Technology has made life in the 21st century a breeze in comparison to the lives our grandparents lived.  The Internet has been the driving force behind much of this.  It has revolutionized almost every aspect of life, from how people get their news to how they shop.  Of course, every new marvel has a dark underbelly and the Internet is no different.  With all those names, social security numbers, and credit card numbers floating around the web, it’s no wonder that identity theft has skyrocketed in recent years.  This doesn’t mean you have to be another helpless victim, though.

Here’s one simple way to prevent identity theft from happening to you.

Empty your wallet.  Yes, it can be that simple.

A lot of people carry a driver’s license, a social security card, multiple credit cards, a medical insurance card, and the list goes on.  If you are one of these people and your wallet is lost or stolen, the thief now has access to all that information which he can pass on to others.  Simply removing your social security card makes identity theft much more difficult.  By reducing the amount of identifiable material you carry, you reduce the scope of damage the thief can do to your credit.

All those cards that are now free of your wallet should be locked away in a secure place, like a locking filing cabinet or a safe.  You should also place anything else with your information on it in the same place.  Burglars won’t just take your television and stereo, they could take your identity if you’re not careful.  If you don’t need to keep something with your information on it, shred it.  It’s best to use a cross-cut shredder.

Never just throw that stuff away.  You never know who is going through your garbage.

While no one is ever completely safe from identity theft, a few simple steps can greatly reduce the chances of it happening to you.

The maximum amount of tax “credit” is $7500, based upon 3.7% of the national median home price of $219,000.  However, the Federal Income tax liability for a median-income family of four using only standard deductions ranges from $3000 - $4000.  This puts the credit in perspective as an economic engine for the homebuilding industry.

The Foreclosure Prevention Act of 2008 allows the IRS to recapture the “credit” over 15 years at 6 2/3%, or $500 per year on a $7500 advance. These are favorable terms; however, if the homeowner’s finances deteriorated, he or she would still be committed to paying this amount. The provision for accelerating the remaining principal upon sale of the residence could present additional problems if the home is sold in a declining market.

In an article entitled “Fraud-prevention pitchman becomes ID theft victim“, CNN reports that Lifelock CEO Todd Davis is being sued by customers because his service didn’t work and he knew it wouldn’t because Mr. Davis has been a victim of identity theft.  The article cites that Mr. Davis acknowledges that in 87 instances in which people have tried to steal his identity…one succeeded:  a guy in Texas duped an online payday loan operation into giving him $500 using Davis’ Social Security number.  The article goes on to say that Mr. Davis said it is possible that driver’s licenses have been issued to other people in his name.

As Carmen Dellutri said in a post Fraud Alerts Under the Fair Credit Reporting Act Create Lawsuit, “we are going to keep our eyes on this one and see where it goes.”

Many believe they need help — either after bankruptcy or in lieu of filing bankruptcy — to “clean up” credit reports. That’s where the snake oil salesman come in. Go to any large city’s Craig’s List and check out all the “Credit Repair” ads in the Financial and Legal Services sections. Watch late night TV, listen to the radio, just watch your junk mail! You will hear the sweet sound of easy redemption from credit problems. Get rid of negative accounts, delete judgments and even bankruptcies — whether or not those entries are truthful.

Want to bet how many of them were around 10-years ago? Or how many will be around in another 10-years?

Most of these credit repair organizations offer pie-in-the-sky services but they don’t come cheap. And that’s the rub: Most “credit repair” services fail to comply with the law. As Pam Stewart, a member here and Texas bankruptcy attorney, has pointed out, much of the accurate (but negative) information in a credit report does not have to be removed except under specific circumstances. And, under the Credit Repair Organizations Act (CROA), the providers of these services are not entitled to be paid until after they provide the services.

Our colleague, Jay Fleischman, a New York consumer attorney, has provided important additional details about CROA and credit repair hype on our companion site, the Credit Law Network, which I encourage you to read as well.

And if you genuinely believe something is incorrect on your credit report, you may have the right to have that corrected under the Fair Credit Reporting Act (FCRA). Read more about credit reporting. Visit the FTC’s website about credit repair scams and rebuilding your credit. Talk to the lawyer who handled your bankruptcy, if you have filed. Or contact the attorney in your area to see if they handle this sort of issue - or if they can refer you to someone who does.

But don’t throw money at credit repair “deals” that sound too good to be true. They usually are.

This means you don’t have to make a payment during that time and it is interest free. We can purchase all the furniture we want, budget ourselves and pay it off within the specified period and it did not cost us a dime in interest. What a great deal!

Then reality sets in the cost of living sky rockets. So instead of making your payments on time and paying off that purchase within the specified grace period the money goes into the gas tank or food goes on the table. So at the end of the yellow brick interest free credit road you have not paid off that original agreement and now the balance is quite a bit higher than what it was before. This does not make sense as it was supposed to be interest free.

Make no mistake retailers regardless of their name are out to make money. If they don’t make money then the business fails. This does not mean that I think the retailers are evil and should be stopped from running interest free programs. But I do think that you need to be informed about “interest free financing.” The companies who finance these purchases are relying on human nature. They develop programs after studying the psychology of human beings and what buttons can they push to entice you to purchase something, anything at all. See if they can get you through the door to purchase anything they view it as a good day.

So the psychology behind “interest free financing” is that I, the store owner, know that you want to purchase nice furniture. After all you work and you deserve a $3,000 - $5,000 couch. Why, because if you can’t you are a failure just like media and the credit card industry would lead you to believe. Enter the financing company, they know based on psychology of Americans that probably over 75% of you are NOT going to payoff that interest free purchase because you could not afford the purchase to begin with and/or life gets in the way. You are not a loser because the media says so and you do not need a $3,000 - $5,000 couch to be successful.

The end result is that on the last day of that interest free grace period if the original agreement is NOT paid off then interest at whatever percentage rate has now sprung to life and attached itself to the amount due and owing. The average interest that I have seen is 9%-12%. The interest will accumulate according to the purchase agreement and terms of that agreement.

So a line of credit for $5000 for 2 years interest free could cost an additional $400-$500 more or even higher depending on the terms and conditions of the contract if the entire balance is NOT paid off within that grace period. This balance increases regardless of the payments you made or even if you just have $1.00 left to pay.

If you are going to use the interest free financing then get the facts first. READ THE CONTRACT. Yes, Virginia you are signing a legal contract when you purchase anything with financing. This means that you can be sued if you do not pay. Understand the terms and if you are not comfortable with the terms or do not understand them then just walk away.

As time goes by I become a bigger and bigger fan of Dave Ramsey’s cash only system. People will make deals. How do I know? Because I just used this philosophy on Basset Furniture the other day. I walked in with cash in hand. The dealer tried to sell me a couch that was higher than what my budget allowed. I informed him that I wanted this particular couch at this particular price including tax. Not a penny more. He said; NO! I replied with good bye (Cue AOL) and headed for the door.

The end result was I got my couch for the price I set which was $2500 lower than what he started at and I paid cash for it. Why Bassett as opposed to Nebraska Furniture Mart or Crowley? Bassett had a better deal. Personally, I love Nebraska Furniture Mart and Crowley’s furniture. It is the cost of credit that I no longer enjoy so I deal in cash and if you as the retailer do no want to work me as the consumer I will be more than happy to take my cold hard cash somewhere else.

Remember knowledge is power and the FTC has a wonderful website where you can gain all sorts of powerful facts to assist you in making a financial decision.

Bottom line: generally interest free winds up costing you money in the long run. Be informed, be prepared and be ready to walk away if you are not 100% satisfied with the terms and conditions presented.

Written by Kansas City Bankruptcy Attorney, Rachel Lynn Foley.

• Interest rates as high as 1,500% (that’s One Thousand Five Hundred percent per year, and yes, we’ve seen them this high).
• Wage withholding.
• Repayment terms that lock you into an endless cycle of borrow and pay that you can never get out of.
• Abusive collection practices.

So why do people borrow money from people like this on such outrageous terms? Because, as one blogger put it, “When the landlord is pounding on the door demanding rent, the kids are crying because the kitchen is empty, and the electric company is hauling the meter out of the house for non-payment, what would you do?”

Well, what can you do other than using a payday lender? The answer? Check with a credit union.

When the District of Columbia capped interest rates at 24%, the payday lenders closed up shop. Who stepped in to fill the void? Credit Unions. As The Washington Post reported in the article, “Credit Unions Slowly Fill Void as Payday Lenders Leave D.C.,” and USA Today in, “Breaking the Cycle of Payday Loan ‘Trap’,” credit unions are offering low income people small, short-term loans at interest rates that you don’t think are a misprint.

As Leslie Parrish, a senior researcher for the Center for Responsible Lending noted in The Washington Post article, “Credit unions were created to offer credit to people with modest means. So, historically, it’s very much in keeping with their mission.” Not to mention that a 16% loan is a whole lot better than a 300% loan.

Think about this.  If you are using a medical credit card to pay for your treatment, then you probably do not have medical insurance coverage.  If you do not have coverage, then you probably cannot afford the high cost of medical treatment.  So, you are destined to default on the medical credit card debt.  Putting your medical debt on a high interest rate credit card will only increase the chance of your not being able to pay the bill.

Banks used to be good for giving customers toasters and blenders, but stay away from those credit card offers.

If you go to the Federal Reserve website you can voice your opinion about the proposed changes to the rules regulating the lending and credit card industry. It is your chance to provide facts about the credit card industry and how they have affected your life. The five key changes that the new rules being proposed are:

* Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.

* Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.

* Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.

* Banks would be prohibited from imposing interest charges using the “two-cycle” method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.

* Banks would be required to provide consumers a reasonable amount of time to make payments.

Don’t miss this opportunity to be heard. Your comments will not be edited so the government and the credit card industry will read exactly what your are thinking. Don’t delay, go to the Federal Reserve website today and submit your comment about what you think about the new rules to tighten the reigns on the credit card industry.

Written by Kansas City Bankruptcy Lawyer, Rachel Lynn Foley.

Clearly, not a lot of information about credit freezes is getting out. I first heard the term “credit freeze” on a radio show hosted by a local consumer advocate. I have mentioned the concept to several of my clients, but no one has heard of it. What exactly is a credit freeze and how does it work?

A credit security freeze works by restricting access to your credit reports. If an identity thief gets hold of your personal information (date of birth, social security number, full name, etc.) he will generally make use of that information by opening new accounts in your name and by using a mailing address that he controls. On the credit application, he will include your old address along with a “new” address for the new account. Usually this new address is a post office box, making it untraceable. The identity thief knows that word of this new account will not filter back to you for two or three months and a lot of damage can be done in that period of time.

In the absence of a security freeze, the credit bureau will consider a new account (based on your legitimate, good credit) and will note a change of address. The credit issuer will submit your name and identification information to the credit bureau database and the new account will be approved based on a pre-determined credit criteria.

With a credit freeze in place, however, this new account creation will not happen. Firstly, a credit freeze will prevent the credit bureau from changing your address. Secondly, the credit freeze will prevent the credit bureau from making your information available to the credit issuer. Therefore, no new accounts will be approved or opened.

Every credit transaction will be blocked. If the identity thief tries to use an existing account on the Internet (planning on having the items purchased delivered to an address of his choosing), the freeze will prevent the transaction from going through.

The bottom line - a credit freeze will put a halt to all access to credit in your name. If your identification really is in the hands of bad guys, you will still have a lot of work to do in reestablishing your identity. Imagine, for example, the hassle of starting over with a new social security number.

Ideally, you should request a freeze the instant you realize that your identity has been stolen. In reality, however, people don’t act that fast. You may only act after you receive the first report of improper activity. If you can’t find your wallet, for example, you may spend a day or two searching before concluding that it is really gone, and even then you may not think to request a security freeze until after unpleasant things have started to happen.