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Monday, May 31st, 2010

New Government Site Puts Financial Information in One Place

The federal government has launched a centralized website to provide consumers with financial information about a variety of subjects.

The site, MyMoney.gov, includes resources from 12 government agencies (including the FDIC, the Federal Reserve, the National Credit Union Association and more), which collectively make up the Financial Literacy and Education Commission.

Centralized Financial Help

The genius of this website is that it brings together in one easy-to-navigate place useful information that had been buried on the websites of a dozen departments. Basically, the site is divided into three sections:

  • Life Events: This section provides guidance and information about major life events that have a financial component. Topics addressed include having or adopting a child, attending college, marrying or divorcing, getting a home mortgage, starting or losing a job, starting or buying a business, planning for retirement and dealing with death. It’s nice to have a resource like this because it’s often easy to overlook the financial aspects of an event when focusing on more emotional features.
  • My Resources: This section offers information for various groups of people, including youth, teachers, parents and caregivers, women, employers, military, retirees, researchers and non-profits. Whether your questions are personal or business-related, you can find information targeted specifically to your demographic.
  • Tools: Here, you can find calculators, budgeting worksheets and checklists to help you plan for or better organize major financial decisions, all designed to help you take control of your finances and avoid the traps that often lead to bankruptcy.

Navigating the Site

The layout of the site is pretty intuitive – if you’re looking for basic information, the “Life Events” category is probably the best place to start, since it provides articles that give helpful overviews.

For example, in the “Going to College” section, there are pages called “Get the Basics: How to Pay for College,” “Money for College: Federal Student Aid Information,” “Using Savings Bonds for Education” and more.

Then, you can look to the “Youth” section under “My Resources” for tips on how to handle money and credit while pursuing a degree.

Finally, you can turn to the “Tools” to find checklists to make sure you aren’t forgetting important steps as you begin the process of applying to colleges and figuring out how to finance your education.

Once you select an article or checklist you want to read, MyMoney.gov provides you with a link to the page of the department that hosts the information, making the whole process pretty painless.

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Saturday, May 29th, 2010

Learn from Your Fake Financial Mistakes

Unfortunately, one of the best ways to learn what an online scam looks like is to encounter one. And if you've had too much experience with online scams you could still be reeling financially or considering bankruptcy.

The good news: The Federal Trade Commission has announced a new website to help consumers experience a variety of realistic online scam situations without actually losing money. By experiencing these scams in a risk-free environment you'll be better equipped to avoid them in real life.

The latest of these sites, Esteemed Lending Services, mimics advance-fee loan scams that have been known to drain consumers of their money without offering anything in return.

Know Financial Scam Warning Signs

When you click on any link on the Esteemed Lending Services page, you’re brought to a page that explains that, had the site been real, you could have been scammed. Then, in order to arm consumers with the tools necessary for avoiding scams, the FTC explains what to expect from advance-fee scammers:

  • Professional-looking web sites: Often, the FTC notes, scam companies will have a legitimate-seeming online presence and a trustworthy-sounding name.
  • Guaranteed loans: Any offer that guarantees you’ll be approved, regardless of your credit history, should signal a scam to you. Legitimate lenders need to know your credit history in order to give you reasonable loan terms.
  • Unclear fees: Real lenders disclose their fees upfront and do not require you to pay them until your loan has been approved. Scammers often charge fees upfront – and then never follow through with their promises of loans.
  • Phone loans: In the U.S., it’s against the law to promise a loan over the phone and ask for payment before the money is issued.
  • Slightly off names: One trick some scammers use is to give themselves a name and logo that resemble those of a legitimate company. If you’re not paying attention, you could easily be confused.
  • Lack of proper registration: If a company isn’t registered in your state, chances are it’s not legitimate. Back away.
  • Money wires: Legitimate lenders will not ask you to pay by wiring money – if someone asks you to do so, decline and walk away.

More Financial Help

The FTC also offers helpful hints for avoiding scams in such areas as diet products, male enhancement, medical supplements and work-at-home offers.

For more tips on managing your money and making smart decisions, visit The Debtress blog.

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Friday, May 28th, 2010

Senate Passes Financial Oversight Bill

Last December, the U.S. House of Representatives passed a financial oversight bill that would address many of the problems on Wall Street that led to the stock market collapse that touched off the Great Recession. Last week, as the New York Times reported, the Senate passed a similar bill.

Now, the two houses plan to work to unify their bills into one that can be signed into law.

Reforms Addressed

In the version of the bill that passed the Senate, changes to the current financial system would include:

  • Provisions to curb abusive lending practices, especially in the mortgage industry
  • Safeguards that would guarantee that large and complex companies could be liquidated - possibly in bankruptcy - without having taxpayers foot the bill
  • Requirements that would force large banks to detach some of their profit-rich derivatives operations into separate entities (though this provision was not in the House’s version of the bill)
  • The introduction of a “Financial Stability Oversight Council,” which would be charged with highlighting troublesome trends that could prove dangerous for the whole economy
  • The introduction of new rules for derivatives traders
  • The requirement that hedge funds and similar companies register for regulation with the Securities and Exchange Commision (SEC)

The Senate’s passage of the bill is seen as a victory for the Obama administration, which has blamed the recession largely on a lack of oversight and accountability on Wall Street.

The Next Step for Finance Bill

In the coming weeks, as the Washington Post reports, a group of senators and representatives will work together to reconcile the differences in content between the two bills, aiming for a version that Obama could sign into law.

While the two versions are reportedly very similar at this stage, sources indicate that the main differences between the two include:

  • Plans for regulating the complicated derivatives market
  • Whether to ban banks’ current practice of trading on their own accounts (proprietary trading)
  • Whether to require a $150 billion fund from financial industry coffers to allow for emergency dissolution of any struggling firm
  • Whether to create a separate agency charged with matters of consumer financial protection

According to sources, leaders in the House and Senate hope to reach a consensus on the provisions included in the legislation by July 4th of this year.

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Tuesday, May 25th, 2010

The Latest in Unemployment & Consumer Prices

The Labor Department has released unemployment data for May and the numbers suggest no significant improvement in the nation’s employment landscape—in fact, last week’s numbers marked the largest rise in unemployment since February.

Here’s a look at some of the numbers and how they relate to previous weeks.

  • Initial claims: For the week ending May 15th, initial unemployment claims rose to 471,000 from 446,000, an increase of 25,000 from the previous week. The four-week average, too, rose by 3,000.
  • This time last year: In this week of 2009, 540,925 initial unemployment claims were made; this year, that number was down slightly, to 407,940, suggesting that the employment situation has improved somewhat since a year ago.
  • High & low claim rates: States reporting the highest rate of initial unemployment claims include California, Michigan, New Jersey, Georgia and Puerto Rico; the lowest reported rates came from New York, Kentucky, Connecticut, Missouri and New Hampshire.

The numbers surprised some analysts, who reportedly expected job growth last week. The increase in unemployment rates points to continued uncertainty in the job market, even as the economy generally seems to be recovering. Because unemployment is often an indicator of bankruptcy filings, these statistics can have long-reaching effects.

Possible Explanations

The news may not be all bad, though. In April, as the economy expanded, the official unemployment rate actually grew, not because more jobs were lost, but because more people began actively looking for work, as they perceived the job market was strengthening.

Consumer Price Index for April

The Bureau of Labor Statistics released data this week that show the Consumer Price Index for April 2010 decreased by 0.1 percent, largely fueled by a 1.4 percent decrease in the energy index. Here’s how some other sectors fared:

  • The food index rose by 0.2 percent in April, spurred by rises in the price of meat, fish, poultry and eggs.
  • The index for all items excluding food and energy remained unchanged.
  • The indexes for recreation, airline travel and medical care rose last month, but were balanced by decreases in the indexes for apparel, household furnishings and services.

During the last year, the index for all goods and services has risen by a modest 0.9 percent, which the BLS reports is the smallest 12-month increase seen since 1966.

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Saturday, May 22nd, 2010

Take Time for a Financial Tune-Up

Many people know that it's important to maintain healthy credit, particularly in a bad economy. But “maintaining good credit” is a vague concept at best. Here’s a look at some concrete steps you can take to improve your finances—even if you only have a few minutes to spare.

Fifteen-Minute Finance Boosters

Here’s a look at a few ways you can bolster your financial situation in a mere quarter hour.

  • Set up an emergency fund: Most experts advise having some money set aside for unexpected expenses (like car repair, illness or even job loss). This can be as easy as figuring out how much money you’d like to have in your fund (experts generally recommend anywhere from three months’ to one year’s expenses), setting up a high-interest savings account and starting regular contributions.
  • Look at your credit report: One essential part of maintaining healthy finances is keeping current with how the authorities view you as a credit risk. And, thanks to the Fair Credit Reporting Act, doing so is as easy as visiting www.annualcreditreport.com and following the prompts. All Americans are entitled to one report per year from each of the big three reporting bureaus. If you space them out, you could check up on your credit once every four months.
  • Review your bills: Take a look at the goods and services you pay for each month (utilities, cable, phone, insurance, etc.). Then do a little research online or by calling your providers and see if you can get a better deal somewhere else (or from your current provider). Bonus: the money you save each month can be funneled into your emergency fund.
  • Draw a map: In order to stay on top of your finances, you should be able to understand them fairly easily. Take out a sheet of paper and outline your accounts, debts and credit cards. Making a visual representation of your finances should help you see any unnecessary duplications and help you determine what you can eliminate to streamline things.
  • Think about retirement: Even if you already have a retirement account through your job, you can start a Roth IRA, which would grow tax-free. The government has instituted contribution limits, though, so do a little research before you commit.

One of the most important things to remember about improving and maintaining your finances is that you don’t have to do everything at once. A little work at a time can make a big difference in the long run.

Additional Resources

For more tips on maintaining strong financial skills, check out The Debtress blog.

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Thursday, May 20th, 2010

Mortgage Application Guidelines Tough for Self-Employed

During the real estate boom that caused the housing bubble that eventually sent the country into a serious recession, it was common practice for borrowers to apply for a mortgage by using "stated income," which meant indicating their income without offering proof.

But mortgage lenders have learned their lesson and now, according to the New York Times, qualifying for a mortgage loan is harder than ever for those working for themselves.

Providing Proof of Income

In order to convince a bank to lend you the money to buy a home, you have to prove that you can afford to repay it. Generally, that entails showing official records of your earnings and current credit situation. People who work for themselves or own a small business, though, may not have regular paychecks to present, which may mean:

  • Higher interest rates: According to the Times, the few banks that still extend stated-income loans charge significantly higher interest rates than they do for standard loans. From an economic perspective, this makes sense: when there’s a greater risk involved, there must be a greater potential gain. But it can mean a much more expensive loan for borrowers.
  • Careful bookkeeping: Some banks will apparently initiate loans with two years' tax receipts, but this might also present a problem for some self-employed borrowers. It seems that, in order to offset losses in the rough economy, many people have been taking liberal tax deductions, thus lowering their overall reported income. This, naturally, could hinder their ability to qualify for a large loan.
  • Solid finances required: One expert quoted suggested that self-employed borrowers with considerable cash reserves and credit scores of at least 700 should be able to get traditional loans, but those who have lost income (or filed bankruptcy) during the recession may have difficulties.

But, according to the piece, self-employed Americans shouldn’t despair. It seems that as many as 30 to 40 percent of those who work for themselves qualify for mortgage loans they apply for. If you aren’t sure how your finances currently look, consider starting the mortgage application process by viewing your credit report (for free) at www.annualcreditreport.com.

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Posted in Home Foreclosure | 1 Comment »

Monday, May 17th, 2010

Consumer Borrowing, Retail & Median Home Prices Boost Economy

Government groups have published numbers for various economic indicators for March and April (such as unemployment and bankruptcy data), giving a little insight into how our nation’s economic situation is changing. Here’s a summary of a few of these telling figures.

Consumer Borrowing Up in March

Since February of 2009, consumer borrowing in the U.S. has reportedly been falling, as we collectively try to claw our finances out of the red.

But March 2010 showed a surprising increase in consumer borrowing—a $1.95 billion increase, according to sources, which far outstripped the $3.85 billion loss many experts expected.

The increase could be a fluke, but it could equally be a sign that American households are becoming more optimistic about spending money.

Retail Rises Slightly in April

Retail sales blossomed in March, thanks in part to an early Easter. April’s numbers represent smaller growth, but growth nonetheless:

  • March retail sales saw a 7.9 percent increase over sales in March of 2009.
  • April retail sales grew only 0.5 percent compared with those a year earlier; however, in April 2009, sales decreased 2.7 percent from the previous year.
  • Combined sales in March and April increased by 4.8 percent; January and February sales increased by only 3.3 and four percent.

While the slower growth in April may seem like cause for concern, many analysts are not worried, pointing to the fact that some growth occurred and that this year’s early Easter likely shifted people’s shopping patterns.

And, as one commentator in a recent New York Times article notes, economic recoveries don’t always happen linearly.

Median Home Prices

NPR reported this week that median home prices are on the rise in about 60 percent (91 out of 152) of the country’s cities surveyed.

This marks significant improvement from the final quarter of 2009, when only about 40 percent of median home prices were rising. Here’s a look at some of the hard numbers:

  • 36 percent of all first-quarter sales were foreclosures and other distressed properties;
  • Nationally, the median price was $166,100, about 0.7 percent below the median price in the first quarter of 2009;
  • Prices jumped significantly in Saginaw, MI; Akron, OH; and Cleveland, OH; and
  • Prices fell significantly in Orlando, FL; Ocala, FL; and Cumberland, MD.
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Friday, May 14th, 2010

Credit Card Offers Begin to Crowd Mailboxes Again

As the economy begins to sputter back to life, various indicators are offering encouraging recovery signs. And, according to an article from msnbc.com, the first quarter of 2010 had one more such indicator: an uptick in the number of credit card offers sent to American households through the mail.

Reasons for the Increase

A combination of factors led to the serious drop-off in mailed credit card offers during the last several months: first, the recession meant card issuers were writing off billions of dollars in debt and none too keen to take on new customers; second, the Obama Administration’s Credit CARD Act tightened many rules governing the way the industry ran.

So what can you expect from the latest batch of credit card offers in your mailbox?

  • Targeted to those with strong credit: Sources indicate that the majority of credit card offers are geared toward those with good repayment histories, which isn’t surprising, since issuers are likely eager to issue loans they can expect to see repaid.
  • Easier to decode: Part of the Credit CARD Act requires all card offers to have a shortcut box that indicates interest rates, fees and other specifics about the offer to make your decision easier and less confusing.
  • More common annual fees: Because new laws restrict some of card issuers’ revenue sources, more cards are likely to come with a yearly fee attached.
  • Greater rewards offers: Apparently, rewards cards users tend to be good customers for credit card companies, so sources are expecting more of this type of card available.
  • Adjustable interest rates: Again, to make up for lost revenue in other areas, more card issuers are expected to issue credit cards whose rates can fluctuate. For this reason, it’s important to read your entire credit card agreement before committing to it.
  • Increased fees for balance transfers: Gone are the days of no-cost transfers from one credit card to another. In order to guarantee income, many issuers will be charging transaction fees and immediate interest for those looking to move balances from one card to another.

Dealing with more credit card debt than you can handle? Find out if filing bankruptcy might be right for you.

If You’re Looking for a New Credit Card

This may be good news for people looking to increase their total available credit, but remember: the best offer for you may not arrive at your doorstep, so before selecting your next piece of plastic, be sure to do plenty of online research to make sure you’ve explored all available offers.

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Wednesday, May 12th, 2010

Proposed Law Would Place Restrictions on Debt Settlement Companies

Two senators have proposed new regulations that may drastically change the way debt settlement companies do business.

The amendments are part of a larger financial reform bill currently being discussed and were jointly proposed by Senator Charles Schumer of New York and Claire McCaskill of Missouri, the Associated Pres reports.

The laws propose some major changes to how debt settlement companies collect fees, operate and the damages for which they are liable. The main points of the law include:

  • No fees could be collected until a settlement is reached
  • A cap on fees charged. Most companies charge consumers a percent of their debt for the service. Some companies may charge 20 percent of the debt, but the proposed cap would likely be much lower.
  • More disclosures from companies to consumers, including costs and services to be performed
  • No monthly fees
  • Consumers would be able to cancel a debt settlement contract and receive a complete refund of fees
  • More regulatory powers of the industry for the Federal Trade Commission
  • Companies would be subject be subject more punitive damages liability during civil lawsuits

As of right now, these are only proposals for a bill that has not yet passed, and changes could be made. The proposals would not affect any bankruptcy laws.

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Posted in Bankruptcy News and Events | 1 Comment »

Saturday, May 8th, 2010

More Protection for Bankruptcy Filers: Labor Department Updates Enforcement

The New York Times reported this week that the U.S. Department of Labor has announced plans to better enforce corporate compliance with worker safety, wage and employment equality laws. There is some hope that this move will provide extra protection to workers filing bankruptcy.

The measure will reportedly target two major problems in the workplace: Improving safety and security on the job; and the improper classification of employees as contract workers. If implemented, here’s how the new measures are likely to work:

  • To prevent safety violations: If and when the new rules become effective, employers would reportedly be required to develop plans for maintaining workplace security and eliminating safety hazards in the workplace, implementing those plans and evaluating their effectiveness.
  • To prevent improper employee classification: Companies that have contract workers on their payroll, according to sources, would be required to compose written explanations of the reasons behind that classification and share those explanations with the government and the employees. The article indicates that some companies improperly classify workers in order to avoid Social Security taxes and benefit payments.

Likely Changes to Workplaces

The Labor Department’s proposed changes are still in the development stage, and once they’ve been finalized businesses will have an opportunity to respond, meaning that it’s likely to be at least a year before any changes are actually implemented.

And, as the article notes, many business groups are less than thrilled at the prospect of stricter regulations. One detractor apparently asserted that stricter requirements will mean more work for employers, but might not lead to any tangible improvements in safety or rule compliance.

Bankruptcy and Your Job

It’s important to remember, too, that you are protected from more than just hazardous conditions at work. While credit checks are sometimes used in the hiring process of employee, your decision to file bankruptcy shouldn't affect your employment status with an employer.

If you’re concerned about a personal bankruptcy filing affecting your job, consider consulting with a local lawyer about what your rights are. And, if you’re otherwise in good standing with your employer, it may be wise to set up a private meeting with your supervisor to disclose your plans and your reasons, and reinforce your commitment to your work.

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