Archive for May, 2009

Earlier this week we reported on the new credit card regulations passed by the Senate that could be signed in to law as early as Memorial Day. This is good news for consumers tired of seeing their rates jacked for no reason and with no notice.

Many banks and credit card companies cried and complained, saying they needed to be able to change rates at will to stay profitable. Abusing your customers is no way to make money, and it seems Mark Gimein over at The Big Money agrees.

He's got a nice read today about why credit companies should take better care of their customers.

For a single bank to raise rates to a sky-high level is a dangerous strategy. When many banks adopt it, however, it gets much worse. Customers who see the rates on all of their credit cards rise become much less able to pay any of them.

We see it all the time: A temporary financial setback can be severely compounded by fees and fines.

Fortunately, the credit companies will have to change their ways.

And for anyone facing the fees and fines, there are other debt relief options available, such as filing bankruptcy.

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Wednesday, May 20th, 2009

10 Ways to Recession-Proof Your Job

These days, having to get up for work every morning may seem a little less of a drudgery ~ with unemployment rates steadily creeping upward, many of us are just happy to be employed.

And, while there’s no failsafe way to ensure that your company won’t cut your job, there are some techniques to improve your odds of retention.

Here are some tips, culled from a variety of news sources, for hanging on to your employment and your paycheck.

  1. Think Frugal: If you can find a way to cut costs or bring in extra money for your employer, be sure to suggest it and then volunteer to get it started. It could be something as simple as offering to lay in supplies of the office’s favorite coffee when you see it go on sale.
  2. Be Seen: Make sure your boss and coworkers know you’re on duty, especially if you’re putting in extra hours. You can do this without going overboard by greeting everyone with a “hello” when you come in and a "good night" when you're still chugging along at your desk and they're heading home.
  3. Talk Yourself Up: If you’re doing something positive for the company (see first item), don’t hesitate to let your superiors know--but don’t overdo the self-promotion. A simple e-mail to your boss letting her know you’ve gotten a project done early may be all you need.
  4. Get (and Stay) Busy: This is not the time to be "caught" playing Solitaire on your computer. Focus on your work and don’t hesitate to volunteer for new projects.
  5. Take Initiative: Don’t wait for someone to complain about an empty coffeepot or announce beneficial classes being offered. Research the latest skills that might benefit you and your coworkers and send a group e-mail if you notice a speaker or class offered that might improve your productivity.
  6. Stay Current: Find out where your company stands so you won’t be shocked if layoffs do come into town.
  7. Don’t Get Too Comfy: Even if you think your job’s safe, now is not the time to let yourself slack: be punctual and keep your complaints to yourself. Don’t pass up chances to network with others in your field, either--you never know when you may need that connection.
  8. Lend a Hand: Whether it’s volunteering to assist in a new project or passing on the resume of a recently laid-off coworker, take care of your peers. They’ll return the favor.
  9. Stay Informed: Find out what’s going on in your industry, whether or not you think you’ll need the information immediately. You never know when you’ll be in the elevator with the CEO and have a chance to drop something in conversation.
  10. Smile: Don’t underestimate the importance of being pleasant. It’s much easier to let go of grumpy employees than ones who seem happy.

Even if you do lose your job and find yourself in dire financial straits, don’t panic. The government’s bankruptcy Code exists because sometimes, ends don’t meet.

Hang in there: no recession can last forever.

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Score one for the little guy. The U.S. Senate voted overwhelmingly, 90-5, to add regulations to the credit card industry, and the move could save consumers lots of money.

A few differences must be worked out with a similar bill passed in the House, but President Obama said he hopes to sign the law by Memorial Day, and it could take effect as early as this year.

Until the specifics come out, we know that, at the very least, this bill will:

  • Make it more difficult for credit card companies to suddenly raise the rates of all consumers
  • Make it more difficult for the credit card companies to issue fees and other charges to all consumers

This means that consumers struggling to keep up with their credit bills will get some breathing room in the form of lower rates and fewer charges. Consumers will also still have the ability to seek credit card debt relief through bankruptcy. From the Washington Post's coverage:

"This is landmark legislation that is going to make the credit card marketplace more transparent and more fair for millions of consumers," said Travis B. Plunkett, legislative director for the Consumer Federation of American. "In particular, it's going to prevent credit card companies from suddenly and unjustly increasing interest rates."

We'll keep you posted as more details about the final bill emerge.

Filing Bankruptcy and Credit Card Debt

Are you deep in credit card debt? Chapter 7 bankruptcy was designed to eliminate credit card debt. Talk to a bankruptcy lawyer to see if filing bankruptcy could help you.

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A recent BusinessWeek article suggests that some tenants may actually benefit from the weak economy right now.

Rent costs are apparently dipping in major U.S. cities, including Manhattan, which is notorious for high rent costs.

But the savings aren’t limited to just the Big Apple – landlords across the country are reportedly looking for ways to fill their units, whether that means offering freebies or reducing rates for current tenants.

Negotiating Your Rent

So how can you take advantage of this trend to save some cash every month? Try these negotiation tips:

  • If you’re looking for a new apartment: Before signing a lease, put on your bargain shoes. Ask for a rent reduction, a security deposit waiver, free access to available amenities, or whatever else makes sense for your area. Landlords would rather fill an apartment or house for a little less money than normal than lose money by letting it sit empty.
  • If you’re getting ready to renew a lease: If you’ve stayed current on your rent and generally been a good tenant, you may be in a position to negotiate. Consider asking your landlord to lower monthly payments, waive rent increases or spring for new appliances. Decide what you want most and then ask for it: a landlord looking to hang on to tenants likely won’t let you go.
  • If you’re worried about losing your job: Consider asking for a “layoff-proof” lease, which some landlords have begun offering to get people to sign. These agreements come with the understanding that, should you lose your job, you can break the lease with no penalty. This offers you a sense of security about the future and allows the landlord to pick up at least a month or two of rent.
  • If you’ve taken a pay cut recently: Again, many landlords would prefer to keep their units filled – even for less money per month – than let them sit empty. If you’re worried about making your rent, contact your landlord and explain your predicament. Ask for a rent reduction or shortened lease.
  • If your neighbors are moving out: If you’ve noticed moving trucks carting away your neighbor’s belongings, consider asking for a free upgrade. Maybe other apartments in your building have nicer features than yours – you could request to be moved to one of those apartments for no price change.

Remember, negotiating can be fun and rewarding–and the worst anyone can say is “no!”

--With the tough economy, many folks are filing bankruptcy. If you're struggling with bills, talk to a bankruptcy lawyer today.

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Wednesday, May 13th, 2009

Foreclosures Rise Again in April

According to the latest report from RealtyTrac, foreclosures jumped again in April.

CNNMoney.com reports that 342,000 U.S. homes received default or auction notices or were in the process of bank repossession last month.

This translates to one in every 324 U.S. homes involved in some part of the foreclosure process, a number which represents a one percent increase from March and a whopping 32 percent increase from the same time last year.

Here are some hard numbers that paint a picture of how serious this news is for American homeowners:

  • April numbers are the highest ever recorded by RealtyTrac in more than four years of monitoring such figures.
  • Since the start of the real estate bust cycle in August of ’07, more than 1.3 million homes have been foreclosed upon.
  • RealtyTrac’s original forecast of 3.4 million foreclosure filings for 2009 will likely be revised upward after April’s statistics.
  • Though foreclosures are a problem nationwide, 10 states were home to 75 percent of all filings (California, Florida, Nevada, Arizona, Illinois, Ohio, Michigan, Georgia, Texas and Virginia).

Dipping Home Prices Compound the Problem

Some experts are concerned about the effect falling home values will have on future foreclosure rates.

As housing prices keep decreasing, more and more borrowers find themselves “under water” on their mortgages (they owe more than their homes are worth).

This has reportedly led to an increase in people simply walking away from their homes and handing their keys over to the bank, and will likely mean missed payments and defaults for those who choose to stay.

Bank Repossessions Down – For Now

April’s bank repossession numbers actually decreased 11 percent from March, according to sources.

But this isn’t a trend that’s likely to continue: bank repossession is the last stop on the foreclosure train, and as more and more houses enter foreclosure proceedings, more and more will have to complete them in the future.

Chapter 13 Bankruptcy & Foreclosure

If you are one of the many Americans facing the threat of foreclosure, filing for Chapter 13 bankruptcy may provide you some of the relief you need.

Thanks to the protection of the automatic stay, all creditor collection actions (including garnishment, repossession and foreclosure) are typically halted for the duration of your case.

Many bankruptcy filers find that Chapter 13’s three- to five-year repayment plan offers them the time and breathing room they need to get current on their mortgages or at least make alternate living arrangements.

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This morning on the CBS Early Show Vera Gibbons and Harry Smith discussed the dangers of debt settlement companies.

If you're struggling with debt, you may have looked into or even been contacted by one of these companies. CBS concludes what we know about these companies: They don't offer real debt relief.

In fact, these companies rarely provide real debt solutions. And, as CBS reports, with $1 trillion in revolving debt in the United States right now, many people need real debt relief.

So we want you to watch this report, and remind you that the actions and relief that come out of bankruptcy are protected by the U.S. law.

While credit settlement companies aren't regulated, bankruptcy is overseen by courts, judges, lawyer and legislators. This means that when you file bankruptcy, you receive protection that private companies can't offer. In fact, you may be able to file charges against a creditor if they try to collect debts that were resolved by bankruptcy.

But before you make a decision on bankruptcy or any other debt relief option, be sure to get information and answers to all of your questions.


Watch CBS Videos Online

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Thursday, May 7th, 2009

Consumer Credit Shrank Again in March

Recently released numbers from the Federal Reserve show that consumer credit in the United States contracted again in March.

According to a recent Bloomberg article, consumer credit fell by $1.11 billion in March, after an $8.1 billion plummet in February.

This figure isn’t jaw-dropping, but is significantly higher than the $4 billion drop predicted by many economists.

At a time when the jobless rate is higher than it’s been in 25 years,  a decrease of this magnitude isn’t entirely surprising, but March’s drop was the largest since records were first kept in 1943.

Here’s a quick summary of some of what the report found:

  • Both revolving and non-revolving debt went down by more than $5 billion in March.
  • Because most banks and lenders are expecting more delinquencies and financial losses this year, many are tightening lending standards, making loans harder to come by.
  • Car sales decreased 37 percent in March of 2009 compared to March of 2008; however, sales incentives were up about 30 percent to approximately $3,169 per vehicle.
  • Consumer spending was up at a rate of about 2.2 percent in the first quarter, a potentially promising figure, since it represents an increase over last year.

The (Potentially) Good News About the Economy

The results of the Federal Reserve’s stress tests for banks could improve consumer and investor confidence, according to some sources.

These tests, designed to determine how well suited many large banks are for difficult economic times, are expected to show which banks need to raise capital and which ones do not.

Preliminary figures show that several major banks, including JPMorgan Chase & Co., American Express Co., Goldman Sachs Group, Bank of New York Mellon Corp., MetLife Inc., Capital One Financial Corp. and State Street Corp. have been assessed as not needing to raise any more capital.

Some news outlets have speculated that some of these banks may try to repay TARP money lent by the federal government.

How You May Be Affected

Overall, if you’re looking to take out a loan or open a new credit card account, you may still find serious roadblocks in your way.

Banks are apparently still holding back on offering consumer loans.

This may not bring enough good news to all-- people are still in financial turmoil and filing bankruptcy.

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Good news! After issuing a “Call to Action” last fall, the National Foundation for Credit Counseling has negotiated with some of America’s biggest credit card issuers on behalf of us, the struggling consumers.

While we wait for the Credit Cardholders’ Bill of Rights to work its way through Congress, this could help some of us ease our debt burdens.

Credit Card Debt Repayment Plans, Other than Filing Bankruptcy

Traditionally, some people with serious credit card debt have opted for a modified repayment plan with their card issuers rather than filing bankruptcy.

But, thanks to the recession, even negotiated plans are now out of many borrowers’ reach. Here are some sobering numbers from the NFCC:

• More than 405,000 Americans were rejected from repayment plans last year because they couldn’t afford even modified payments.
• Currently, only 25% of borrowers qualify for repayment plans, down from 33% just a few years ago.
• Last year, borrowers averaged $24,000 in debt, with only $39,000 in annual income.

Basically, what was happening was that fewer and fewer Americans were qualifying for repayment plans to eliminate their debt, and many of those “rejected” from such plans opted for bankruptcy protection instead.

Because credit card debt is often discharged completely in bankruptcy, card issuers were losing money – rather than getting slightly less money than they were owed in a repayment plan, they were getting nothing at all from a bankruptcy.

The Changes

Before the NFCC’s negotiations, most credit card repayment plans already included the following:

• Interest reductions (and, in rare cases, forgiveness)
• Fee waivers after enrollment
• Agreement (from borrowers) to refrain from further debt accumulation

Under these terms, the average borrower apparently took about five years to repay credit card debt, with payments of about $540 each month.

But, with the new terms proposed by the NFCC, which include further cuts on interest and fees (but no deductions of principal balances), the average family would only have to pay about $420 per month for five years.

Though this savings is admittedly not enormous, it’s significant enough that it could mean more families qualify and are able to maintain payments on their mortgages/rent and other necessities.

Which Credit Card Issuers Have Signed On?

The Foundation reports that the top 10 U.S. credit card issuers have agreed to the new repayment terms, including Bank of America, Capital One, Chase Card Services, American Express and Discover.

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Sometimes, one traumatic life event causes another – as when a serious illness, injury or divorce pushes you to file for bankruptcy.

Bankruptcy after divorce can be tricky to understand, largely because both involve complex legal systems. Here are the basics of what happens in a bankruptcy after a divorce:

No Joint Filing Bankruptcy Petitions after Divorce

Once you and your spouse are legally divorced, you no longer have the option of filing a joint bankruptcy petition. But, depending on which chapter of bankruptcy you choose, one spouse’s filing could still affect the other.

Filing Divorce: The Division of Debts and Assets

As you probably know, divorces usually involve a division of marital property and debts between the divorcing parties. Depending on the laws in your state, you and your spouse will take responsibility for various debts and possession of various belongings.

The Chapter 7 Debt Discharge

The bankruptcy court does not always recognize the designations of the divorce court, though.

If one spouse files for Chapter 7 bankruptcy and receives a discharge for a debt that was jointly held during the marriage, creditors may have legal recourse to collect that debt from the other spouse.

The Chapter 13 Repayment Plan

The Chapter 13 repayment plan often allows bankruptcy filers to protect cosigners (and co-debtors) who have not filed a bankruptcy petition. Because many debts are eventually repaid in Chapter 13 bankruptcy, the likelihood that the other spouse would have to take on responsibility for a debt is typically lower in Chapter 13.

But Keep in Mind...

Although bankruptcy offers financial relief for many types of debt, some debt cannot be discharged by the bankruptcy court, such as:

• Alimony/spousal maintenance
• Child support
• Most student loans
• Most tax debt
• DUI & other criminal penalties and fines

If you’re worried about being able to afford child support and/or alimony payments (for example, because of a recent reduction in your income), you may be better off consulting with your divorce attorney about modifying the terms of your divorce than filing for bankruptcy.

However, bankruptcy can offer you relief by excusing you from other, less essential debts and thus freeing up more of your money to put toward the maintenance of your children and former spouse.

As always, consider seeking legal counsel before proceeding with bankruptcy, either before or after a divorce case.

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