Dear Liz: I want to dispose of my older car but don't want to face the hassle and intrusion of selling it. I'm having trouble finding a reputable car donation organization in my area. I checked with a charity watchdog site but it didn't have information on specific charities to use. Can you recommend an organization that operates efficiently and actually gives a substantial amount of the car proceeds to charity?
Answer: Start paying attention to which charities heavily advertise their car donation programs on commercial radio and TV stations — and strongly consider avoiding them.
Many of these ads are paid for by for-profit companies that wind up keeping most of the proceeds from car sales. "Even the most reputable of the agencies that handle these transactions keep nearly 50% of the car's value for their troubles," notes watchdog site Charity Navigator, adding that other, less scrupulous entities keep 90%, or even more.
By contrast, charities that handle the donations themselves get to keep all or at least most of the proceeds. But finding such charities may not be easy.
Instead of starting with an ad, start with a charity you admire. Call and ask if it accepts car donations, or check its website. If the charity accepts such donations, ask if it handles the donation itself or contracts out to another entity. If it contracts, ask how much of the proceeds are donated to the charity. If you can live with that percentage, go ahead with the donation.
If you're really stumped, check out your local public radio or television station. Many accept vehicle donations, and although the sales may be contracted out, the nonprofit typically ends up with the bulk of the proceeds.
Finally, remember that your tax deduction, if any, typically will be limited to what the car sells for at auction. And you won't get any tax break if you don't itemize your deductions on the relevant year's tax return.
Bankruptcy won't erase child support
Dear Liz: Why are child support arrears reported to credit agencies if they cannot be discharged in bankruptcy? And, why is it one can discharge some federal income taxes in bankruptcy but not child support?
Answer: Child support is not a run-of-the-mill debt. It's a family support obligation, and one of the few debts that can land you in jail if you ignore it.
That's because the welfare of your kids is at stake. The Internal Revenue Service will still be able to carry on if you negotiate a settlement or discharge some of your debt in bankruptcy, but skipping your child support obligations could doom your children to poverty, poor health and a host of other ills.
Although you can't erase your obligation in bankruptcy, a Chapter 13 bankruptcy filing — which involves a payment plan — may enable you to catch up on any missed payments. A bankruptcy attorney can provide details.
In any case, the ability to erase a debt in bankruptcy isn't among the criteria for reporting debts to credit bureaus. Other debts that typically can't be discharged, such as student loans, also show up on credit reports.
Retirement shouldn't affect credit score
Dear Liz: I recently passed my full retirement age for Social Security. What effect will retirement have on my credit scores, which are quite good?
Answer: If you'll have sufficient income to cover your bills and you continue handling credit responsibly, retirement shouldn't have an effect on your scores.
The leading scoring formula, the FICO, doesn't include information on income or employment. What matters most is paying your bills on time, not using too much of your available credit and applying for new credit sparingly. If you continue those good habits, your scores should continue to thrive.
Liz Pulliam Weston is the author of the book "Your Credit Score: Your Money and What's at Stake." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at http://www.asklizweston.com. Distributed by No More Red Inc.