According to the New York Times, “The number of food stamp recipients has climbed by about 10 million over the past two years, resulting in a program that now feeds 1 in 8 Americans and nearly 1 in 4 children.” They provide this map to show the breakdown.

In a related article, the New York Times claims that food stamps have lost the stigma they once held and that “the program is now expanding at a pace of about 20,000 people a day.” Food stamp use is at a record high.

With unemployment numbers not expected to drop anytime soon and food prices on the rise, how are these “safety nets” going to hold up?

I just watched the movie I.O.U.S.A. It’s a 30 minute documentary about our national growing debt and its consequences.  It’s a sobering look at the real problems facing our nation’s economy and the hole that we, as a country, have dug ourselves into. It’s definitely worth watching.

Here is the movie

Visit http://indebted.com/ . This site is run by mtvU. Make sure to visit the Take Action page for things you can do personally, how you can advocate for change, and resources to help you get involved.

Now that 2008 is coming to a close we are faced with looking back on a less than stellar year. The miserable economy hogged the spotlight all year and, as of right now, 2009 does not promise to be any better.

We’re betting that working on your finances will top losing weight as the Number One resolution for 2009. Here are some tips for making and keeping your 2009 Financial New Year’s Resolutions:

1.    Start small. Don’t make a resolution to save $10,000 dollars if you didn’t even save $1,000 the year before. Start by trying to save an extra $100 or $200 a month and go from there.
2.   Create a budget, the more detailed the better. How can you know how much you are saving if you don’t even know how much you spend? Break down your expenses—and be honest. If you know you are going to spend $6 on coffee a day, include that.
3.    Get out of debt. If you can’t get out of all of your debt this year at least bring it down and DO NOT add to it! Debt is a huge stressor. It limits everything. Live by this simple rule: if you don’t have it, don’t spend it.
4.    Pay in cash. If you know you are going to have to fix your roof or buy a new dishwasher, start setting money aside and pay for that purchase in cash. This will stop you from using a credit card and adding to your debt (or making new debt as the case may be).
5.    Start an emergency fund. If you have a job right now, count your blessings. The unemployment rate is out of control and I’m betting there is not one person who is unemployed who doesn’t wish they had saved more money. The ideal emergency fund will cover your living expenses for three to six months. If you can’t put that much aside then start small. Put aside $100 from each paycheck. Your emergency fund will start to grow before you know it.
6.    Make a long-term savings plan. You might not be able to start this plan now (getting out of debt should come first). But it doesn’t hurt to start planning. Someday we will all have to retire. I know a lot of people lost their retirement savings in the Stock Market this year but if you invest wisely and you diversify and allocate you should be okay. At the very least, start a high-interest bank account for your long-term goals.

Have you made any New Year’s resolutions about saving money? What tips do you have for people to do better financially this year?

Dear Melissa,

I had my wisdom teeth out a few months ago, and I thought my parent’s insurance would pay for all of it.  I just opened a bill for $557.89!  I can’t afford that!  If I call them and tell them I can’t pay, will they turn the bill over to a collection agency?  I am not working but may be able to pay something every month.  I don’t know what to do.  I don’t want my credit to be ruined.

Tonya L.

Dear Tonya,

If you just received the bill, you should have some time before the dentist entertains the thought of turning the account over to a collection agency.  Generally, they will wait 90-180 days before using collection services.

I would call the dentist immediately.  Chances are they will have a billing manager who hears from many other patients about needing a payment plan for rendered services.  The important thing is to stay in contact with them.  When bills and phone calls go unanswered, that’s when the dentist will want to use a collection agency.

You mentioned that you should be able to pay something every month.  Tell the manager that you fully intend to pay the bill, but need to be put on a structured payment plan.  But, when doing this, only commit to what you know you can pay every month.  When payments are missed or shorted, the account may be turned over.

Do YOU have a question for Melissa? Email her at melissa@dovcocs.com.

Melissa Douros
Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection.  With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

Dear Melissa,

Is it really possible to send a letter to the credit agencies such as Equifax or Experian and request they remove an account they have on file after its paid? How long does it usually take and what’s the percentage that this actually works?

Jake M.

Dear Jake,

A collection account will remain on your credit report for seven years after the last activity.  Generally a collection account is reported to the three major credit bureaus, Experian, Equifax and TransUnion, 180 days after the account has been deemed delinquent.  So, the collection account will be delinquent for 7 years and 6 months, remaining on your credit report for 7 years.

Contrary to popular belief, when the account is paid, it does not “reset the clock” for this time period.  According to Internet rumors, if you pay off a collection account, the 7 years begin again, and the collection account will remain reported to the credit bureaus for 7 additional years.  According to the Federal Trade Commission, the governing principle over collection agencies and credit bureaus, this is simply not true.

So, if the account has been reported to your credit bureau for longer than seven years, you can write a letter to the three credit bureaus requesting them to remove the account.  They have thirty days to respond to your inquiry.

However, the credit bureaus will not just haphazardly remove collection accounts.  There have been many boasts from companies claiming they can do so, but the majority are because there have been mistakes reported such as, collection accounts for the wrong people, mistaken amounts, statute of limitations being over, etc.  It is a good idea to request a copy of your credit report from all three agencies in order to ensure there are no mistakes on yours.

Do YOU have a question for Melissa? Email her at melissa@dovcocs.com.

Melissa Douros
Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection.  With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

Do YOU have a question for Melissa? Email her at melissa@dovcocs.com.

Dear Melissa,

A debt collector called me at 8:45 p.m. regarding a bill I had.  The collector told me that he was going to sue me and garnish my wages if I didn’t pay right then with a post-dated check over the phone.  My question is, can they call me that late?  And also, can they sue me?  I thought they couldn’t say that.

Jennifer M.

Dear Jennifer,

The Fair Debt Collection Practices Act allows for debt collectors to call consumers between the hours of 8:00 a.m. and 9:00 p.m. in the consumer’s time zone.  However, if you feel that this time is inconvenient, you can instruct the collector to call times deemed okay by you.

The other answer is yes; they can legally initiate litigation for an unpaid bill.  But, they are not legally permitted to threaten suit if:

1)    They do not intend to do so.  They can arbitrarily threaten legal action unless they intend to sue, and
2)    A debt collector cannot threaten suit by means of soliciting a post-dated check over the phone.

The next step would be to send the collection agency a letter with the times that you want to be contacted.  If you feel that 8:45 p.m. is too late, instruct them to call you at earlier times.

The letter should also contain that you are aware of your rights pertaining to the FDCPA section 805(a)(1) with regard to the time the collector can contact you, and sections 807(4) & (5) with regard to they cannot threaten legal action unless it will be done, and section 808(3) stating that legal action cannot be threatened in order to obtain a post-dated check.

Do YOU have a question for Melissa? Email her at melissa@dovcocs.com.

Melissa Douros
Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection.  With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

Dear Melissa,

About six months ago, I ordered flowers online for my girlfriend’s birthday, and she never received them.  I called and complained and they sent the flowers but they charged my credit card twice!  I had my credit card company reverse the charges, but now they have sent me to a collection agency.  I have good credit so far, and I do not want to have this be reported to my credit report.  What should I do?
Bobby A.

Dear Bobby,

The first thing that you want to do is dispute the charge with the collection agency.  Write them a letter citing that you invoking your legal right to dispute a charge that you do not believe you owe and that you are requesting validation for the charge.   This will buy you some time with the collection agency, because legally, they cannot report an account to the credit bureaus without validating that the charge is owed.

However, do not leave it up the collection agency to make the correction of the mistake for you.

The second thing to do is to contact the florist.  It is possible that they made a mistake with the double charge, and that the accounts receivable department did not catch the double billing.  Immediately upon placing the call, ask to speak with a supervisor and do not allow them to pawn you off on the collection agency.  A lot of times, once an account has been placed with a debt collection agency, the original creditor will no longer speak with you.

Explain to the supervisor that there is an error that needs to be corrected as a result of double billing.  After they realize their mistake, request a letter in writing that you are no longer responsible for the bill and that the bill will be removed from the collection agency.  This way, if there is an issue with the credit bureau, you will have your letter to dispute the account.

Do YOU have a question for Melissa? Email her at melissa@dovcocs.com.

Melissa Douros
Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection.  With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

If I get a letter from a collection agency, does that mean that the bill automatically goes on my credit?  The electric bill was in my name at my apartment last year, and my roommate swore she paid the bill.  Now I find out she did not because I received a letter from a collection agency saying the bill is unpaid.  How do I find out if it has been reported to my credit?
Jamie N.

Dear Jamie,

Thank goodness, no.  When you receive the first letter from a collection agency notifying you that an account has been placed with them, there is generally a time frame of thirty, or in some cases as many an ninety days, before the item will be placed as a derogatory mark on your credit report.

As soon as the initial letter is received, it is imperative to contact the collection agency and find out how long it will be before the item shows up as a collection account on your credit report.  The collection agency must legally inform you as to how long you have to pay the account to avoid this.

The other way to investigate whether or not an account has shown up on your credit report is to request a copy.  Each credit bureau, Equifax, Experian, and TransUnion must legally furnish one free copy of a consumer’s credit report every year, if requested.  This will show if any account, not just collection items have been reported negatively.

Melissa Douros
Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection.  With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

Last week I received a call from a debt collector saying that I owe $347.56 from a cell phone that I had back in 2005.  I know that I had a bill from the cell phone provider but I didn’t know that it was that much!  Does the collection agency have to give me any sort of documentation to pay the bill, or do I just have to pay it based on their phone call to me?  What can I do about this?

Amy J.

Dear Amy,

Yes, you are entitled to documentation proving that you do owe the bill.  The Fair Debt Collection Practices Act put this regulation in place so that people are not liable for paying bills that they may not owe.

Contact the collection agency in the form of a written letter requesting proof that you owe the bill.  In this letter request from the collection agency proof of all documentation, invoices, dates and times of contacts regarding this bill from the cell phone provider, memos, etc.  Request that any and all information regarding this debt be sent to your address in order to prove the validity of the debt.  In this case, you will also want an itemized bill of all phone calls and charge made to the account.

The collection agency will then have thirty days to prove that you do in fact owe the debt.  Chances are that one of three things will occur:

1)    You will not hear from the collection agency again.
2)    The collection agency will send you a letter stating that they have closed the account.
3)    They will send you proof of the debt.

If you receive proof, you can always try and work out a payment arrangement or settlement amount with the collection agency to get the bill paid.

Melissa Douros
Dovco Collection Solutions, Inc.

As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to debt collection.  With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.

Too many Americans have to deal with collection agencies. It’s not a nice topic and most people don’t like to talk about it. That’s why we found an insider in the collections business and tried to get some top secret information out of him to help you with any collection issues you might have. This guy was not very forthcoming, but we did our best to glean a few collections agency secrets.

What types of debt do you go after?
Defaulted credit cards, defaulted student loans, and bank accounts with unpaid over drafts.

What’s the most common excuse that you hear from people when you call them?
The most common are: I can’t afford to pay, I lost my job, I’m getting divorced, I’m sick, and I’m unemployed.

What do you say those excuses?
It get’s worse, not better, we can give a payment plan, terms, or a settlement. Otherwise we litigate and seek attorney fees which are a percentage of your debt. The worst thing you can do is ignore the problem. Garnishing wages and bank accounts are other options available to us. We can find out what you have, and whether you are lying about being able to afford it.

What about the credit agencies (reporting)? Do you report to the bureaus?
By the time I get the debt, it’s already been reported. Credit card companies give you six months before they write it down and it comes to me.

What options does the debtor have?
Bankruptcy, settlement, or a payment plan.

What about settling the debt? What’s the lowest percentage [of debt] you’ve ever taken?
Every company is different, some will settle and others won’t. But settlements can almost always be reached. Percentages vary.

What are your recommendations?
Payment plans look best on your credit report, much better than a judgment or a bankruptcy.

What are the guidelines for payment plans?
Credit card companies usually want to be paid back in full within 1 to 3 years. So if you owe 10,000 you may have to pay roughly $280/month.

The moral to this story? Don’t get into debt. But if you are, we hope this helps.