By now everybody has heard of some horror story about identity theft from TV shows or magazine articles. In the popular culture, references of identity theft are found in the novels and movies, notably Frederick Forsyth’s novel, “The day of the Jackal” and the 1995 movie “The Net.” In real life, the Identity Theft Resource Center (http://www.idtheftcenter.org) reports 8.9 millions identity theft victims in 2006.

So, what is an identity theft? An identity theft occurs when somebody steals vital pieces of personal information, e.g. your social security, credit card numbers, etc. and uses that information for financial gains by taking your identity. The most common form of identity theft involves credit card and mortgage frauds. But it can also be used for vicious crimes like drug dealings, terrorism, etc.

You may be surprised to know that many minor identity thefts are committed by someone you know. So, don’t make it an easy job for a person to steal your personal information from your wallet, checkbook, etc. Avoid leaving things containing your personal information lying around for others to have an easy access to that information.

Shred, shred, shred. Buy a cheap paper shredder from an office supply store and shred all your paid bills, used check books, etc. before tossing those into the trash. Put aside 30 minutes every Saturday morning for shredding anything that contained your personal information and you intend to trash. Make it a habit.

Never give out your personal information like your social security number; birth date etc. over the phone when the call you received is unsolicited. Your financial institutions have those information and they will not ask you for that. Sometimes, for verification purposes, they make ask you the last four digits of your social security number.

Don’t pay to get anybody to get a copy of your credit report. Because of a congressional mandate, all three-credit report bureaus will give you a copy of your credit report for free every year. Go to AnnualCreditreport.com to obtain your free credit report every year from TransUnion, Equifax, and Experian. While obtaining your free credit report, these bureaus will push some paid services. Just ignore those.

Don’t get your free credit reports from the three bureaus all at the same time. Then you have to wait one year before you can get your reports again for free. In the mean time, some unwanted stuff may show up in your report. Get your free report every four months from each bureau. If you are using a PDA, password protect it to prevent others from accessing it.

Phishing is a popular method to steal sensitive information for identity theft purposes. Don’t be a phishing victim. Avoid clicking on any link that comes to your way through e-mails or IM. The e-mail will disguise itself coming from your financial institutions (your bank or PayPal accounts) and will urge you to click a link to verify your accounts or resort to such other tricks. Sometimes, it can be outright threatening. If you click the link you will end up in the thief’s website. And if you enter your user name and password, the thief will have enough information to log into your actual account.

Open online accounts for all your credit cards and financial accounts. Online accounts are not only convenient for faster bill paying, paperless transactions, etc.; they also help monitor your accounts frequently, instead of waiting for the monthly bill or statement to arrive. Monitor your accounts online every week and if you see any suspicious charges, checks, etc., call you banks immediately. Also setup e-mail based account alerts, if available, to alert you when charges are made to your accounts.

If possible, avoid putting your outgoing mails containing bills and checks in your mailboxes for easy access by a thief. Drop them in mailboxes located in the post office or street corners. Better yet, setup online bill payment with your bank and avoid the snail mail for bill paying.

You also need to keep your computer safe. Thieves can get into computers through spyware and unsecured wireless or network connections. Use anti-spyware programs and turn on your Windows default personal firewall program. To prevent viruses infecting your computer, use an anti-virus program. Setup accounts for each user of your computer and ask them to use strong passwords that include a combination of letters and numbers.

Another way to prevent anybody, including you, from opening any credit in your name is to freeze your credit. This option is not available in all states. If it is available in your state and you opt for this option, you need to lift the block before you allow anybody, e.g. an employer for a new job, creditor for a car loan, etc., to access your credit information. Though it is almost like a foolproof system to prevent identity theft, it is the also the most inconvenient method.

“How much can I borrow?”, is a question that often arises when getting a loan through the Veterans Administration. They are not responsible for placing limitations on the amount a veteran can borrow. The amount is determined by the lending institution.

/The VA loan entitlement ranges from $36,000 to $60,000 depending on the amount of the total loan amount the lender will fore-go the down payment and will tree to four times the basic entitlement.

Always remember that the lender or financial institution determines the maximum allowable amount that can be loaned. The VA does not set any maximum amount that you may borrow. Lenders will not usually approve a loan above $417,000 because that is the maximum amount of a loan that can be re-sold on the secondary market.

A tax arrears sale can be a way to purchase property for a considerably less amount than the value of the property. Unfortunate circumstances can cause people to lose their property. The government can then sell the property for the default amount owed on the property. Sometimes it is a fraction of the worth of the property.

Flipping properties (buy properties and fix them up for resale) can make you a lot of money. Buying foreclosed or tax arrears property in a prime area can help you make a significant profit.

To find out about tax arrear sales look online at the available options. Her are usually free and fee-based services dedicated to bringing information about these sales to the public.

The definition of bankruptcy is a process of the federal court that is aimed at helping both businesses and individuals in clearing up debts and repaying under the protection given by the bankruptcy court. The two types of bankruptcy are liquidation and reorganization.

Chapter 7 of the bankruptcy code allows for liquidation bankruptcy which allows you to plead the court to have your debts discharged. Returns for the sale or liquidation of some of your properties shall be divided among your creditors. This type of proceeding lasts 4 to 6 months. It requires one court appearance. It doesn’t require payments over a long period of time.

To qualify for Chapter 7 bankruptcy, you must meet certain criteria. If you have filed for bankruptcy in the past 6 to 8 years you can not file again. Other things reviewed are your income, expenses and overall debt.

You may qualify for the other type of bankruptcy. Disabled Veterans who incurred their debt during their active duty are almost automatically allowed to file. Those people whose debts are caused by running a business can also qualify.  If you don’t fit into one of these categories you may qualify based on other criteria.

There are new rules imposed on bankruptcy. Your current monthly income (an average of the last six months) is compared against the median income for a family of similar size in your state. Social security benefits and disability benefits are not included in this calculation. If your income seems to be enough to support reorganization bankruptcy then Chapter 7 bankruptcy will not be allowed.

Most people prefer chapter 7 since repayment of a portion of the debt is unnecessary. You may lose some of your property but usually not all of it. So you can start over.

Under Chapter 13, reorganization bankruptcy, you file a plan with the bankruptcy court on how you intend to discharge your debts. You designate the amount each of your creditors will receive depending on your finances. After a three or fie year repayment plan, if any debt still remains your debt can be discharged.  If there are obvious financial difficulties, the court itself can decide to discharge the debt earlier than was planned.

Both types of bankruptcy have an additional requirement which is completions of credit counseling by an agency that is recognize and approved by the United States Trustees office. The help you determine if bankruptcy is essential. They also examine the possibility of informal repayment which you may not have been aware. Counseling is still a requirement no matter what course you take. Completion of post counseling is also required.

The aim of credit counseling tis to teach you financial management to avoid problems in the future. The bankruptcy discharge will not be released unless this is completed.

Counseling helps a person recognize their responsibilities and mistakes which led to financial problems. The process takes into consideration both the debtors and creditors interests and advises a plan to fulfill them.

Bankruptcy must be considered as a last resort. Discipline is very important to keep you from having financial difficulties.

Debt Management