Friday’s need-to-know money news

Today’s top story: New payday loan rule protects borrowers from sinking into debt. Also in the news: Sailing into Columbus Day sales, how to make money on Amazon, and why you’re losing money if cash is your only savings strategy.

New Payday Loan Rule Protects Borrowers From Sinking Into Debt
Protecting the consumer.

Should You Sail Into Columbus Day Sales?
What to purchase this weekend.

How to Make Money on Amazon
So that you can turn around and then spend it on Amazon.

If Cash Is Your Only Savings Strategy, You’re Losing Money
A piggy bank doesn’t draw interest.

Q&A: Your debt lives even after you die

Dear Liz: I live in a senior building and we had a discussion about our debt after we pass away. I said, “If we have any money in our estate, that will pay it off.” One woman who lives here claims that all you have to do is send in a copy of a death certificate and that will get rid of any debt. Hope you can settle this for us.

Answer: Debt doesn’t just disappear when someone dies. Whether and what creditors get paid, though, depends on a lot of factors.

After someone dies, the executor of the estate (or the personal representative, if the deceased had a living trust) is supposed to notify creditors of the death. The first bills to be paid usually are the costs of administering the estate, followed by secured debt such as mortgages, liens and so on, then the funeral and burial expenses, says Los Angeles estate planning attorney Andrew Steenbock. Next in line typically are medical bills from the final illness and the dead person’s last tax bill. Then other creditors are paid from what’s left, if anything. Only after creditors are paid can any remaining assets be distributed according to the will, trust or state law if there are no estate planning documents. If the estate is insolvent — with more debt than assets to pay those debts — then heirs typically get nothing and the creditors are paid a portionate amount of whatever assets are available.

Things can get more complicated if there is a surviving spouse or co-signer, since debt that’s jointly owed would become the survivor’s problem.

Ignoring these rules can have serious repercussions for the executor, who can become personally liable for mistakes made in settling an estate. If your neighbor’s executor ignores state law and distributes assets to heirs before paying off creditors, for example, the creditors could sue the executor. That’s a pretty powerful incentive for learning and obeying those rules.

Are you a yo-yo debtor? Ways to break that cycle

Americans’ debt loads, like our waistlines, tend to expand as we approach middle age and then gradually diminish as we get older.

Some people, though, are yo-yo debtors, fighting an ongoing up-and-down battle with debt. They pay it off, or come close, only to find themselves battling bills once again. But there are ways to break that cycle.

In my latest for the Associated Press, how to break the cycle of yo-yo debt.

Wednesday’s need-to-know money news

Today’s top story: Want to graduate with minimal debt? Choose the right college. Also in the news: How to budget, save, and even win money with today’s prepaid debit cards, 5 key facts about earthquakes and insurance, and hackers are stealing home buyers’ down payments.

Want to Graduate With Minimal Debt? Choose the Right College
Comparison shopping.

Budget, Save, Even Win Money With Today’s Prepaid Debit Cards
Getting your spending in order.

5 Key Facts About Earthquakes and Insurance
Important information.

Hackers stealing home buyers’ down payments
Targeting hopes and dreams.

Monday’s need-to-know money news

Today’s top story: You could be overspending with credit cards. Yes, you. Also in the news: Your excuses for not contributing to a 401(k) are dwindling, which is the best way for you to zap your debt, and how millennials can prepare for the next financial crisis.

You Could Be Overspending With Credit Cards. Yes, You.
Keeping your spending in check.

Your Excuses for Not Contributing to a 401(k) Are Dwindling
No more excuses.

Different Ways to Zap Your Debt: Which Is for You?
Finding the best way to conquer your debt.

How millennials can prepare for the next financial crisis
Preparing for the inevitable.

Q&A: Sinking under a heavy debt load? There’s help

Dear Liz: I am trying to get my finances in order and, like many, I am struggling. The majority of my debt comes from student loans, but I also have unsecured debt that is weighing me down. I work for a nonprofit and know I need to contact my lenders to try to enroll in the Public Service Loan Forgiveness program, but my debt has me completely frozen. Every few months I try to do something and then I end up back where I am now, feeling overwhelmed.

Answer: You’re not alone. Credit counselors often deal with people who are so paralyzed by debt problems they can’t even open their bills. These people bring in sacks of unopened mail to their first appointments with the counselors.

If you haven’t been able to deal with your debt alone, then by all means, get help. A nonprofit credit counselor is an option; you can get referrals from the National Foundation for Credit Counseling at www.nfcc.org. A financial planner, a financial coach or even a money-savvy friend also can help you.

If you can force yourself to simply call your student loan servicers — the companies that process the payments on your education debt — you can get the ball rolling. These companies can determine if you’re eligible for the Public Service Loan Forgiveness program and help you start on the paperwork.

Public Service Loan Forgiveness can erase the balance of your federal student loans after 10 years of payments if you work in the public sector. To get the maximum benefit, you would need to sign up for an income-based repayment plan and you may need to consolidate your loans. All this involves effort, but if you’re planning to stay in public service, it can be worthwhile.

The Trump administration has proposed ending the forgiveness program for future borrowers. Even if Congress enacts such a change, it should not affect those who have already taken out loans. But you’d still be wise to enroll as soon as possible.

Q&A: Debt has a habit of hanging around

Dear Liz: Last year my dad had an account he couldn’t pay and it is showing up on his credit report as a closed, charged-off account. As expected, the lender sold it to another company. The new company now also has it listed as an open account in collection on his credit report. How can the same account be listed twice? I thought the second company couldn’t report it.

Answer: That’s not correct. Once the debt was charged off and turned over to collections, it could be reported again as a collection account. If the original account still shows a balance owed or more than one collection shows up for the same debt, however, your dad should definitely dispute it and file a complaint with the Consumer Financial Protection Bureau.

Tuesday’s need-to-know money news

Today’s top story: 5 things debt collectors can’t do – and 5 they can. Also in the news: The pros and cons of dropshipping, protecting intellectual property, and how to choose a rewards credit card.

5 Things Debt Collectors Can’t Do — and 5 They Can
Learn the limits.

Dropshipping Cuts Your Inventory — and Control
The pros and cons.

Protecting Intellectual Property: A Guide for Entrepreneurs

How to choose a rewards credit card
Optimizing your rewards.

Debt settlement a bad alternative to bankruptcy

Debt settlement isn’t the Wild West industry it was a decade ago, when people routinely paid hefty upfront fees to companies that failed to deliver any relief.

Thanks to increased regulation and enforcement, the much smaller number of settlement companies that remain often do what they promise: persuade at least some of a borrower’s creditors to forgive part of the debt, typically in exchange for a lump sum payment.

Several people I’ve interviewed lately reported positive experiences with debt settlement, so I decided to take another look at the industry. It turns out that hiring a negotiator could be a reasonable alternative to bankruptcy for some. But debt settlement is not as consumer-friendly as the industry presents it, and some of the people who praised the companies didn’t fully understand their alternatives or the longer-term consequences of settling debt.

In my latest for the Associated Press, a look at the biggest problems with debt settlement.

Q&A: An Internet search isn’t the best way to find a credit counselor

Dear Liz: You’ve mentioned finding a nonprofit credit counselor and I was wondering the best way to go about that without feeling like I’ve been scammed. I’m wise enough (in my later years) to know that “nonprofit” does not mean free or even cheap services, so I didn’t want to just search for “nonprofit credit counseling, McKinney Texas.” Suggestions? Or should I do just that?

Answer: You can find a nonprofit credit counseling organization in your area using the National Foundation for Credit Counseling site at www.nfcc.org. NFCC is the oldest and largest credit counseling organization. Member organizations provide a variety of free and low-cost services. Those include financial education, credit report reviews and counseling about credit and debt, bankruptcy, foreclosure prevention, housing and reverse mortgages. If you’re struggling with credit card debt, these agencies provide debt management plans that can allow you to pay off your accounts at lower interest rates.

If you think you may need a debt management plan, you may also want to consult with a bankruptcy attorney. You can get referrals from the National Assn. of Consumer Bankruptcy Attorneys at www.nacba.org. Credit counselors — and their clients — are sometimes too optimistic about people’s ability to pay off debt, so you should understand the advantages and disadvantages of bankruptcy before you commit.