When student debt payoff becomes complicated by identity theft
Dear Liz: I went back to school in 2002 to get my teaching credential. I took out several student loans and set up a repayment plan upon graduating with automatic deduction out of my checking account. Several years ago, the IRS started garnishing my bank account stating that there was a lien but I never received any other type of indication what was going on.
After contacting the IRS, we found that someone took out a fraudulent student loan using my former married name. I also got my credit reports, which showed the loan. I was able to get the signed loan documents from the U.S. Department of Education but now the department does not respond to my certified letters or phone calls.
I’m at a loss at what to do at this point. I filed a police report and notified the credit reporting agencies. I’m out almost $10,000. Is there any other advice you could give me?
Answer: First, follow up with the credit bureaus to make sure the fraudulent loan has been removed from your credit reports. Consider setting up credit freezes at all three bureaus to reduce the chances of being victimized again. The Identity Theft Resource Center at www.idtheftcenter.org has more information to help you protect yourself.
Getting the actual loan dismissed and your money back is a more difficult task. You may be able to have the loan erased under what’s known as a false certification discharge, but qualifying for that isn’t easy, said Jay Fleischman, a Los Angeles attorney who specializes in student loan problems.
It’s not enough to have a police report. You’d need to identify and file a lawsuit against the thief. If you can get a court judgment against that person, you would provide the Education Department with that as well as proof of your identity and possibly signature samples from the approximate date of the loan.
Even if you did everything necessary to prove eligibility for discharge, the department could still deny it if you received any benefits from the loan — if it paid any costs of your education instead of someone else’s, Fleishman said.
At this point, you may need to hire an attorney familiar with identity theft issues. You can get referrals from the National Assn. of Consumer Advocates at www.naca.net.
The road to homeownership should be paved with skepticism
Dear Liz: My husband is 46 and I am 43. We have been living in Las Vegas for six years. We are aware that we missed out on buying a home a few years ago. Are we chasing a dream or do you think that we might have another chance to buy a house in the next few years? I am also very concerned about another recession. Some websites forecast one in 2018.
Answer: Some websites forecast the end of the world in 2016. And 2015. And 2014. And so on.
Recessions, by contrast, are pretty much inevitable but they’re not really predictable. You shouldn’t try to time your real estate purchases hoping to avoid, or take advantage, of the lower prices they might bring.
In general, you need to be a lot more skeptical about what you read and what you’re told if you want to be a homeowner and not get fleeced.
Everyone involved in real estate transactions — as well as in most other financial transactions — may have an incentive to mislead you or at least not tell you the whole truth. That’s why it’s so important to do your own research and make your own decisions.
Here’s just one example. A lender will tell you how large a mortgage it will give you, but that doesn’t necessarily mean you can really handle that loan. You may have other goals, such as retirement, that you won’t be able to achieve if you take on a too-large payment.
The best time to buy a home is when you want to be a homeowner, you’re financially ready to do so and you can afford to stay put for several years, because it can take a few years’ worth of appreciation to offset the costs of buying and selling a home (not to mention moving costs).
You also should make sure you have a healthy emergency fund — three months’ worth of expenses is a good start — to handle the inevitable unexpected expenses that arise when you own a home.
Liz Weston, certified financial planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com. Distributed by No More Red Inc.
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