible about the ceremony and reception and splurge on the honeymoon (if you must). Creating five- or six-figure debt to finance your wedding and honeymoon could well damage your individual or joint credit rating, and make it difficult to live the life you dreamt about when you walked down the aisle.

- Avoid digging a hole from which you can't escape with credit card debt. Like wandering into quicksand, you sink hopelessly into debt as exorbitant interest rates proliferate and multiply faster than rabbits.

- By keeping your costs down and building a solid credit history, you establish yourself as a couple ready to build savings, develop a positive mutual credit rating, and seize the world rather than be crushed by it.

- When you need to take out your first loan as a couple, you'll be eligible rather than rejected and denied. With a strong credit rating, minimum debt and growing savings, you'll be viewed positively by banks and more likely to be approved.

- Weak credit can also affect a couple's ability to take out a joint credit card. That's another reason to lower debt or eradicate it. The quicker that bad credit is extinguished, the faster you can embark on establishing positive joint credit and achieving your dreams.

There is no substitute for talking things out. You're a couple now and everything you do from here on in should be done as two-some, a partnership, and a marriage. Don't hold back, don't fudge, don't mislead and, of course, never lie. Be straight, get everything out in the open, and reach an agreement in principle about how you plan on straightening out any bad debt from the past, cleaning up any credit issues, and establishing a positive joint profile and track record for the future.

Stanley Kubrick once directed a film entitled Eyes Wide Shut, but in this case, eyes wide open is the operative way to behave. Be open with your spouse; learn to talk things out. Collaborate on establishing positive joint credit, fixing any problems of the past, and embarking on a new sterling financial record. This will lead to material happiness and emotional health as well.

Copyright 2013 ABC News Radio

Saturday
Mar232013

Cyprus Crisis Boosting Value of Bitcoins

Luis M Molina/Getty Images(NEW YORK) -- Currency markets are keeping close track of Cyprus' banking crisis and are braced for possible repercussions, but one currency has thrived in the chaos and zoomed in value -- Bitcoins.

A Bitcoin is a digital currency that is traded electronically and does not need government backing. Despite its name, there is no coin to put in your pocket.

Two weeks ago, one Bitcoin was worth $40, then a record high.

Today, a Bitcoin is worth $72, largely because of "incremental interest" from euro and Russian ruble holders who are terrified by the situation in Cyprus, said Nicholas Colas, chief market strategist at ConvergEx Group, a financial technology company in Manhattan.

"The best-performing currency year-to-date has no home country, no central banker and no physical scrip," Colas said.

The Bitcoin is "clearly having a breakthrough moment here, and a deeply surprising one given its novelty and nascent infrastructure," he said.

The Bitcoin reportedly was invented by a man who called himself Satoshi Nakamoto, and who may -- or may not -- have been a 23-year-old graduate student in cryptography at Trinity College in Dublin. He wanted people to be able to exchange money electronically and securely without a third party's involvement.

Although there are no physical coins, Walmart sells Bitcoin gift cards, and WordPress and Reddit both take payments in Bitcoin.

Charlie Shrem, the CEO of BitInstant, a payment processor for Bitcoin exchanges and other merchants, thinks the Bitcoin is the wave of the future.

"Let's say you have someone in Cyprus who badly needs money," Shrem said. "How are you going to get that person money? There's not enough cash going around. Bitcoin can and will be used as a barter, or maybe a collateral tool."

He believes that people will first use Bitcoin "for its better uses" like remittance, wire transfers, donations and micropayments, before it reaches a mainstream audience.

"Imagine being able to pay five cents to read an article online instead of these ridiculous pay walls that require expensive monthly subscriptions," he said. "People will start reading the news again. Right now, you can't do that. Try sending five cents over the Internet."

But Diana Furchtgott-Roth, the former chief economist for the U.S. Department of Labor and a senior fellow at the Manhattan Institute, a conservative think tank, was unimpressed.

"It's a gimmick," she said. "The Bitcoin would never work in Cyprus because Cyprus is full of insolvent loans. Putting in different currency is not going to help. They would ideally have their own currency. Whether it's digital or dollars, they need to separate from the euro and put in economic currency that will attract more investment."

Colas was also hesitant about the Bitcoin's future.

"Whether it succeeds or fails is hard to predict," Colas said. "We're clearly in uncharted waters. But one thing is clear: Bitcoin is one more lens with which to assess the ongoing European financial crisis."

Copyright 2013 ABC News Radio

Friday
Feb082013

Virginia Lawmakers Want Their Own Currency, But Don’t Bet on It

Nick M Do/Getty Images(RICHMOND, Va.) -- Will Virginia start minting its own currency? It’s an idea worth considering, according to the state’s House of Delegates.

The lower chamber passed a bill on Monday to study the possibility. The legislation, proposed by Manassas Republican Del. Robert Marshall, would create a new joint subcommittee made up of lawmakers, plus two outside experts, to “study the feasibility of a metallic-based monetary unit.”

The committee could spend up to $17,440 and would present its recommendations before the legislative session starts in 2014.

Translation: Ten people would advise Virginia on whether to start making its own currency on a gold or silver standard.

It’s not the first time Marshall has proposed such legislation.  Versions of this bill have been floating around since 2011.  Its preamble is rife with damnations of the Federal Reserve and its “unprecedented monetary policy actions” and “activist intervention in banking and credit markets” -- the point being that Virginia can no longer trust federal fiat money, and might need “a more stable money unit consistent with limited government.”

The heavily Republican House of Delegates passed it 65 to 32 on Monday.

While the prospect of a state-based Virginia currency may sound intriguing, and potentially destabilizing, it’s not likely to happen.  The bill now moves to the state Senate, which is less likely to approve.  Virginia’s upper chamber is evenly split between 20 Republicans and 20 Democrats.

The response from Republican leadership has been lukewarm.

“Although I cannot express confidence in the legislation’s prospects as of this writing, I might note we are prepared in the event of a Virginia currency being approved,” said Jeff Ryer, spokesman for the Virginia Senate GOP caucus.

The Marshall proposal, well known to some in the Virginia legislature, was gently mocked at the annual Virginia Capitol Correspondents Association dinner in 2011, where wooden coins bearing Marshall’s face surfaced.

No one has publicly taken credit for the coins, according to a Virginia source.

Copyright 2013 ABC News Radio

Monday
Feb042013

Consumers Remain Cautious About Spending

Brand X Pictures/Thinkstock(NEW YORK) -- With all the market euphoria, a rally in the housing market, plus gains for auto sales, it may be surprising that U.S. consumers are still very cautious about spending money.

A government survey released late last week showed the savings rate rose in December.

Phil Orlando, chief equities strategist at Federated Investors, tells ABC News Radio, “If consumers and businesses were extraordinarily confident they would be going out and spending and bringing that savings rate down.”

Gridlock in Congress may be one reason why consumers and businesses remain so cautious.

“I think what’s been going on in Washington is an economic chilling effect,” says Orlando.  “People just don’t know what to make of it and to some degree some businesses and consumers may have just held back a little bit.”

Despite recent gains, consumer confidence remains well below its historical average.

Copyright 2013 ABC News Radio

Monday
Jan072013

Feds: Counterfeit Money Being Made with Everyday Office Equipment

Adam Gault/Thinkstock(NEW YORK) -- Millions of counterfeit dollars are flooding cash registers, and more often than not, this “funny money” is being manufactured using everyday office equipment, federal authorities said.

Heath Kellogg, a graphic artist known as “The Printer,” his father and four other men were busted in November after authorities said the men produced more than a million dollars in counterfeit bills.

The operation was shockingly simple.  Kellogg, who is a self-taught graphic artist, and his team, allegedly used a printer to produce the front of fake $50 bills and printed the back of the bills separately before carefully gluing it all together.

“It’s easier today because the technology has gotten so good and people can make better fakes,” said Brad Garrett, a former FBI agent and ABC News consultant.

How-to guides, easily found on the Internet, guide people through the counterfeiting process.

A Rhode Island man was arrested in November after he allegedly learned how to use a chemical soap to rub off the ink on $5 bills, turning them into counterfeit $100 bills.

Despite the flood of fakes, the government said new security features on money, such as color shifting numbers and portrait watermarks that show the same face that’s on the front of the bill, do make a difference.

Copyright 2013 ABC News Radio

Wednesday
Sep052012

Most Kids Not Learning About Financial Responsibility in School

Wavebreak Media/Thinkstock(NEW YORK) -- America's children may be back at school, but how much are they learning about money?  Apparently, not much.

According to a new poll of parents by RetailMeNot.com, 70 percent say their children are not being taught about financial responsibility when they're in class.

Trae Bodge, a senior writer at RetailMeNot, says that's a mistake.

"We're sending our kids out there with no financial training of their own," she says.  

That may be one reason why many college students make poor choices about debt and credit cards.

"I think it's really crucial when kids go out into the world on their own that they have a very solid foundation of financial responsibility," Bodge says.

Parents can help remedy this by teaching their kids about budgets at an early age. Bodge encourages parents to get kids "set up with a couple of chores and an allowance and help them save their own money and understand the value of money."

Copyright 2012 ABC News Radio

Friday
Aug242012

Bloomingdale’s Security Boss Accused of Passing Counterfeit Money

Elizabeth Burks/Getty Images for Bloomingdale's(NEW YORK) -- Bloomingdale’s security boss Alice Butler was arrested after allegedly passing off fraudulent bills at the chain’s flagship store in New York.

Part of Butler’s job was to teach employees how to detect counterfeit money.

According to a report in the New York Post, Butler, 56, who has worked at the store for 17 years, passed out a pair of faux $100 bills while loading money onto her employee debit card on July 1.  The cashier -- whom Butler had personally trained -- noticed that the images on the ink were off-color and that the bills were blurry.  She called security, which called New York police.   A Secret Service agent was also brought in to verify that the bills were fake, the Post said.

Butler, who lives in New Jersey, was later arrested and released without bail on charges of petit larceny and forgery.

Butler’s lawyer, Mark Macron, insisted she is innocent.

“She says that she did nothing wrong and that the allegations are a mistake,” Macron told ABC News, adding that Butler has no prior criminal record.  “The attorney general and I are discussing a non-felony, non-jail plea disposition.”

Bloomingdale’s remained tight-lipped.

“We do not comment on pending litigation,” said Bloomingdale’s spokesperson Anne Keating.

Copyright 2012 ABC News Radio

Thursday
Aug232012

Survey: Money Number One Cause of Conflict for Young Couples

Wavebreak Media/Thinkstock(NEW YORK) -- Money can’t buy happiness, but the lack of it can cause conflict for young couples, whether they’re engaged, just married or expecting a child. 

A survey commissioned by Chase Card Services and XO Group Inc., the company behind TheKnot.com, TheNest.com and TheBump.com, finds money is the root of all arguments at every stage of a young couple’s life together.

Key findings related to engaged couples:

-- 55 percent of engaged couples argue over whether their wedding is the best way to spend the money they have.

-- Of those who fight about money and finances, 49 percent do so because they don't have the budget to have the wedding they want.  As a result, every planning detail becomes stressful to them.

-- 22 percent of engaged couples fought because their parents were giving them money for the wedding and then thought that gave them the right to help plan, too.

Key findings related to married couples:


-- Three out of four married couples clash over money and expenses, and 45 percent do so because they want nice things but don't have the budget for them, and 41 percent disagree on where to spend their money.

-- Among couples who argue about expenses, 30 percent of wives say they are more frugal than their partners.

-- Of the 34 percent of couples who disagree about when to start a family, approximately one-third say they’re not sure if they're ready for the responsibility of raising kids.

Key findings related to pregnant couples:


-- When it comes to planning for a baby, 58 percent of expecting respondents said they didn't wait until they were financially secure to get pregnant.

-- Of those who are currently expecting, three out of four wish they were more financially secure at this point in their pregnancy. Ten percent think they aren't financially prepared at all for the cost of their approaching child.

-- 35 percent of pregnant couples argue about whether they can afford their baby, with 68 percent of these couples unsure if their current income is enough.

-- Twenty-two percent of expecting couples wish they had a little more time to themselves before they have children.

-- Being able to afford children and giving them the life they deserve is the number one worry of couples having a baby.

The survey involved more than 2,100 engaged, married or pregnant women.

Copyright 2012 ABC News Radio

Tuesday
Jun192012

Detroit Man Gambled Away Over $1.5M After ATM Error

Hemera/Thinkstock(DETROIT) -- A Detroit man is facing 15 months in prison after he was able to withdraw unlimited cash from his Bank of America account that only held a few dollars.

Ronald Page, 55, took advantage of a bank mistake that placed his account into a "pay all" status, allowing him to withdraw unlimited overdrafts, the U.S. Attorney's Office in Detroit said.  And withdraw he allegedly did: From August 1 to 18 in 2009, Page hit ATMs, mostly at casinos and cashiers, for $1,543,104.

Page, a retired worker after 30 years at General Motors, had maintained an average balance of about $100 in his account from Dec. 1, 2008 to May 31, 2009, according to his indictment.

He pled guilty on March 7 to theft of bank funds.  His sentencing will take place on June 27.

Page could not be reached for comment.  His attorney, Richard Morgan, did not immediately return a request for comment.

A spokeswoman for Bank of America provided a statement to ABC News saying, "We can't provide specifics in regards to Mr. Page's account as it is proprietary and because his case is still in the courts, we are unable to comment."

Court papers state that Page was a frequent gambler at casinos in the Detroit area and Las Vegas from January 2009 to February 2010. Between February 2009 and August 2009, his Bank of America account was used primarily for gambling, a court document states, in which he would deposit his winnings and withdraw amounts from $2,000 to $50,000.

On Aug. 1, because of the bank error, Page withdrew $312,000 from ATMs at Greektown Casino in Detroit, then $51,727 the same day from MGM Grand Casino.  But the party came to an end on Aug. 18, when his attempt to withdraw $52,000 from his account at Greektown Casino was denied.  He also went to the Motor City Casino on Aug. 19 and attempted to withdraw $51,400 from his account but was again denied.

Bank of America advised Page on Aug. 21, 2009 that his account was overdrawn by over $1.5 million and demanded immediate repayment.  He has not repaid the bank.

The U.S. Attorney's Office recommended 15 months in prison for Page and that the court order restitution to Bank of America for the $1,543,104.

They also recommended Page be prohibited from gambling activity, lotteries, or wagering of any kind along with banning him from entering the premises of any gambling casinos, horse tracks, bingo parlors, or dog races or wherever gambling activity is conducted.

Copyright 2012 ABC News Radio







ABC News Radio