Home » 2010 » Page 2

Archive for 2010

« Older Entries
Newer Entries »
Wednesday, November 24th, 2010

Your Life after Foreclosure

If you, like millions of other Americans, are currently in some stage of the foreclosure process, you’re probably wondering what you can expect from life after foreclosure. The bad news is that losing a home to the bank will almost certainly have a negative impact on your credit – the good news, though, is that the current foreclosure glut means that mortgage foreclosure might not be quite as bad as it used to be.

What to Expect from Credit, Jobs, Cars and More

So which areas of your life might be affected by foreclosure action? According to a recent studies, a lot.

  • Your credit: As with a bankruptcy filing, a mortgage foreclosure will remain on your credit report for seven years – but the overall impact it has on your score and the way creditors view you should decrease with time. Because you likely won’t be able to open any new credit cards in the months and years directly following your foreclosure, it’s a good idea to keep up with payments on whatever cards you have now. Credit cards can play a central role in helping you rebuild your credit and thus qualifying for loans in the future.
  • Your career: Though some states have outlawed pre-hiring credit checks, many states still permit it, and plenty of employers take a peek at applicants’ credit histories as part of the screening process. If you’re looking for work, it’s important to be realistic and understand that your foreclosure might prevent you from getting jobs in economic fields.
  • Future purchases and loans: As mentioned above, a mortgage foreclosure will ding your credit rating in a pretty serious way, so you shouldn’t expect to qualify for a car loan or a new mortgage for a while. But that doesn’t mean you’ll be stranded on an island without any options for moving forward. The WalletPop.com post mentions one option called a “lease purchase,” wherein a person can agree to make regular rental payments to a landlord and decide, at some future point, to put those payments toward the purchase of the house.

On the Bright Side: Greater Understanding

The bright spot in all this foreclosure gloom is that, because so many Americans are currently struggling with foreclosure-related problems, more people are aware of the sorts of extenuating circumstances (like death, divorce, serious illness or injury, job loss, etc.) that can lead otherwise responsible financially individuals into mortgage foreclosure.

So, suggests the post mentioned above, don’t underestimate the power of explaining your situation to potential lenders or sellers. And, of course, don’t ever give up on rebuilding and maintaining your credit to demonstrate that you’re a good credit risk.

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

Tags: , , ,
Posted in Home Foreclosure | Comments Off

Monday, November 22nd, 2010

Protection from Mortgage Relief Scams from the FTC

The Federal Trade Commission announced this week that it has published new rules for companies that advertise themselves as mortgage foreclosure relief outfits. The rules, it seems, are designed to eliminate scammers from taking money from struggling homeowners.

Here’s a look at the details.

FTC: No Advance Fees, More Disclosures

The FTC’s rules include a number of provisions designed to bring more transparency to the world of foreclosure relief companies. These include:

  • A ban on upfront fees: This rule will prevent companies from taking homeowners’ money without actually offering any help. When the new rules take effect on December 13, foreclosure relief firms will be required to present consumers with a written agreement from the lender or servicer indicating that the proposed changes are acceptable and approved, as well as a written document detailing the changes.
  • Increased disclosures: In addition to the ban on advance fees, the new rules will require foreclosure rescuers to disclose more information and in a clearer format. Specifically, firms must explain that they are not affiliated with the government, that a customer’s lender might not agree to the proposed mortgage modification and that if a customer stops making regular mortgage payments it could adversely affect her credit rating and/or cause her to lose her home. Further, these companies have to disclose that customers have the right to stop doing business with the firms whenever they choose and that they have the right to reject an offer made by these firms.
  • Prohibited claims: Besides being required to disclose certain information, foreclosure rescue firms will be forbidden from making any kinds of false or misleading claims, which might include claims about their likelihood of helping a client, government affiliation, a client’s obligation to pay, refund and cancellation policies and how much the company’s services cost.
  • Attorney exemption: It should be noted that the FTC rules provide an exemption for lawyers who are properly licensed and actively practicing law in the state where the client or the client’s home is located.

More Hope for Struggling Homeowners?

The new rules come as welcome news to a nation gripped by a flailing housing market, where millions of citizens are in some phase of the foreclosure process. Hopefully, when the new rules take effect, they’ll decrease the prevalence of foreclosure rescue scams, which would in turn mean that American families would stand a better chance of finding workable solutions to keeping and staying in their homes.

It should be noted that these rules are in a similar vein to those passed earlier this year for the debt settlement industry, which, like the foreclosure rescue industry, has historically been plagued by fraudsters and scammers who wreak financial havoc on cash-strapped customers.

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

Tags: , ,
Posted in Home Foreclosure | Comments Off

Wednesday, November 17th, 2010

Watch out for these Ridiculous (but Legal) Credit Card Fees

Since the passage of the Credit CARD Act and its full implementation this summer, consumers have been protected in some important ways from the credit card industry. But, as Credit.com reminds us in a recent post about absurd credit card fees, there are still plenty of credit card industry practices to be wary of.

Here’s a look at some of the fees you should watch out for (and avoid, if possible) if you’re in the market for a credit card.

  • Hefty upfront or activation fees: Though the CARD Act limited how high initial fees can be on credit cards, many issuers are still charging upfront and/or activation fees. One industry insider has apparently defended these fees as legal because many issuers assess them before an account has officially been activated, meaning that they can’t contribute to the card’s limit.
  • Credit insurance or protection: This credit card charge is reportedly designed to allow consumers to stop making payments if they lose their job unexpectedly (but, one would assume, it would not stop any interest from accruing on the balance due). Naturally, it’s not free, and, according to Credit.com, your credit card issuer may not even tell you that you’re paying for such “protection” – you have to check your bill to determine whether you’re forking over cash for this. And, if you are, consider calling your card issuer to cancel it.
  • Inactivity fees in disguise: Because the CARD Act forbids credit card issuers to charge inactivity fees (that is, charges for not using a card), some companies, it seems, have done little more than renamed their inactivity fees to keep them alive. Some cards apparently charge “annual fees,” which consumers don’t have to pay if they charge a certain amount each year. If you use your card very little and don’t think you’ll reach the annual fee limit, you may want to close the account.
  • “Pick-a-rate” interest rates: This practice, according to Credit.com, is particularly nefarious because it can go undetected by individual credit card holders – it doesn’t cost individuals very much money, but, when applied to millions of accounts, earns a hefty chunk of change for credit card companies. What essentially happens is that credit card issuers charge a slightly higher interest rate than usual – your best bet is to avoid cards that have this language in the agreement: your interest rate “will be the maximum prime rate reported in the 90 days preceding the last day of the billing cycle.” An ordinary interest rate will be signified in your contract in this language: your interest rate “will be the maximum prime rate reported on the last day of the billing cycle.”

The bottom line? Watch out. Even though federal law protects your consumer rights to a certain extent, it’s still essential to read all the fine print and make sure you understand the terms of your credit card before you sign anything.

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

Tags: , , ,
Posted in Finance 101: Secure Your Future, Your Credit Score | Comments Off

Monday, November 15th, 2010

Personal Bankruptcy Filings Climb in 2010

The latest figures on personal bankruptcy filings in the U.S. have been released and it looks like 2010 will see the most bankruptcy cases since 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) took effect.

Here’s a refresher course on what BAPCPA did for filings in 2005 and what the latest numbers might mean.

How the “New” Bankruptcy Law Affected Filing Figures

  • New law announced: When news came down that BAPCPA would be signed into law, some consumers were afraid that the law’s provisions would make qualifying for bankruptcy protection much more difficult in the future.
  • A rush to file: Fearing that they would not be eligible for bankruptcy protection once BAPCPA regulations were on the books, many consumers filed for bankruptcy immediately before the new law took effect, meaning that filing figures for 2005 were exceptionally high.
  • A drop-off in filings: Because so many people filed before the new law took effect (perhaps earlier than they would have filed under normal circumstances), bankruptcy filings in the months following the implementation of BAPCPA dropped significantly. This caused BAPCPA supporters to claim the law had “worked” by decreasing bankruptcy filings.
  • A steady climb in filings: But, within two years of the laws going into effect, the U.S. economy was thrown into turmoil and millions of Americans have found themselves without work and in danger of losing their homes. Bankruptcy filing numbers have climbed since the initial decline, and 2010’s figures are no exception.

The Latest in Personal Bankruptcy Filings

This year, according to government figures, bankruptcy filings will reach about 1.5 million in 2010, the same annual level as the first half of the last decade. These numbers suggest that what the overall impact BAPCPA had on the number of bankruptcy filings was minimal:

  • More hurdles, same need: Though the new bankruptcy law made it more difficult (and more expensive) to file for bankruptcy, it seems that the added “hurdles” have not deterred those in financial distress from getting the protection they need, as some feared.
  • Little “abuse” to prevent: One bankruptcy myth that spurred the passage of BAPCPA was that a significant number of bankruptcy filings were abusive and/or fraudulent – that is, that people were abusing the bankruptcy system to get out of debts they could otherwise pay, or had no intention of paying when they first took them on. In fact, most studies show that a mere two percent of pre-BAPCPA bankruptcy filings could be considered “abusive;” that the total number of yearly filings hasn’t changed much since the new law took effect seems to support those findings.
  • If you need financial help, bankruptcy is an option: Finally, it’s important to note that people who honestly need the financial relief bankruptcy provides are, by and large, still able to qualify for that protection. To learn more about whether bankruptcy might be right for you, simply contact a bankruptcy lawyer practicing in your area.
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 | Comments Off

Wednesday, November 10th, 2010

A Better Alternative to Payday Loans?

The financial dangers of taking on a payday loan (a short-term, high-interest loan offered to people with weak financial histories) generally outweigh any benefits. For cash-strapped Americans who need to make rent or utility payments, though, payday loans are often the only viable source of cash.

But, according to a post on WiseBread, that might change soon: it seems that, in some parts of the country, a more consumer friendly alternative to payday loans is cropping up.

More Affordable Small Loans

Here’s a look at what might soon act as a better option for people looking to borrow a little money for a short amount of time.

  • FDIC pilot program: Between February 2008 and February 2010, the Federal Deposit Insurance Corporation tested a program that allowed Americans to borrow up to $2,500 for a period greater than 90 days. Interest rates were capped at 36 percent (but were often less).
  • Non-payment loan requirements: In addition to making regular payments on their loans, borrowers were often required to meet other criteria, such as opening and putting money into a savings account, taking a financial literacy class and more. These measures were instituted to reduce or eliminate a borrower’s need for small dollar amount loans in the future.

According to the FDIC’s web site, the experiment showed promising results in many of the volunteer test banks (28 across the country). Now, the question many consumer advocates are asking is when will such programs be more widely available.

Finding Affordable Loans Near You

If you’re in need of a loan but don’t have the credit score or history to qualify for a traditional bank loan, you may be able to find a small dollar amount lender near you that won’t charge punishing interest rates. Here’s what to look for:

  • Check out your local banks: Sources note that national banks like Bank of America and Wells Fargo have not yet hopped on the small loan bandwagon, but various regional banks across the country do offer a variety of small loans. To find out what your options are, call some local banks and ask about their non-traditional lending programs.
  • Visit a credit union: If no banks in your area offer smaller loans, check out some of the credit unions. Because they’re structured on a more community-centric model, credit unions may have more alternatives for local members without other options.

It’s uncertain right now whether these programs will catch on (and even whether they’ll get some sort of national support to help them grow), but it seems that the FDIC’s chair, Sheila Blair, hopes they do.

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

Tags: , ,
Posted in Predatory Lending, Your Credit Score | Comments Off

Tuesday, November 9th, 2010

Students & Parents Need Financial Literacy Lessons

Hard economic times (like the ones we’re in) tend to remind us of how important understanding financial matters can be. After all, everyday transactions and financial decisions are what pave the way to larger financial events like being able to purchase a home or requiring the debt help offered by bankruptcy.

But, according to a recent report from Credit.com, fewer than half of the nation’s high school students were able to earn passing grades on a test of the basic tenets of financial literacy. And, according to another Credit.com story, many American parents are similarly befuddled by money matters.

What Your Kids Need to Know about Money

According to Credit.com, financial literacy lessons are best given and demonstrated in the home. Here are some finance basics to consider:

  • Debt starts early: Sources note that the average college student leaves school with about $4,000 in credit card debt and $20,000 in student loans – that’s a pretty big hole to be in, especially in this economy, when jobs are difficult to find. Further, reports indicate that bankruptcy filings are increasing most rapidly among citizens aged 18 and 25.
  • Money affects the whole family: It seems that as many as half of all college graduates are now moving in with their parents after leaving school because of an inability to find work or afford alternate housing. This can put a financial strain on parents, especially those who are already having difficulty making ends meet.
  • Talking is important: It’s unfortunate that money is often a taboo subject in this country, because discussing finance issues in an open, frank manner may be the best way to make sure everyone is on the same page financially. Credit.com reports that 85 percent of teenagers are worried about money – in many cases, speaking with teens about a household’s finances might relieve some of their stress.
  • It’s okay to be confused…if you seek help: One study suggests that a mere five percent of American parents were able to name the main factors that affect a person’s credit score, which means that if you’re not sure where to begin teaching your kids about money, you’re not alone. The good news is that there are plenty of educational resources available for free online, which means you and your family don’t have to be in the dark much longer.

Start Your Kids on a Path to Financial Success

If you don’t talk with your kids about money, now might be the time to start. Consider addressing some of the following:

  • How much things cost: If you’re paying all your kids’ expenses, they probably don’t understand the dollar value attached to each item.
  • How much people make: While you may not be comfortable revealing your salary to your children, you can discuss minimum wage, typical salaries for various professions, and how much time a person must spend working.
  • How credit cards work: Kids probably don’t ever see a credit card bill – only the magic of using plastic in a store. So teach them about interest rates and monthly payments.
  • Allowance: If you don’t already give your kids an allowance, it might be a good tool to teach them how to handle money.
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?, Finance 101: Secure Your Future | Comments Off

Wednesday, November 3rd, 2010

Credit, Cosigning and Bankruptcy: What You Need to Know

If you’re thinking about cosigning a loan for a friend or family member to help him qualify for better interest rates or a greater loan amount, make sure you know your responsibilities if the borrower is unable to make payments or ends up in bankruptcy.

Many people struggling with debt could use a reminder about the responsibilities of a loan cosigner. Here’s a recap and expansion.

Your Responsibilities in Cosigning

Before putting your signature on the dotted line of someone else’s loan, review the facts:

  • You are considered a borrower: Even though you may have nothing to do with this loan or line of credit after you sign your name, it will appear on your credit report. This means that the primary borrower’s payment habits have the potential to affect your credit score.
  • Your credit may take a hit: Besides the question of timeliness of payments, having an extra loan on your credit could affect your credit in another way: by shifting your credit-to-debt ratio. This ratio (which compares your total credit limit to how much debt you have) affects your credit score, which in turn could affect your ability to get future loans.
  • You are agreeing to pay: According to figures from the Federal Trade Commission, of cosigned loans that go into default, 75 percent are paid by cosigners. And if the primary borrower decides to file for bankruptcy protection, you’ll likely be required to pay the loan as well.
  • You agree to all loan terms: This means that if the primary borrower falls behind or defaults, you’ll be responsible not only for the loan payments but also for any late fees, penalties, increases in the interest rate, and so on. Further, a debt collector could conceivably approach you for payments, and might (in extreme cases) even resort to legal measures.

The Moral: Cosign with Caution

This isn’t meant to detract people from cosigning altogether – in fact, cosigning a loan can be a great way to help a loved one build or rebuild credit. But before you agree to put your signature on lending papers, make sure you understand the potential consequences. You may want to consider:

  • Making a separate contract between you & the primary borrower to define expectations;
  • Setting up an “emergency plan” for making payments if the primary borrower thinks she might miss a payment;
  • Discussing the primary borrower’s income sources and spending habits to get an idea of what you’re working with financially; or
  • Setting aside some money specifically for covering that loan.

The bottom line is to treat a loan you’re asked to cosign as you would any other loan – after all, it could have as big an impact on your credit score and financial health.

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

Tags: , ,
Posted in Finance 101: Secure Your Future, Your Credit Score | Comments Off

Monday, November 1st, 2010

What New Debt Settlement Rules Mean for You

The Federal Trade Commission issued new rules governing how debt settlement firms can charge consumers for their services. The new rules prohibit debt settlement firms from charging upfront fees for their services, which in theory will prevent some of the predatory practices that cost consumers so much money in the past.

Here’s a summary of some of the potential side effects these new rules might have on the debt settlement process.

Fewer Ads, More Honest Claims

  • A drop-off in ads claiming to settle debts for little money: A ban on hefty upfront fees will mean that simply bringing customers through the door will no longer guarantee income for debt settlement firms, which in turn will mean that dropping money on TV and radio commercials may no longer be worthwhile financially.
  • More selective consumer selection: Now that debt settlement firms cannot charge every customer large fees, they’ll have to more carefully choose which customers they agree to help. This will likely be good news, regardless of your goals. If you’re a good candidate for debt settlement, visiting a debt settlement firm may have a greater chance of helping you than in the past. And if you’re not a good candidate, the debt settlers may be less likely to waste your time and money with their services.
  • Claims made based on all customers: Before the FTC’s rules took effect, debt settlement firms commonly made claims based only on the settlement experiences of their most successful customers. Now, though, companies must advertise using figures that represent all their customers’ experiences, meaning that the figures should more honestly represent what the company may be able to do for you.
  • Some closures of debt settlement firms: Some debt settlement firms may no longer have a workable business model without upfront fees from customers, which could mean closures in debt settlement firms.
  • “Innovative” trickery: And, finally, as with any implementation of new rules, some debt settlers may try to find ways around the new requirements. As always, you are still responsible for making sure your money and financial health is in good hands.

Debt Settlement without a Firm

If you’re struggling with debt and are trying to figure out which debt-relief option might work best for you (bankruptcy, debt settlement, credit counseling, etc.), remember that you can contact your creditors without any help from a third party. By exploring all of these options, you may find the debt-relief option that works best for you.

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

Tags: , , ,
Posted in Finance 101: Secure Your Future, Predatory Lending | Comments Off

Wednesday, October 27th, 2010

Take Advantage of Free ID Theft Protection & Education Materials

The Federal Trade Commission has announced that, in honor of National Protect Your Identity Week, it will provide consumers with a wealth of free information and materials about how to fight, avoid and protect themselves against identity theft.

Where to Learn about Identity Theft Prevention

Though federal laws exist to protect the finances of people who are victimized by identity theft, it’s still fairly common for bankruptcy filers to indicate that identity theft contributed to the financial distress that led them to file for bankruptcy. Here’s a look at what the FTC has to offer:

  • Basic information: This “one-stop national resource” provides consumers with information about what identity theft is, how to recognize it, how to prevent it and what to do if they’ve been victimized by identity theft. Additionally, the site has information for businesses and law enforcement groups to help prevent and fight identity theft cases from happening.
  • Informative videos: The FTC has posted some educational videos for consumers interested in learning how to reduce their online risk of identity theft and how to protect their digital lives from exposure to identity threats.
  • Online application of skills: At their game portal, the FTC offers consumers a chance to test their knowledge about the risk factors of identity thefts, basic precautions to take to avoid being victimized by identity thieves and apply identity theft prevention skills by playing online games. This site might prove especially helpful for younger computer users who might be resistant to more traditional information sources.
  • Reminder of your rights: Finally, the FTC has posted a reminder about every American consumer’s right to obtain and view copies of his or her credit report and why staying abreast of what appears in your credit is important to financial health.

Legal Help for Identity Theft Woes

To top off its bevy of useful information about fighting and preventing identity theft, the FTC has also announced that it will offer legal guidelines for identity theft victims. This web page is designed to help victims and their advocates (whether lawyers, credit counselors or other activists) determine how to proceed to maximize the benefit of fighting identity thieves.

As many people who have unfortunately felt the sting of identity theft already know, the crime can lead to hours of headaches as consumers try to sort out their financial situation and reclaim their private information. Generally, there are a few practices can help you avoid identity theft:

  • Shred all sensitive documents before disposing of them;
  • Don’t click on unfamiliar links online and definitely don’t enter your personal information unless you’re sure what web site you’re on;
  • Don’t share your passwords with anyone;
  • Check your free credit report every year for suspicious activity; and
  • Make sure your email has a good spam filter. Be wary of emails from unknown sources.
Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google
  • E-mail this story to a friend!

Tags: , ,
Posted in Finance 101: Secure Your Future, Identity Theft | Comments Off

Monday, October 25th, 2010

Foreclosure News: Record Repossessions and the Scandal

Since news of the so-called “robo-signer” scandal broke a few weeks ago, a lot has happened in the foreclosure business in this country. Here’s a look at some of the latest developments and what they might mean for individual homeowners and the nation’s housing market.

Record Number of Home Seizures

Bloomberg news reports that mortgage foreclosures in the United States reached record high levels in September, just before the robo-signing story pushed many mortgage lenders to pause their home repossessions. Here are some details (before you read on, we want you know that Chapter 13 bankruptcy is designed to stop foreclosure and repossession. Ok, that's it. Have fun reading on!):

  • More than 100,000 homes foreclosed: In September alone, according to figures from RealtyTrac, lenders repossessed 102,134 U.S. properties. This figure apparently represents the highest monthly total ever recorded (going back to 2005). The previous high came a month earlier, in August of this year.
  • Foreclosure filings at record high: In addition to actual lender repossessions, other steps in the foreclosure process (including notices of default and auction) reportedly occurred at high levels last month: 347,420 total foreclosure notices, which means that one in every 371 U.S. homes was in some stage of foreclosure.
  • Sales of foreclosure properties high: While the record foreclosure levels aren’t exactly good news, there seems to be a small bright spot: Bloomberg notes that one-third of all home sales in the U.S. in September were sales of foreclosed properties, meaning that at least people are buying houses again.
  • National foreclosures halted: Of course, Bank of America, JPMorgan Chase & Co. and Ally Financial Inc., three major mortgage lenders, have paused foreclosure proceedings in some or all of the country to address the legal issues raised by the alleged improprieties of robo-signers. While a pause to foreclosures might be good news for families in danger of losing their homes, it could have a negative impact on home sales.

Will You Have to Pay Your Legal Fees?

The New York Times reported this week on a new state law in New York that will require lenders to pay the legal fees of homeowners who triumph in foreclosure proceedings. Here’s the scoop:

  • Not a national law: While the law currently only applies to New York residents, it may gain popularity elsewhere, depending on the effect it has on foreclosure cases there.
  • Correcting an imbalance: Currently, in most states, mortgage lenders apparently include a provision in loan papers that requires borrowers to pay lenders’ legal fees in the event of foreclosure.
  • A better shot for homeowners: With the potential of higher payments (because lenders tend to have more capital than individuals facing foreclosure), consumers looking to fight foreclosure cases may have an easier time getting lawyers to take on their cases and thus fare better in court.

Considering the hubbub in the news concerning foreclosure right now, it will likely be an interesting few months or years to see if and how the foreclosure process changes in the United States.

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, Economic News: How Are We Doing?, The Law and Your Money | Comments Off

« Older Entries
Newer Entries »