The survey found a 2 percent increase in the number of respondents with more money in savings than in credit card debt. On the down side, 16 percent said they have no credit card debt, but no emergency savings, either. According to one of the analysts, this group is "only one unplanned expense away" from racking up some high-cost debt.
]]> An Index score of 100 shows that things are about the same. Anything lower means that things are worse than a year ago, and anything higher means that the respondent feels more secure. February's overall index came in at 97.3, with no change from January but a marked improvement from the 92.3 Index in August 2011.For individual categories, the results also show improvement. Twenty percent of respondents felt more secure in their jobs than they had last year at this time. With savings, the improvement is a little harder to describe. While it doesn't show that people are more secure, it does show that fewer people are less comfortable -- the double negative boils down to more respondents saying they felt about the same as last year.
There wasn't much difference between January and February in debt and net worth. Those categories also showed most respondents feeling neutral compared to last year.
This month, then, the Index hints at a cautious optimism in American households. Things may not be getting better, but they aren't getting a lot worse, either.
Source: Bankrate.com, "Americans' values on savings versus debt," Feb. 21, 2012
]]>Although these numbers are nearly double those expected during ripe economic conditions, experts say that the numbers have been relatively consistent throughout the past year. The average 2011 monthly foreclosure count in the region was about 9,100 homes, with February 2011 boasting the highest number at more than 10,800. A total of 109,548 foreclosure notices were served during the 2011 calendar year in the Atlanta metro area, which is down from 2010, when about 127,000 notices were issued.
]]> The county with the most notices served was Gwinnett, which has been at the top of the list for many months. Fulton County came in a close second. Each county had more than 1,300 foreclosure notices.It is important to note that foreclosure notices are only one step in foreclosure proceedings. The issuance of the notice does not mean that the house will necessarily be lost, but rather that the lenders and borrowers may ultimately reach a payment agreement that allows the homeowner to keep their property. Lenders also sometimes fail to complete the foreclosure proceedings.
A variety of fluctuating factors limit the regional market's predictability, according to financial experts. They surmise that the lowered foreclosure rate has resulted from new agency regulations that closely monitor paperwork for the submission of forged or falsified foreclosure documentation.
Mortgage servicing firms had been using unethical methods to push through foreclosure proceedings, say officials, and abandoning those processes might have stemmed the tide temporarily. Lenders are also trying to be more judicious with the number of foreclosures they complete, as the market could easily be flooded if all of the properties were suddenly released.
Source: The Atlanta Journal-Constitution, "Metro Atlanta foreclosure notices drop," Christopher Quinn, Feb. 13, 2012
]]>According to a statement from the agency's director, the two industries have perhaps the greatest impact on consumers right now. The economic downturn has left more Americans with debt and more Americans with debt in some stage of collection. Debt collection agencies have grown as more debtors default. One result is that consumer reporting agencies have been gathering information about more people than ever before.
]]> From the industries' perspective, the agency's decision is a public relations strategy. These two industries are so vilified by consumers that the CFPB will be well-positioned as the "protector of the working class."Dodd-Frank authorizes the CFPB to establish supervision parameters for nonbanks. The agency will continue to identify other industries for the next few months. The final proposal is due on July 21; a 60-day comment period will follow.
This proposal places debt collectors with more than $10 million in annual receipts and credit reporting companies with more than $7 million in receipts under CFPB supervision. The number of firms involved looks small -- just 4 percent of debt collectors and 7 percent of credit reporting agencies -- but these companies carry the lion's share of receipts in their categories. The 175 debt collection firms hold 63 percent of all annual receipts; the 30 credit reporting companies hold 94 percent of all annual receipts.
Supervision itself is the same for bank and nonbank alike. The CFPB will have unfettered access to financial information, and companies will have to answer the agency's questions about operations. The companies will also be subject to new rules issued by the CFPB and enforcement actions initiated in relation to those and consumer protection rules.
The agency will not supervise smaller companies. However, those companies must abide by all consumer protection laws and rules, and they are subject to enforcement actions as well.
Source: Collections & Credit Risk, "Consumer Protection Bureau Targeting Debt Collectors," Feb. 16, 2012
]]>The settlement was struck between the states and Bank of America, JP Morgan, Ally Financial, Wells Fargo, and Citigroup. It appears that most of the states hit hardest by foreclosures intend to spend the settlement money on budget holes that are not directly related to the foreclosure crisis.
]]> The plans for the foreclosure settlement money have some homeowners and mayors outraged because many people understandably feel that the settlement money should be put toward issues involving the foreclosure crisis which still continues to ravage sections of Atlanta and cities throughout the country."Not one dime should be used to fund the unbalanced state budget," one mayor said. "Families and local communities did not cause the foreclosure crisis, nor did they have a hand in the mismanaged state budget."
Waiting for politicians and settlement money to remedy a foreclosure situation is often a bad idea. The lack of help coming for homeowners facing foreclosures means that other measures are likely needed to help stop the tide of foreclosures expected to be filed this year. In some cases Chapter 13 bankruptcy is the most effective way of stopping a foreclosure. Chapter 13 bankruptcy almost immediately stops foreclosures and allows homeowners to restructure their obligations.
Source: Business Week, "Foreclosure Deal May Help States Prop Up Budgets, Raze Houses," Mark Niquette and Tim Jones, Feb. 13, 2012
]]>Wells Fargo, Citigroup, and Ally Financial will pay wrongful foreclosure victims $116,785 plus lost equity and interest. This number could be even pushed higher by banking regulators.
]]> JP Morgan Chase agreed to clear the veteran homeowners from debt or provide the cash value of the home at the time of its sale. Additional damages may be available for these wrongful foreclosure victims.Authorities say that service members do not have to sign up for this program as the government is tasked with identifying and notifying them. Those who believe that they are eligible can contact the Armed Forces Legal Assistance office however.
The settlement expands some protections found in the Servicemembers Civil Relief Act, which the assistant attorney general for the Justice Department's civil rights division touts as a victory for our service members.
"It allows our service members to focus on the critical role they play in protecting our nation," he said.
Some of the protections include a requirement of court approval for any foreclosures on service members' property. Banks are also required to notify courts if a service member is on active duty and to reduce service members' interest rates to 6 percent on debt that was acquired before they entered the military.
Source: New York Times, "Mortgage Relief for Service Members," John Cushman Jr., Feb. 12, 2012
]]>Fortunately, as an individual consumer, there are steps you can take to stop creditor harassment. You can contact a bankruptcy attorney to take action on your behalf against those collectors.
]]> Federal regulatory agencies have a role to play as well in enforcing the Fair Debt Collection Act and other laws. One of these agencies, the Federal Trade Commission, cracked down on creditor harassment recently by levying the second-largest fine ever against a debt collector.The FTC levied the penalty against a company called Asset Acceptance, a company not based in Georgia but active throughout the U.S. The company agreed to pay the fine to settle charges that it engaged in deceptive practices when seeking to collect old debts.
Evidence gathered by the FTC indicated that, in many cases, debt collectors tried to collect money even when consumers were not legally obligated to pay it.
Debt collectors do not have an unlimited time to sue consumers for nonpayment. Though the statutes of limitation vary from state to state, at some point debts get too old to be legally collectable.
According to the FTC charges, however, Asset Acceptance tried to do just that. It also failed to tell consumers that the time had passed where they could legally be sued for nonpayment. Further, it failed to tell them that paying part of the amount owed would have the effect of reviving the debt - even if the amount paid was very small.
Source: "FTC Fines a Collector of Debt $2.5 Million," New York Times, Jan. 30, 2012
]]>In general, most debtors file under Chapter 7 to wipe out all of their debt. A debtor must pass the means test to qualify. Chapter 13 offers more protection for the debtor's assets -- including his home -- and it requires the debtor to adhere to a payment plan. In Georgia and other Southern states, Chapter 13 may be more common than elsewhere in the country.
]]> Research suggests that Chapter 13 is "less successful" than Chapter 7. Almost two out of three debtors fail to complete their repayment plans under Chapter 13. Not completing a plan means the debt isn't paid. These debtors end up very close to where they started. According to a judge who works with them, many debtors simply can't keep up with the payments.The authors of the study claim that Chapter 13 is more onerous than Chapter 7; they also claim that Chapter 13 costs more in the end. While Chapter 13 has lower up-front costs than Chapter 7, the authors point to the payment plan as a financial burden.
Bankruptcy experts disagree. They assert that the study does not include enough information to draw any financial impact conclusions about either type of bankruptcy. Rather, what the study tells us is that there is a disparity between blacks and white, regardless of the usual mitigating factors. Without more research and more in-depth analysis, the preference cannot be explained.
They add, though, that the failure rate does show how important it is for debtors to consult with an experienced bankruptcy attorney. Together, the debtor and the attorney, and the trustee or judge, can determine a payment plan that is appropriate for the debtor's budget.
Source: New York Times, "Blacks Face Bias in Bankruptcy, Study Suggests," Tara Siegel Bernard, Jan. 20, 2012
]]>However, many consumers are still on the hook for large amounts of credit card debt from before the holidays, even if they didn't overspend during the shopping season. While negotiating with credit card companies and other creditors is an option for people with large debts--as is bankruptcy--it may be possible to pay down the debts before those options have to be considered.
]]> One way to get started that is encouraged by many experts is to make a list of what needs to be paid off. It sounds simple, but people's lives are busy and it's easy to overlook or put aside your goals if you aren't disciplined. If you have everything in writing, you're less likely to drop the ball and fall behind (or miss payments altogether).As far as actually paying the debt off, experts suggest one of two ways: going after the account with either the highest interest rate or the lowest balance. Many suggest the latter because once you have the satisfaction of paying off one account, you're likely to be disciplined enough to work on paying off the others.
Finally, make a commitment to use your credit cards as little as necessary until you have made significant headway toward paying them off. You don't want to make the problem worse before it gets better.
In any case, sometimes these options just won't work, and other methods might be required. People who are concerned about their debt may be well-served to speak to an attorney versed in bankruptcy and debt laws who can offer practical solutions to help alleviate the problems.
Source: Statesman.com, "Make a plan to get rid of holiday debt," Dale Roe, Feb. 4, 2012
]]>This tale begins when the woman's son took out a reverse mortgage on the home for $32,000, the assessed value of the home. This was an option available to her, as the U.S. Department of Housing and Urban Development permits reverse mortgages for the elderly.
]]> The woman, 101, was evicted from the home that she spent 60 years living in, September 12, after her son failed to pay property taxes linked to the reverse mortgage, and her home was foreclosed upon. Soon after the foreclosure took place, the federal government said she could move back into her home, but recanted and said that the home is unsanitary and unsafe.According to home inspectors, it was determined that the house was unsuitable for a person to live in. HUD doesn't want to pay to fix up the house, but they are looking into other agencies that might be willing to fix up the house so that the woman can move back into her home.
This situation was stressful for this woman and her family, but the foreclosure epidemic is happening nationwide with stories just like this one. If you are faced with a situation of not being able to make your mortgage payment and are just waiting for foreclosure, you should consider hiring an experienced bankruptcy attorney. They understand how property values have plummeted, and other economic factors have made it very difficult for some families.
In Georgia alone, there have been thousands of foreclosures. An attorney could offer practical and effective solutions that may enable you to save your home and help you build a stable financial future.
Source: BostonGlobe.com, "Evicted 101-year-old Detroit woman can't go home," Jan. 22, 2012
]]>Late last week, the administration announced that the Home Affordable Modification Program will remain in place for another year. Those who praise the move say that the extension (until Dec. 2013) means that more distressed homeowners will take advantage of the program. Critics -- and there are many -- say the extra year may be enough to clear the backlog of applications and to fix all of the botched applications.
]]> HAMP is an incentive program for lenders. Until this most recent announcement, the program paid as much as $1,000 to private lenders each time they agreed to lower the principal of a distressed homeowner's mortgage loan.The administration is tripling the incentives and is expanding the program to include loans backed by Fannie Mae and Freddie Mac. Reactions to this change have been mixed. While some say the increased incentives should be tied to performance, others say the red tape involved with HAMP earns lenders their combat pay.
Reactions to the program in general have been mixed since its inception. The program has helped more than 900,000 homeowners obtain permanent modifications to their loans. More than half of the applicants have been turned down for permanent modifications.
Changes are in the air for the Home Affordable Refinance Program, as well. The administration has promised to work with Congress to make the program more robust and to serve more homeowners. HARP, however, is a topic for another post.
Source: Associated Press, "Obama administration to extend and expand foreclosure relief program," Jan. 27, 2012
]]>According to the authors, the study shows that bankruptcy professionals intentionally or unknowingly steer blacks toward what the authors believe is the more expensive and more onerous option. In the broadest terms, Chapter 13 involves a repayment plan, while Chapter 7 wipes the debt out completely.
]]> The conclusion is based in part on the responses to the survey of attorneys. Given two couples, one black and one white, who are in exactly the same financial situation, the respondents tended to recommend Chapter 7 for the white couple and Chapter 13 for the black couple.The researchers included various contingencies in their analysis, but the results still showed disproportionate preference for Chapter 13 among blacks. In one example, they removed all the blacks from the database who had homes. Chapter 13 allows a debtor to keep his home and to protect it from foreclosure. The numbers still did not explain the discrepancy; the authors report that, among those debtors without homes, blacks were twice as likely to file Chapter 13 as other races.
If the authors are correct, choosing Chapter 13 over Chapter 7 can have a long-term negative impact on a family. We'll explain that and get into why critics heartily disagree in our next post.
Source: New York Times, "Blacks Face Bias in Bankruptcy, Study Suggests," Tara Siegel Bernard, Jan. 20, 2012
]]>Steinberg allegedly stopped paying for an office back in 2009, according to sources. He claims that financial trouble was a result of his 2008 divorce. Furthermore, the agent lost track of his finances while he was in rehab. As a result, he has confronted many legal matters over several unpaid bills.
]]> Steinberg has selected to deal with his bankruptcy under Chapter 7. In general, Chapter 7 bankruptcy is a way to eliminate or reduce debt. Specifically, this filing removes unsecured debt. Examples of these include medical bills, credit card debt and personal loans. Under this liquidation style, people manage to save homes, cars and create a new financial beginning.In lieu of his financial challenges, sources say that Steinberg is hopeful about his future. While debt can be overwhelming to deal with, you have options. If you are in financial trouble and need assistance reducing your debt, you may want to speak to an attorney about your financial possibilities. Chapter 7 is just one liquidation route, and a lawyer can educate you about other debt-reducing alternatives.
Source: CBS Los Angeles, "'Jerry Maguire' sports agent Files for bankruptcy in OC over $1.4M debt," Brian Ping, Jan. 12, 2012
]]>Locally, the Georgia Department of Revenue has filed a tax lien against singer-producer The-Dream. At issue is the 34-year-old's tax bill from 2007, when The-Dream reportedly didn't pay about $60,500 in income taxes. Interest has accrued and fees have accumulated over the past few years, and The-Dream now owes more than $117,000.
]]> The debt surprises some, because the artist produced a song for Rihanna, "Umbrella," that earned him $15 million. The-Dream does have two ex-wives and four children, though, and tabloids speculate that most of his earnings go to them.Perhaps coincidentally, Jermaine Dupri, a big name in hip-hop, also failed to pay his 2007 income tax bill. According to documents filed with the Georgia Department of Revenue, the original tax bill totaled about $255,000. When he finally cleared the lien last year, he had paid, approximately, $92,000 in interest and a $65,000 penalty, about $82,000 in collection fees, and another $50 in costs. The total came to almost $495,000.
Dupri had other problems last year. His Atlanta mansion went into foreclosure, and his Lamborghini was repossessed. While the mansion escaped the auction block (for undisclosed reasons), the lender for the car sold it for $115,000 (Dupri was about $80,000 behind) and proceeded to press Dupri to pay back what he still owed.
It isn't clear how Dupri paid off his debt. He may have had a windfall; he may have tightened his belt considerably; or he may have sought the advice of a debt management and foreclosure prevention professional. Perhaps he can help The-Dream figure out what his next steps should be.
Sources:
Ballerstatus.com, "Jermaine Dupri Pays Off Massive Tax Debt," Allen Starbury, Jan. 9, 2012
RollingOut.com, "The-Dream Owes Uncle Sam $100K," Nicholas Robinson, Jan. 17, 2012
]]>During the foreclosure crisis, cities and counties realized that these distressed properties were falling into disrepair. The mere fact of a foreclosure in a neighborhood will have a negative effect on area home values; a rundown home will only exacerbate the problem.
]]> To make sure the properties were properly maintained, cities and counties launched foreclosure registries. The lender that forecloses on a property must register the property; if the lender is not local, it must designate a local agent. There is a fee for registering and a penalty for failing to register.Fees are not consistent from county to county or city to city. The bill proposes that the registration fee not exceed $175 and that the penalty would not exceed $500 per month or $2,000 total.
The bill standardizes the paperwork and criteria for registration as well, preempting the local rules. The one rule not pre-empted is the required registration of foreclosed properties with repeat violations that are uncorrected for 60 days.
A committee member said that the fee and penalty caps will keep local governments from treating foreclosed properties as cash cows. As an example, he said that DeKalb County collected in excess of $550,000 in fees and penalties in less than a year.
A spokesperson from the Association of County Commissioners of Georgia reported that county and city elected officials are receiving a lot of public comment about this proposal. The representative added that foreclosed properties are not being taken care of despite their large numbers, and there is no solid way of figuring out who is responsible.
The law will go into effect on July 1 if it is approved.
Source: DeseretNews.com, "Senate committee OKs bill to cap foreclosure fees," Errin Haines, Jan. 9, 2011
]]>Those documentation issues include allegations of robo-signing, a term Georgia is familiar with. According to one consumer advocate, the robo-signing problem in the mortgage industry was dwarfed in comparison to the problems in the credit card industry.
]]> Supporting the theory is the bank's involvement in a whistleblower suit last year. An employee alleged she was fired after questioning the documents supporting $200 million of legal judgments that Chase sold.Chase did not dispute the claim, but said the buyer had purchased the judgments "as is," warts and all. Having disclosed the possibility that the judgments were flawed, Chase said, the bank had violated neither the law nor the sales agreement.
The parties ended up settling the suit. That same month, though, Chase pulled the plug on filing new suits against consumers in a number of states.
Industry insiders say the bank's move will likely mean significant losses. During the first quarter of 2011, Chase recouped $405 million; by third quarter, the total was down to $266 million.
Lenders, especially credit card issuers, have found the threat of litigation to be an effective collection tool. The bank would collect at least part of what they are owed if they took the debtors to court.
Chase customers will just have to watch and wait for the bank's next step.
Source: Collections & Credit Risk, "Chase Suspends Filings Suits Over Consumer Cards, Other Debts," Jeff Horwitz, Jan. 12, 2012
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