Home » 2009 » December » Page 2

Archive for December, 2009

Newer Entries »
Saturday, December 12th, 2009

Personal Finance News Roundup: 12/12/2009

This week, many November numbers about money and credit were released, with some surprising findings. Here’s a summary of a few important figures.

November Consumer Bankruptcy Filings Down 18 Percent

The American Bankruptcy Institute (ABI) reports that personal bankruptcy filings decreased 18 percent last month, compared to October’s numbers. Specifically:

  • Total filings: 112,152 consumers filed for bankruptcy in November 2009, compared with 135,913 in October.
  • Increase from 2008: A year ago, in November 2008, 99,925 consumers filed for bankruptcy. This year’s figure represents a 12 percent jump.
  • Chapter 13 filings: Only 29 percent of consumers who filed for bankruptcy did so under Chapter 13 of the U.S. Bankruptcy code last month, a rate unchanged from October.
  • Yearly estimate: Sources predict that total bankruptcies in 2009 will total more than 1.4 million.
  • Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
  • Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
  • Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

Retail Sales Drop Surprise 0.3 Percent in November

However, this figure is not considered comprehensive, and will be reevaluated after the government releases its sales data on December 11th. Still, the initial figure has some retailers worried that this year’s holiday shopping season will mirror last year’s, when many Americans were holding onto their money after the tumult of the stock market’s crash.

The retail figures, quoted in an msnbc.com article, apparently don’t include online sales, sales from electronics chains or sales from Wal-Mart Stores, Inc., three groups the government’s figures will cover.

Report: Online Fraud Down Overall

In a survey out this month on online scams, the security company CyberSource reports that web fraud has decreased by about 18 percent in the United States in Canada since 2008. Here’s a closer look at the findings:

  • Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
  • Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
  • Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

The dip in fraud doesn’t mean you should be any less vigilant when shopping online, though. Be sure to guard your credit card numbers carefully and only shop on secure web sites!

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , , ,
Posted in Economic News: How Are We Doing? | No Comments »

Friday, December 11th, 2009

Federal Reserve Proposes New Limits on Store Credit Cards

According to the Wall Street Journal, the Federal Reserve has proposed new regulations that would restrict retailers' ability to issue store-specific credit cards. Many major retailers, it seems, are not happy about the prospect.

Prove You Can Pay

The new proposal, if adopted, would require store-card applicants to prove their ability to pay their bills when they apply for their cards. Many commentators believe this would amount to presenting a pay stub before being able to fill out a form.

  • Based on the Credit CARD Act: One provision of the Credit CARD Act of 2009, set to take full effect in February 2010, requires lenders to verify that borrowers are capable of repaying loans before lending money. The proof of income requirement for in-store cards is, apparently, an application of this provision. This may help prevent future bankruptcy filings, as borrowers may be less likely to take on more debt than they can handle.
  • Displeasure from retailers: Perhaps unsurprisingly, retailers are less than thrilled about the potential for this rule to change the way they operate. Many retailers currently offer tempting incentives to shoppers to open store cards, including one-time discounts and rewards programs.
  • Support form consumer advocates: On the other side of the coin, though, those concerned primarily with consumer rights have hailed the proposed measure as an important move toward limiting too-easy credit.

How Well Do We Pay?

So how likely are Americans to default on their store-specific cards? Sources indicate that store-branded (also called private-label) cards tend to be higher than general purpose plastic.

This makes sense: if you’re struggling financially and only able to make payments on some of your cards, it’s smarter to stay current on cards that can be used at a variety of locations rather than on one that’s only good at a single retailer.

But, it seems, even this less-than-stellar track record doesn’t make retailers eager for a change. Here’s why:

  • Sales volume: WSJ reports that Macy’s, one major retailer that issues a store card, saw more than half of all its sales bought on store cards in Q3 of this year.
  • Salary is a private matter, and few Americans are likely to be comfortable with handing evidence of their income to a stranger behind a register, no matter how much they make.

The Federal Reserve has not yet announced when this proposed rule will be completed.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Economic News: How Are We Doing? | No Comments »

Thursday, December 10th, 2009

Call Your Representative and Demand Mortgage Modification in Bankruptcy

An amendment being debated in the House of Representatives could provide powerful protections for homeowners going through bankruptcy. This legislation would allow bankruptcy judges to modify mortgages in Chapter 13 cases, providing a huge benefit for everyday hardworking Americans who are facing home foreclosure. The House may start voting on this amendment as soon as today!

Please take the steps below then share with your family and friends via email, Facebook, or any way you can get the word out!

  1. Phone toll free at: 877.354.4958
  2. Put in your zip code
  3. When you reach the receptionist:
    • State your name
    • Say that you are a constituent
    • Ask the Representative to vote FOR the Conyers-Turner-Lofgren amendment (#201) to the Financial Services Reform bill.

The amendment is being fiercely opposed by the business and financial services communities. By calling your representative in support of this amendment, you can fight corporate greed and help your fellow Americans. This amendment will cost taxpayers NOTHING and will save millions of homes from foreclosure! Take action today!

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Bankruptcy News and Events | No Comments »

Thursday, December 10th, 2009

What It Takes to Get a Debt Canceled (or Reduced)

If you’re struggling with credit card debt, you’re certainly not alone. Research indicates that more than three-quarters (78 percent) of American households have at least one credit card, and among this group, the average debt is more than $10,000.

While credit card debt can be a significant financial burden no matter what the national economic climate, when the economy weakens, paying off such debt can seem almost impossible. But, if you make a commitment to eliminate your debt, you may have some alternatives to paying the entire amount you owe.

Ask for a Reduction

Deciding to pay off your credit card debt is an important part of actually becoming debt free. After you’ve laid out all your latest statements and calculated what you owe, it’s time to contact your creditors.

  • Research your history: Review old bills and notices from your credit card issuers. Take notes on what accounts you’ve kept up to date, how much you owe where and what interest rates are on each card.
  • Place a call (or several): If you’re like many Americans, you have more than one credit card. Choose the card you’ve been most diligent about paying on time and call the customer service number provided on the bill.
  • Explain yourself: Explain to the representative that you’ve decided to pay down your balance, and you were wondering if they could lower your interest rate. Remain polite and point out the positive history you have with the account if you need a bargaining chip.

Repeat with as many of your cards as you can. Even if none of your issuers agrees to lower your rates, the worst anyone say is “no.”

Write a Letter

If you think your financial circumstances will prevent you from paying down your credit card debt regardless of your interest rates, it’s time to ask for a bit more.

  • Contact your creditors. If your attorney believes that you are judgment proof (that is, that your creditors couldn’t collect any money even if they sued you), you can write to your creditors to ask for a complete cancellation of your debt.
  • Contact a lawyer. A local attorney can help you determine whether your finances are truly as dire as you think. If they are—that is, if you have little enough income and few or no valuables that could be sold to raise money—you may be a good candidate for debt cancellation.

This method has worked in the past, as this post from Creditbloggers.com reports. Remember, credit card debt doesn’t have to ruin your finances. A little determination can go a long way.

The ultimate way to cancel credit card debt? Bankruptcy. In a Chapter 7 bankruptcy case, you may be able to completely wipe out 100 percent of your credit card debt, plus medical debts, utility bills and more.

Additional Resources

Credit Card Facts and Stats (PDF)

The Burden of Credit Card Debt (PDF)

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Your Credit Score | No Comments »

Wednesday, December 9th, 2009

Retirement Home Bankruptcy Filings on the Rise

A recent report from Newsweek explores the troubling trend of financial distress among retirement communities which is causing many to file for bankruptcy. If you or someone you care about is either living in or considering moving into such a facility, be sure to read the article. Here’s the shorthand of what you need to know.

High Costs, Tight Budgets

The article indicates that both retirement community chains (like Sunrise Senior Living Inc.) and smaller, independent communities have been hit hard by the recession, partly because of the following:

  • Expensive care: Between medical care, insurance costs, equipment and other miscellaneous costs, catering to the elderly tends to be a high-cost endeavor.
  • Medicaid restrictions: The budgets allocated by this government health plan are often difficult to work around for institutions.
  • Fixed income: Retirees no longer receiving significant paychecks can be reluctant to pay large sums for their living arrangements. These big costs can strain their tight budgets.

Because of these and other factors, many retirement communities have apparently had to raise their fees, sell out to large chains or close their doors altogether – all of which can be disruptive to residents.

Protecting Your Money

Many residential retirement facilities charge monthly fees in addition to a sort of “down payment” due at the beginning of a person’s stay – usually, this payment is refundable at the time of a resident’s death or decision to leave. But, according to Newsweek, if such a facility filing bankruptcy is the right course, for bankruptcy, those deposits can be used to pay off creditors instead, which can be terrible news for residents.

So what can you do to prevent serious financial loss from a failed retirement home?

  • Contact a lawyer: Before signing any documents, consider enlisting the help of an attorney, who will know what clauses to look for in a contract. Review this checklist  of questions to consider before signing onto a retirement home.
  • Research the facility: Moving into a retirement home requires a bit of legwork anyway, so taking the extra time to delve into a facility’s financial history shouldn’t be too taxing. Check out these suggestions for choosing a retirement facility from the Department of Health and Human Services.

Unfortunately, some financial disasters are well concealed until they erupt. Remember: knowledge and preparation are your best defenses against financial turmoil in any area of life.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Economic News: How Are We Doing? | No Comments »

Saturday, December 5th, 2009

FDIC: One Quarter of Americans Unbanked or Underbanked

At the beginning of 2009, the Federal Deposit Insurance Corporation (FDIC) initiated an examination of the unbanked and underbanked people of the U.S. as part of Census data collection.

The report was released this week, and shows some worrying trends about financial institution usage, particularly among minority populations.

  • Unbanked: This term refers to people who have neither checking nor savings accounts, and who rely primarily on non-bank financial institutions (like check cashing services, payday lenders, refund anticipation loans, etc.) for their financial needs.
  • Underbanked: This refers to people who have either a checking or savings account, but rely on alternative financial sources at least once or twice a year.

The Banking Study

According to the executive summary of the report, its goal was to address a gap in reliable data on the number of unbanked and underbanked households in the U.S.

The issue matters because those without bank accounts lose out on access to lower-cost financial management. Bank use can also permit people to build credit histories and establish financial stability – in other words, it’s in the best interest of the U.S. as a whole to improve access to banks for everyone.

Here’s a look at the hard numbers:

  • 25.6 percent of American households (about 60 million adults) are unbanked or underbanked.
  • A breakdown by race shows that 43.3 percent of Hispanic households, 44.5 percent of American Indian/Alaskan households and nearly 54 percent of black households are unbanked or underbanked.
  • At least 71 percent of un- and underbanked households have incomes of $30,000 per year or less.
  • The most common reason people offered for not having a bank account was feeling that they did not have enough money to justify one.
  • About two thirds of unbanked households use one or more of these financial tools: non-bank money orders & check cashing, payday loans, pawn shops, rent-to-own agreements and refund anticipation loans.
  • About one quarter of unbanked households use none of the aforementioned services, which suggests that cash is their go-to commerce tool.

Opening and maintaining bank accounts is an important step toward financial stability for individuals and households. On a larger level, the high numbers of unbanked Americans can be seen as one symptom of our country’s varied economic woes, as little savings can often lead to bankruptcy if debts become unmanageable.

Additional Resources

Full FDIC Report (PDF)

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Predatory Lending | No Comments »

Friday, December 4th, 2009

Health Insurance for the Unemployed: A Costly Concern

Thanks to the health care overhaul bills currently working their way through the U.S. Senate and House of Representatives, the high cost of health insurance in America is on the public’s mind. And now, with a key provision of the stimulus bill expiring this month, another aspect of the health care dilemma has come to the surface.

Job Loss and Health Insurance

Because many Americans get medical insurance through their employers, job loss can be a double blow, meaning the loss of income as well as coverage. To address this concern, lawmakers included provisions for health insurance in the stimulus bill passed in February:

  • Subsidized coverage: The stimulus provided funds to reduce COBRA payments by 65 percent for those who wanted to keep their company’s health coverage after losing their jobs.
  • Limited offer: Naturally, the government assistance came with boundaries: to be eligible, people must have been laid off between September 1, 2008 and December 31, 2009. Further, subsidized coverage only lasts for nine months.

Because the measure went into effect in March of this year, thousands of unemployed Americans are now facing huge jumps in the cost of their health coverage.

In fact, sources indicate that the average affected family will see their costs soar $722 per month – from $389 to $1,111. In many states, that amounts to the vast majority of unemployment payments; in some states, it exceeds possible unemployment payments.

Hope on the Horizon: Bills in Congress

Luckily, the situation is not completely without hope. In fact, the Associated Press reports that Congress is currently considering bills that would add an additional $100 billion to unemployment benefits (including the COBRA subsidy).

Here’s a numerical breakdown of the proposed legislation:

  • $85 billion would be funneled toward extending emergency unemployment payments
  • $15 billion would fund the expanded health care coverage

In 2007, when unemployment hovered around 4.8 percent, about $43 billion was reportedly spent on unemployment costs.

While some measures of the economy suggest we’re pulling out of the worst of the recession, many experts still expect unemployment levels to remain high for another year or so, which means these problems likely won’t disappear any time soon. And as unemployment often leads to bankruptcy, it may signal more problems down the line.

Additional Resources

Special Report: Expiration of COBRA Subsidy (PDF)

Unemployed and Uninsured (PDF)

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Unemployment | No Comments »

Wednesday, December 2nd, 2009

Bankruptcy Rate Drops in November

The number of Americans filing bankruptcy fell in November, according to the American Bankruptcy Institute, but the number remains above last year's filings.

A total 112,152 consumer bankruptcy petitions were filed in November, down 18% from the 132,749 filed in October. Even though the U.S. Courts were open fewer days in November, the number shows the bankruptcy rate slowing, though moderately.

The average daily filing was 6321 in October, and 5903 in November.

Still, the November statistic remains 12% above the November 2008 bankruptcy figure, when 99,925 consumers filed.

A chart at the Calculated Risk Blog predicts that total filings for the fourth quarter of 2009 will come in slightly below Q3. If December continues the downward trend, it would be the first time that quarterly filings decreased since the new bankruptcy law took effect in the third quarter of 2005.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Bankruptcy News and Events | No Comments »

Tuesday, December 1st, 2009

Student Loan Bankruptcy Case Argued in Supreme Court

The U.S. Supreme Court began hearing today the case involving a debtor whose student loans were discharged in a Chapter 13 bankruptcy—though possibly against the U.S. Bankruptcy Code.

Student loans are notorious for being difficult to discharge in bankruptcy, even in a Chapter 13 bankruptcy. In order to have student loan debt eliminated, a debtor must prove undue hardship.

In the case before the Supreme Court, the debtor, Francisco Espinosa, was allowed to enter a Chapter 13 plan without ever proving undue hardship to the bankruptcy court, according to a story on National Public Radio.

The Bankruptcy Case

In 1988, Espinosa was a baggage handler for America West Airlines when he began taking computer drafting classes at a technical school. Espinosa took out four student loans totaling over $13,000 from United Student Aid Funds.

After earning his degree, Espinosa was unable to find work in the computers field, and continued working at America West. However, that company was facing its own financial strain, and began cutting salaries. In 1992, Espinosa, a college graduate earning $6 an hour, filed bankruptcy.

According to the NPR story, Espinosa agreed to repay the full amount of the student loan debt through a three-to-five year Chapter 13 plan—but not the $4,000 of interest accrued on the loan. USAF was notified several times of the terms of the plan, and never objected to the case.

In 1997, the bankruptcy court declared Espinosa's debt repaid, and issued him a debt discharge.

However, two years later, USAF issued a lien on Espinosa's tax return for the unpaid interest. USAF claimed that the bankruptcy plan was illegal—11 years after the court confirmed it—because of the undue hardship requirement.

Undue Hardship Hearing Never Held

The student loan company argues that the bankruptcy court should have held a special hearing to determine whether Espinosa's situation qualified as an undue hardship, and should have summonsed USAF to appear in court. Because the hearing was never held, undue hardship was never established, and the loan should not have been dischargeable, USAF argued.

Espinosa's attorney has argued that USAF was properly notified and did not raise any objections at the time. A federal appeals court agreed.

Now it's up to the Supreme Court to decide just when a creditor can raise objection to a Chapter 13 bankruptcy plan—and when the can still collect on debts.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , , ,
Posted in Bankruptcy News and Events | 1 Comment »

Newer Entries »