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ASK KIM
Is it Time to Buy Fannie?
(Page 2 of 2)
by Kimberly Lankford
Protect your credit record
I received a package in the mail that I did not order, followed by a bill. I didn't pay the bill, and now the company is threatening to send it to a collection agency. I understand that this is a common scam, but can it hurt my credit record?
--M.S., Washington, D.C.
Federal law prohibits companies from mailing unordered merchandise and then demanding payment, so you don't have to pay for it, and you don't have to send it back. But be sure you didn't order the item, perhaps by inadvertently joining a club that sends products periodically. Such deals are often disclosed in the fine print when you sign up to receive free trials.
If you're on firm ground, you don't have to do anything. But the Federal Trade Commission recommends sending a letter to the company by certified mail stating that you didn't order the item and that you have a legal right to keep it. If the bill goes to a collection agency and the issue winds up on your credit record, your letter will help you straighten things out.
Next time, mark the unsolicited items "return to sender." "You won't have to pay for anything, including postage," says Maxine Sweet of credit bureau Experian.
401(k) for a co-op
I'm 26 and planning to buy a co-op apartment. Can I tap my 401(k) retirement account? Are there any penalties I might encounter?
--A.M., New York City
Although a special rule allows penalty-free withdrawals of up to $10,000 from an IRA to buy a first home, there's no such break for 401(k)s. In fact, you generally can't withdraw from a company plan unless you're at least 59½ or you leave your job. You probably can, however, borrow from your account. The law permits you to borrow up to half of your account, to a maximum of $50,000. You'll probably get a sweet interest rate (but be aware you can't deduct the interest). Another downside: If you lose your job and are unable to repay the loan, the balance is treated as a 401(k) distribution. It will then be taxed and hit with a 10% penalty because you're under 55.
Worried about WMD
I own a home near Washington, D.C., which is insured by Nationwide. My agent advises me that if the house were destroyed or rendered uninhabitable by a weapon of mass destruction or biological accident, I would receive nothing. He said all home-insurance companies have this exclusion. Is that true?
--F.G., Potomac, Md.
Homeowners policies generally exclude coverage for nuclear, biological, chemical and radiological events, according to Jeanne Salvatore of the Insurance Information Institute. And you can't buy a rider to add that protection, either.
My thanks to Steve Goldberg for his help this month.
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