Consumer Credit Counseling

Service of Buffalo, Inc.

40 Gardenville Pkwy, Suite 300

West Seneca, NY 14224

(716) 712-2060 [phone]

(800) 926-9685 [toll free]

(716) 712-2079 [fax]

cccs@cccsbuffalo.org

www.ConsumerCreditBuffalo.org

Twitter: @CCCSbuffalo

Community Counseling Centers

Please call

(716) 712-2060

to schedule an appointment

at any of our locations:

CCCS Main Office

Dale Association (Lockport)

Family & Children’s Service

of Niagara (Niagara Falls)

KeyBank (Buffalo)

Veteran’s One-stop Center

(Buffalo & Lockport)

This newsletter is a publication of Consumer

Credit Counseling Service of Buffalo, Inc.,

a not-for-profit agency. It is provided as a

source of information for clients, sponsors,

representatives of the credit industry and the

human service networks supportive of the

mission and vision of CCCS.

H ave you received a call or le er

demanding that you pay a debt that

either you forgot about, paid off or

previously se led, or is not even yours? You

may be a vic�m of “zombie debt

collec�on”. Zombie debts show up for a

number of reasons:

1. Some�mes they are debts that are

either very old or no longer owed; Past

the statute of limita�ons (SOL) for

egal ac�on in NYS, which is typically

six years.

2. You may have forgo&en about the

debt, or had previously se&led on the

debt with either the original creditor

or another collec�on agency.

3. The debt is a result of iden�ty the)

4. You filed the debt with a bankruptcy

filing and it has been discharged

The biggest issue is that people are

pressured into paying the debt, which they

may not need to pay. The first step is not to

acknowledge the debt but request

verifica�on that the debt is yours, and that

you may be required to pay. Let the

collector know that you would like to

validate the debt prior to discussing any

further; obtain their name and address…

then hang up the phone and end the

conversa�on.

Proceed to then send a debt valida�on

le er; cer�fied return receipt requested

(this way you know they received it). The

collec�on agency will have to give you

proof of the debt, such as the original

creditor with account number, the original

balance when sent to collec�on, any

interest or fees that have been charged,

along with any payments applied to the

debts since being sent to collec�ons, and

how to con�nue to dispute the debt, if

necessary.

Be advised that if you state knowledge of

the debt or agree to make a payment then

it could reset the statute of limita�on, and

you could be legally responsible for this bill,

even if it’s not yours.

“ZOMBIE DEBT”: RUN, HIDE, OR

STAND YOUR GROUND

FALL 2018

1

In this Issue: Page 1

“Zombie Debt” - Run, Hide, or Stand

Your Ground

Page 2—3

Just Released: Cleaning Up

Collec$ons

Page 4

‘Twas The Nights Before...

Page 5

Jared’s Five Financial Budge$ng Tips

Page 6

Pre-Purchase Homebuyer Educa$on

By: Sonya Goins-

Singletary,

CCCS Counselor

August 14th, 2018

Liberty Street Economics

By Andrew Haughwout,

Donghoon Lee, Joelle

Scally, and Wilbert can

der Klaauw

H ousehold debt balances con�nued their upward trend in the

second quarter, with increases in mortgage, auto, and credit

card balances, according to the latest Quarterly Report on Household

Debt and Credit from the New York Fed’s Center for Microeconomic

Data. Student loans were roughly flat, a typical seasonal pa$ern in the

second quarter. The Quarterly Report contains summaries of the

types of informa�on that is covered in credit reports, sourced from

the New York Fed Consumer Credit Panel (CCP). The CCP is based on

anonymized Equifax credit reports and is the source for the analysis

provided in this post, which focuses on an area that un�l recently has

received li$le a$en�on: collec�ons accounts.

Third-party collec�ons are quite prevalent; in the past ten years

alone, more than 40 percent of individuals with a credit report had a

collec�ons account at some point. And collec�ons accounts can

reflect an extraordinarily wide array of financial commitments—

although they certainly do reflect tradi�onal consumer debt balances

that have defaulted and been sold to third-party collec�ons firms,

there are also other types of unpaid debts—medical debt collec�ons,

rent payments, traffic �ckets, and even unreturned library books. In

the first paper that looked comprehensively at credit reports, Avery,

Bos�c, Calem, and Canner reported that in 2003, 52 percent of unpaid

collec�ons accounts were associated with medical debts and 23

percent were associated with unpaid u�lity accounts, while only

6 percent were associated with defaulted accounts sold by financial

ins�tu�ons.

The chart below, which is from our Quarterly Report, shows that

collec�ons accounts became more prevalent between 2008 and 2012

as Americans went through the financial hardships presented by the

Great Recession. But there has since been a declining trend in the

blue line which shows the percent of consumers (that is, Individuals

with an Equifax credit report) with a collec�ons account on their

credit report declined from over 14 percent to 12 percent between

2013 and 2017. But in the fourth quarter of 2017, that share suddenly

dropped to only 9 percent.

This sudden and sharp decline was an�cipated by those watching

the credit bureaus and had been discussed by the press in advance of

the change. The downturn was a result of a change in the required

repor�ng prac�ces that impacted collec�ons accounts specifically,

known as the Na�onal Consumer Assistance Plan (NCAP),

which rolled into effect during the second half of 2017. The plan has

many components, including(1) a requirement for more frequent,

detailed, and accurate repor�ng of collec�ons accounts, including

reflec�ng when those accounts have been paid; (2) a prohibi�on

against repor�ng debts that did not arise from an agreement to pay,

or from, medical collec�ons less than 180 days old; (3) the removal of

collec�ons accounts that did not arise from a contract or agreement

to pay; and (4) permission to report any account only when there is

sufficient informa�on to link the account with an individual’s credit

files (requiring a name, address, and some other personally iden�fying

informa�on such as a Social Security number or date of birth).

Impact on Collec ons Accounts Repor ng

Between June 2017 and June 2018—the �me period during which the

NCAP was implemented—the number of individuals with a collec�ons

account on their credit report fell from 33 million down to 25 million.

The number of collec�ons accounts reported also dropped

substan�ally, from more than 66 million collec�ons accounts at the

end of the second quarter of 2017 to about 47 million appearing on

credit reports in the second quarter of 2018. The aggregate

balances reported on collec�ons accounts also declined, by about

$11 billion.

Con�nued on page 3...

JUST RELEASED: CLEANING UP COLLECTIONS

2

Who Benefi�ed?

Here, we examine the individuals who had a decline in the number of

collec�ons accounts reported on their credit reports in the first

quarter of 2018. As may be expected, the majority of these

individuals had rela�vely low credit scores to begin with. Nearly

9 percent had no scores at all—mostly collec�ons—only credit

records too thin to actually be scored. And nearly 80 percent of the

individuals in this group had credit scores below 660 before the drop

in accounts, as shown in the chart below. Only a very small share had

very high scores. Overall, these individuals had higher delinquency

rates on other debts besides their collec�ons accounts—in fact,

33 percent of them had some kind of delinquency in their credit

accounts, compared to only 8 percent of everyone else.

A Mixed Impact on Credit Scores

We find that the impact on individuals of removing at least one

collec�ons account from a credit report was rela�vely small on

average. Because the vast majority of people in this group had very

low credit scores and flawed credit histories to begin with, the effect

of these collec�ons accounts being removed was modest overall, with

an 11 point increase in the Equifax Risk Score on average. However,

there is considerable varia�on in observed credit score changes. The

distribu�on of score changes is shown in the chart below:

Score Down:

About 20 percent of individuals saw a decline in their credit score,

very likely reflec�ng a worsening in other nega�ve aspects of their

credit history during the same quarter. This means that the credit

score change we report is not en�rely a$ributable to the removal of

collec�ons but would incorporate other possible contemporaneous

changes.

Score Up, a Li�le:

The most common impact of the NCAP was no change or a small

credit score increase—an average 11-point increase during the

quarter the collec�ons accounts were removed; just about half saw

an increase of less than 20 points.

Score Up, a Lot!:

However, a nontrivial 18 percent of affected individuals saw their

credit scores increase by more than 30 points. Those who saw the

largest boost to their scores were generally those with ini�ally very

low credit scores. For example, those who saw a 40 or more point

increase in their score began with a 529 on average, and ended with

an average of 588.

Disclaimer

The views expressed in this post are those of the authors and do not

necessarily reflect the posi$on of the Federal Reserve Bank of New York

or the Federal Reserve System. Any errors or omissions are the

responsibility of the authors.

For full ar�cle, please click: Just Released: Cleaning Up Collec�ons

JUST RELEASED: CLEANING UP COLLECTIONS

3

4

‘TWAS THE NIGHT(S) BEFORE...

A nother swiftly approaching holiday season… Have you

started planning yet? Well… if not, you likely aren’t alone. In less

than 3 months a busy schedule lies ahead; Family gatherings and

visiting relatives, attending parties and potlucks, entertaining the

kids while they are eagerly home from school, and of course…

Shopping. This should be the time of year to enjoy, and with the

right planning, of both your time and your finances, you can have

a great holiday season!

Like most successful endeavors, this will

start with a detailed plan. Ideally this

should happen earlier in the

year; whether you are pu(ng money

aside in a savings club, or purchasing gi)s

intermi*ently throughout the year.

Perhaps that wasn’t the case this

year, do not fret! You can s-ll have a

great holiday season if you focus your

a*en-on, and inten-ons, on these 5

specific recommenda�ons and �ps to

maximize your dollars:

1 Make a list, and check it twice. Determine the amount you

want to spend on each and every person, no matter the

price of the gift. Carry the gift list with you so you can keep track

of your purchases. This will help to limit your purchases to what

you initially planned and eliminate any impulse spending. Don’t

give in to discounts and sales if it means you will go over your

allotted budget.

2 Tame your expectations. This does not mean you have to

sacrifice or leave people off your gift list, but more of

in-depth look at your current personal financial situation to see

what you can comfortably afford. Perhaps you have to reduce

the amount you normally spend on your children, your

spouse, or your best friend. You shouldn’t feel bad, as almost

certainly your loved ones wouldn’t want you feeling unnecessary

financial distress over a few gifts. If you have children, you can

also use this as an educational experience by helping them

better understand the importance of family budgeting.

3 Get creative. Nothing is better than receiving a gift that

someone put thought and effort into, and the best way to

create that gift could be by making it yourself. This could be

artwork, pottery, custom-made CD’s, photo albums, or

something sweet like holiday cookies! You could also simply

spend quality time with a person by treating them to a

concert, ball game, or a movie. And never forget the emotional

value of a hand written note or card.

4 Shop around. There are many ways

that you can shop in order to save

money. If you are comfortable shopping

online, you can often find great value

through sales or online coupon sites

such as Groupon.com. If you feel it

would be worth investing the time and

potentially testing your patience to the

limits, Black Friday and Cyber Monday

could be great opportunities to net big

savings. Keep an eye out for sales year

round and take advantage…But only if

it’s on your list!

5 Don’t overextend yourself. While you may be sticking to

your list, you still need to make sure you are spending

wisely. Pay with cash as much as possible, and if you absolutely

have to use credit, limit to only one card. You don’t want to

worry about paying off your past purchases into the following

summer, as this could be the -me that you are planning for the

next holiday season! Now and go -ghten up your plan, put a bow

on it, and have yourself a wonderful holiday season!

By Robby Dunn

Vice President of Counseling

JARED’S FIVE FINANCIAL BUDGETING TIPS

5

By Jared Buckner,

CCCS Counselor

P��� ����

Bring your lunch, and dinner if need

be, to work in order to minimize

ordering out and buying food. You

have heard this �p before many

�mes, because it truly can save you

a lot.

C��� � ���

Save all that loose change you obtain

on a daily basis, or find in your car or

laying around your house. Put the

coins in a jar, can, or container and

try not to touch for at least 6 to 12

months. You’ll be surprised how

much you have saved. Use this

money to buy gi's, or treat yourself

to something nice.

C����� ���� �������

Limit yourself to only charging 30%

of the actual credit line on your

credit card, and pay off in full each

month if you are able. If you cannot,

be able to pay the balance off in a

few months’ �me. Refrain from using

the credit card un�l the balance is

fully paid off.

F�������� ���������

Educate yourself on financial

well-being topics by a0ending

educa�onal courses, whether it be in

person or on-line. Consider a0ending

a CCCS financial educa�on

workshop! :)

C������ �������� ������

This can be very difficult, but it is

vital in becoming financially stable.

Try and only purchase what is

needed, and limit purchasing “fun

stuff” or unnecessary items to a

quarterly or semi-annually basis,

while giving yourself a manageable

spending limit. It is natural to want

to treat yourself or splurge, but be

careful as you don’t want to put

yourself in a posi�on of financial

regret.

“It is a blessing and an honor to be able to assist the various people that walk through our doors, and

although we are not first responders, we help people and save lives every day, just like they do.”

-Jared-

CHIEF EXECUTIVE OFFICER

Paul C. Atkinson

PRESIDENT & CAO

Noelle Carter

BOARD OF DIRECTORS

Mark J. Mendel—Board Chair

Senior Vice President, M&T Bank

Customer Asset Management

Jason Houseman—Vice Chair

Vice President, Corporate Banking

Citizen’s Bank NA

John Eagleton—Treasurer

President, Steuben Trust Company

Nancy Blaschak—Secretary

Blaschak Consulting

Marylou Borowiak

Community Leader & Consultant

Karla Gadley

Community Development Officer—Senior Vice President, Five Star Bank

Anthony Gutowski

Vice President—Commercial Relationship Manager, Evans Bank NA

Nancy LaTulip

Vice President, Retail Banking Officer, Lake Shore Savings Bank (retired)

Kevin McNamara

Chairman, Millington Lockwood

Catherine Roberts

Senior Vice President—Community Action Organization of WNY

CCCS is a member of the National Foundation for Credit Counseling (NFCC), accredited by the Council on Accreditation of Services for Families & Children (COA), a member of the Better Business Bureau,

and is a certified HUD housing counseling agency.

6

PRE-PURCHASE

HOMEBUYER EDUCATION

C CCS of Buffalo understands that

purchasing a home can be a very

exci�ng �me, as well as a newfound

responsibility in your life. Whether one is

currently in the process of purchasing a home,

or just beginning to consider the idea of being a

homeowner one day, we can help you prepare.

CCCS of Buffalo offers a homebuyer educa�on

course via a free monthly workshop offered at

our main loca�on in West Seneca; typically on

the last Saturday of the month. The workshop is

six hours in length, covering topics such as

managing your budget, understanding credit,

the process of obtaining a mortgage, shopping

for a home, and managing your finances. The

course also can also be taken online. Upon

comple�on, individuals will be issued a

cer�ficate of comple�on which is o&en required

by federal, state, and local grant programs and

the First Home Club. In 2017, 182 individuals

par�cipated in our Pre-purchase/Homebuyer

educa�on. We are pleased to offer this service

to our community, and be of assistance in

helping them achieve their goal of being a

homeowner.

First Home Club

Schedule an appointment with a CCCS cer�fied

financial counselor to see if you may be eligible

for the First Home Club, a grant program

designed for first-�me home buyers. For every

$1 you save in a dedicated First Home Club

savings account, you will receive an addi�onal

$4 in matching grant funds, up to $7,500

towards the down payment and closing costs of

your home from the Federal Home Loan Bank of

New York.