"A federal law that bars attorneys from telling clients who are contemplating bankruptcy to take on more debt is not an unconstitutional restriction on the free-speech rights of lawyers, the Supreme Court decided Monday

Attorneys may give their clients any advice that does not lead to an abuse of the bankruptcy system, the court ruled unanimously in an opinion written by Justice Sonia Sotomayor." ...more...

"Under new rules, public service employees can enjoy full loan forgiveness after making 10 years of monthly payments on their federal loans. So it's technically more than just teachers who are eligible; it's also those working in government, military service, emergency management, public safety, law enforcement, public health and elsewhere. " ...more...

"The Supreme Court on Monday issued this ruling, in a case called Milavetz, Gallop & Milavetz v. United States, holding that the First Amendment did not stand in the way of 2005’s Bankruptcy Abuse Prevention and Consumer Protection Act’s prohibition on bankruptcy advisers giving certain kinds of advice to clients. Specifically, the court found constitutional a provision in the law barring debt relief services, including lawyers, from advising clients to incur more debt for filing for bankruptcy." ...more...

"Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed." ...more...

"The Federal Reserve reported Friday that consumer borrowing rose by $4.96 billion in January, surprising economists who were looking for borrowing to decline by $4.5 billion. It was the first gain after a record 11 straight declines and the largest increase since July 2008.

In percentage terms, the overall increase was an advance of 2.43% and followed a revised 2.23% drop in December.

The strength in January came from a $6.62 billion increase in borrowing for auto loans and other types of nonrevolving debt. That represented a 5.01% gain and followed a 3.69% rise in the auto loan category in December.

Credit cards and other types of revolving credit fell $1.66 billion or 2.3%. Even with the decline, it was a much smaller drop than the 12.9% plunge in December. Credit card borrowing has now fallen for a record 16 straight months, although the January decline was the smallest since July." ...more...

"Moody’s reported that credit card charge-offs advanced above 11 percent in January, for the first time ever, to 11.15 percent. The ratings agency predicted that credit card charge-offs will peak at close to 12 percent in the next several months.

Moody’s reported that the delinquency rate – which it calculates as payments more than 30 days late -- dropped to 5.96 percent in January, the first month below 6 percent since September. The amount of a cardholder’s balance paid slid to 17.53 percent in January after increasing in December." ...more...

"As the government cracks down on the way banks charge fees for overspending on debit cards, the industry is mounting an aggressive campaign aimed at keeping billions of dollars in penalty income flowing into its coffers. Chase and other banks are preparing a full-court marketing blitz, which is likely to include filling mailboxes with various aggressive and persuasive letters, calling account holders directly, and sending a steady stream of e-mail to urge consumers to keep their overdraft service turned on." ...more...

"After Congress passed credit card legislation last May, new rules governing credit card companies take effect Monday. Some changes to the way companies can set interest rates and pay schedules already took effect last August. For an idea of what consumers can expect from the new changes, we spoke to Adam Levin, chairman and founder of Credit.com, a consumer education and advocacy group. He's also the former director of New Jersey's consumer affairs division." ...more...

"The Federal Reserve's new rules for credit card companies mean new credit card protections for you. Here are some key changes you should expect from your credit card company beginning on February 22, 2010." ...more...

"In his latest book, Nobel Prize-winning economist Joseph Stiglitz claims President Obama has failed to spark economic reform by reverting to orthodox politics instead of advocating a new economic model. Stiglitz joins us in the studio to discuss the book, "Freefall: America, Free Markets, and the Sinking of the World Economy."" ...more...

"Beginning Monday, some of the more outrageous practices of credit card issuers will be outlawed. But just like a bully on a playground who doesn't punch when the teacher is watching, lenders will find ways to continue pummeling consumers." ...more...

"Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come." ...more...

"The number of homeowners falling behind on their mortgage payments almost always rises with the start of winter. But late last year, the total fell slightly, the Mortgage Bankers Association said in its quarterly delinquency report.

“We’ve got fewer new problems coming into the system,” Jay Brinkmann, the group’s chief economist, said in a briefing. The improvement in the fourth quarter, he added, “frankly surprised us.”

The system, however, is still overwhelmed with millions of distressed homeowners. In a series of events in the Las Vegas area on Friday, President Obama said he was designating $1.5 billion from the Troubled Asset Relief Program to develop assistance programs in five of the most troubled states, including Nevada.
.......
The housing market is at a difficult juncture. Last summer’s modest recovery in home prices has apparently ceased. The government’s effort to compel lenders to modify troubled mortgages has done relatively little. And the pool of pending foreclosures is so large that it is likely to be a drag on the market for years.

About one in seven homeowners with a mortgage is struggling to pay it, an unprecedented level of distress that threatens to undermine the fragile economic recovery.

" ...more...

"After a U-turn in the politics of poverty, food stamps, a program once scorned as “welfare,” enjoys broad new support. Following deep cuts in the 1990s, Congress reversed course to expand eligibility, cut red tape and burnish the program’s image, with a special effort to enroll the working poor. These changes, combined with soaring unemployment, have pushed enrollment to record highs, with one in eight Americans now getting aid." ...more...

"There's nothing free about FreeCreditReport.com's credit-monitoring service, which carries a $14.95-per-month charge. Erica Possin went to the site to check her credit before buying a new car. She says she entered her credit card information and received her report, but she didn't realize she would be automatically enrolled in the monitoring service.
.....
The only authorized site from which to get a truly free report is AnnualCreditReport.com, which is run by the FTC. Most people are legally entitled to a no-cost report once a year from each of the credit agencies: Equifax, Experian and TransUnion" ...more...

"“People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”

After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration’s loan modification plan raised the expectations of many but satisfied only a few, a large group of distressed homeowners is wondering the same thing.

New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying." ...more...

"Recent research on healthcare showed a startling shift in the American populace, especially among young people: incomes are plummeting for those just starting out. Combined with new communications habits, accounts receivables management experts believe the shift may be permanent." ...more...

"Frontline episode being rebroadcast this week on PBS stations nationwide, outlines the ‘art’ of deceptive business practices that credit card companies seem to feel is their birthright." ...more...

"Bankruptcy lawyers noted it's not only layoffs and firings driving people to insolvency as the economic downturn drags on. The losses of once-regular overtime pay and full-time status have left consumers unable to stay current on monthly payments that in the past were no problem to handle.

"The under-employment issue is huge," said Milwaukee bankruptcy attorney James Miller. "More and more people are working multiple jobs but they are making less now than they were five years ago and trying to make a go of it on these limited incomes.

" ...more...

"So many people have lost their jobs, says John Farver, another Seattle area bankruptcy lawyer, that they can no longer afford what they easily could have six months ago. "They need their own personal bailout," he says. "Just like the fat cats on Wall Street."" ...more...

"The number of U.S. student loan accounts has risen 29 percent to 69 million over two years, according to Equifax, while balances have jumped by $105 billion to $527 billion.

"We've never seen this high student loan activity," said Dann Adams, president of Equifax's U.S. Information Systems." ...more...

"Credit card issuers are concerned, of course, that these rules will crimp their profits. So some companies are devising creative ways to generate new revenue.

An example is Alliance Data Systems, a big issuer of private-label credit cards like those that specialty stores offer. It has decided to levy a $1 monthly surcharge to customers who choose to receive account statements by mail.

Proof, yet again, that if you close the door, they will come in through the window. And if you close the window, they blow through the door.

The $1 statement fee from Alliance certainly seems to flout the spirit of both the Fed’s regulations and the Credit Card Accountability Responsibility and Disclosure Act of 2009. But because it is labeled a statement fee, it does not appear to violate the letter of the law, which barred credit card issuers from levying separate fees when a consumer submitted a payment, whether “by mail, electronic transfer, telephone authorization, or other means, unless such payment involves an expedited service by a service representative of the creditor.”" ...more...

"Steven Colbert’s take on the “Walk Away From Your Mortgage” article in the Sunday New York Times magazine... (video, 6 minutes)" ...more...

"November marked the 14th consecutive month for credit card debt contraction. Since September 2008, more than $101 billion in credit card debt has been wiped off the books of credit issuing banks.

Non-revolving debt, like that found in auto, student and personal loans, declined by $3.8 billion, or at an annual rate of 2.9 percent.

" ...more...

"Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials. Former Treasury Secretary Henry M. Paulson Jr. declared that “any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation.” (Paulson presumably was not so censorious of speculation during his 32-year career at Goldman Sachs.)" ...more...

"The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.

And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.

" ...more...

"For consumers, the move makes perfect sense. Credit unions are not-for-profit cooperatives, and they're owned by their members. They offer the same products and services banks do, but unlike banks, credit unions exist only to serve their members -- not to generate profits for outside investors. Members typically experience that difference in the form of better rates and lower fees. In 2008 (the latest data we have available), consumers saved $9.2 billion by using credit unions rather than banks, or the equivalent of $104 per member and $198 per family. And that's just on average. Loyal members -- those who use credit unions extensively -- often receive total financial benefits that are much greater than the average." ...more...

"If I were a debt collector, I would be pretty unhappy about an AP article that came out yesterday. It portrays the career as one for felons and bullies. And indeed, there are some collectors who do use unlawful tactics. But there are also bad eggs in other industries who sometimes break the law. There are dirty doctors, lawyers, cops and hedge fund managers, to name a few. I don't think the article fairly singles out the collections industry." ...more...

"As the sour economy leaves people less and less able to pay their debts, the collection abuses have become so flagrant and numerous that state and federal authorities have moved to shut down several Buffalo-area agencies where the most heartless and bullying telephone calls originated. At least 20 people have been sued or arrested on criminal charges.

The regional Better Business Bureau said that in the past three years, it has gotten 4,562 complaints about debt collection agencies in western New York. Of 213 agencies it has graded in the region, 104 were given an "F." And of all the complaints about debt collection received by the Better Business Bureau nationwide last year, about 1 in 10 involved a company in western New York." ...more...

"The AP gathered data from the nation's 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.

Arizona saw the fastest increase, a jump of 77 percent from the year before, followed by Wyoming (60 percent), Nevada (59 percent) and California (58 percent).
" ...more...

"Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system." ...more...

"“The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” said Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”" ...more...

"The fragile housing sector showed signs of firming up, according to a report from the National Association of Realtors, with existing home sales climbing a greater-than-expected 7.4 percent in November, to a seasonally adjusted annual rate of 6.54 million, up from 6.09 million in October.

" ...more...

"Members of the accounts receivable management industry are increasingly finding themselves under attack from state attorneys general and civil lawsuits brought by consumers alleging violations of the Fair Debt Collections Practices Act (FDCPA). ARM leaders have always been well-advised to understand the legal and regulatory environments applicable to the industry, but that need is even more important today.

" ...more...

"Fannie Mae, Freddie Mac and Citigroup Inc. have announced that they will suspend evictions during the holidays.

Freddie Mac and Fannie Mae said they have ordered mortgage servicers and foreclosure attorneys to suspend evictions for occupied single-family homes owned by the government-controlled companies between Dec. 19 and Jan. 3, 2010. Foreclosure processes will continue, however." ...more...

"Now, even before most of the Credit CARD Act's provisions have gone effective, a new report from the Center for Responsible Lending finds that the card industry has already invented a new bunch of tricks and traps. " ...more...

"The measure, called The Wall Street Reform and Consumer Protection Act (H.R. 4173), passed the full House on a 223-202 vote. No Republicans voted for the bill, while some moderate Democrats voted against it as well. The Senate could have similar divisions, according to Peterman. The Senate has not yet marked up the proposals for consideration, and is unlikely to do so in 2009." ...more...

"After falling a month earlier, financial institutions reported rising credit card defaults in November. Bank of America (NYSE: BAC) still leads all big banks with a 13 percent default rate, but Citigroup (NYSE: C) posted the largest rise as defaults jumped 1.5 percent to top 10 percent in November.

JP Morgan Chase (NYSE: JPM), the nation’s largest credit card issuer, saw defaults rise to 8.81 percent in November, which marks a new high for the year. However, the bank did report a small drop in delinquencies, which represent payments 30 days past due, to 4.9 percent from 4.95 percent in October.

" ...more...

"More than half of the nation’s unemployed workers have borrowed money from friends or relatives since losing their jobs. An equal number have cut back on doctor visits or medical treatments because they are out of work." ...more...

"Historically, the government has reported such figures in terms of how many students default within two years -- a figure that stands at 6.7 percent of student borrowers overall and about 11 percent at for-profit schools.

But the new three-year numbers, though preliminary, give a clearer picture of whether a student at a particular school will default, so the government will soon begin using them to help decide which colleges qualify for taxpayer-supported student aid programs" ...more...

"Mortgage rates in the United States have dropped to their lowest levels since the 1940s, thanks to a trillion-dollar intervention by the federal government. Yet the banks that once handed out home loans freely are imposing such stringent requirements that many homeowners who might want to refinance are effectively locked out." ...more...

"Figures released this week by the Federal Reserve showed that Americans owed $10.8 trillion on home mortgages at the end of the third quarter, down 2.2 percent from a year earlier and the lowest level since mid-2007.

Similarly, the Fed said that outstanding credit card bills in October totaled $888 billion, down 8.5 percent from a year earlier. That number was the lowest since March 2007.

Those trends do not, however, necessarily indicate that Americans have paid down their debts and are starting to lead the more frugal lives that some financial planners have been recommending for years. There has undoubtedly been some of that, but the declines also indicate that banks have been forced to write off a lot of bad debts and have grown more stingy in granting credit.

As can be seen from the accompanying charts, banks’ credit card write-offs have soared, to an annual rate of 10.2 percent in the third quarter of this year.
" ...more...

"The House on Friday approved a Democratic plan to significantly tighten federal regulation of Wall Street and the financial sector, advancing a far-reaching Congressional response to the financial crisis still reverberating through the economy.

After three days of floor debate, the House voted 223 to 202 to approve the measure, which did not get a single Republican vote. It creates a new agency to oversee consumer lending, establishes new rules for transactions that contributed to the meltdown, and seeks to reduce the threat that one or two huge companies on the verge of collapse could bring down the economy." ...more...

"In Jerman, the defendant law firm filed a complaint seeking foreclosure of real property owned by the consumer plaintiff. The complaint included a validation notice that provided the debt would be assumed valid unless the consumer disputed the debt in writing within 30 days. The plaintiff filed a complaint alleging the defendant violated the FDCPA because it compelled consumers to dispute the debt in writing when the FDCPA imposes no such requirement." ...more...

"Filing bankruptcy reshapes America.

This chart from the EconomicCrisisBlog.com graphically illustrates what many of us in the Atlanta area already know – Georgia has one of the nation's highest rates of bankruptcy filings.

" ...more...

"The nation’s employers not only have stopped eliminating large numbers of jobs, but appear to be on the verge of rebuilding the American work force, devastated by the recession." ...more...

"Tucked into the 2005 Bankruptcy Reform Act is some strange language forbidding lawyers from advising clients “to incur more debt in contemplation of” a bankruptcy filing.

Indeed, it sounds like a sound proscription: nobody wants lawyers encouraging clients to load on debt before filing for bankruptcy in the hope that the debt will soon be erased. But is such a prohibition constitutional?" ...more...

"Several justices seemed convinced on Tuesday that a federal law restricting the advice bankruptcy lawyers may offer was a bad idea. But they had differing ideas about what the Supreme Court should do about it." ...more...

"Student loans are a way of life in America, and the federal government guarantees most of those loans. The question now before the Supreme Court is what the obligations of the lender and the borrower are when a student can't pay." ...more...

"State Bar prosecutors took action last month against five more lawyers under investigation for loan modification misconduct, bringing to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the bar’s Loan Modification Task Force in April." ...more...

"Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said." ...more...

"Lending by U.S. banks plunged by 2.8 percent in the third quarter, the largest drop since at least 1984 and the fifth consecutive quarter in which banks have reduced lending, the Federal Deposit Insurance Corp. reported Tuesday.

The decline in lending is emerging as a serious impediment to economic recovery. Banks reduced the amount of money extended to their customers by $210.4 billion between July and September, cutting back in almost every category, from mortgage lending to funding for corporations. " ...more...

"“This has really become the insurance system for the country,” said Susan R. Limor, a bankruptcy trustee who calculated that 13 of the 48 Chapter 7 liquidation cases on her docket one recent afternoon included medical debts of more than $1,000." ...more...

"As Congress debates how to rein in credit and debit card companies in the United States, Australia’s experience is being pointed to as an example of just how tricky that can be: for one thing, if regulators limit one fee or rate, banks are likely to find another way to keep revenue flowing." ...more...

"An increasing amount of the bankruptcies are being filed by middle class Americans, suffering from the perfect storm of the highest unemployment levels since the early 1980s, rapidly declining home equity, tight credit and previously incurred debt, reports USA Today, citing a report from Elizabeth Warren, Harvard Law School Leo Gottlieb professor of law and chair of the Congressional Oversight Panel on the Troubled Asset Relief Program (TARP) and Deborah Thorne, Ohio University associate professor of sociology." ...more...

"The fallout from the recession has cut deeply into the housing security, employment and income of many Americans. But some parts of the country are clearly faring better than others. Here, three interactive maps show foreclosure and jobless rates as well as household income by county.

" ...more...

"New Law Offers Some Help

If graduates can prove that they are hardship cases, they can defer loan payments for up to three years. And since Congress passed the Income-Based Repayment Plan this summer, borrowers now can sign up for a program that will limit their payment to 15 percent of their incomes.

" ...more...

"The unemployment rate fell in 13 states, including Massachusetts, where it declined to 8.9 percent from 9.3 percent; New Hampshire, with a drop to 6.8 percent from 7.2 percent; and West Virginia, which fell to 8.5 percent from 8.9 percent.

The number of states with at least 10 percent unemployment held at 14 last month, the Labor Department’s report showed. In the states reporting record jobless rates, California was at 12.5 percent; South Carolina, 12.1 percent; Florida, 11.2 percent; and Delaware at 8.7 percent. The District of Columbia also set a high with an 11.9 percent rate." ...more...

"with roughly a quarter of the stimulus money out the door after nine months, the accumulation of hard data and real-life experience has allowed more dispassionate analysts to reach a consensus that the stimulus package, messy as it is, is working.
....
In interviews, a broad range of economists said the White House and Congress were right to structure the package as a mix of tax cuts and spending, rather than just tax cuts as Republicans prefer or just spending as many Democrats do. And it is fortuitous, many say, that the money gets doled out over two years — longer for major construction — considering the probable length of the “jobless recovery” under way as wary employers hold off on new hiring." ...more...

"F.H.A. insurance was created for minority and low-income families who could not come up with the traditional down payment of 20 percent required by private lenders. Buyers receive loans from government-approved lenders and are required to document their income and assets. They must pay a substantial insurance premium of 1.75 percent of the loan. But in return, their down payment can be as low as 3.5 percent.

For decades, most F.H.A. loans were in low-cost states like Texas and Michigan. Under the agency’s loan limits, houses along the coasts were usually too expensive to qualify. In 2007, fewer than 4,400 F.H.A. loans were made in California, according to the research firm MDA DataQuick, and none were in San Francisco.

The Economic Stimulus Act of 2008 helped change that by temporarily doubling the maximum loan the F.H.A. insured, to $729,750. A two-unit property like the one bought by Mr. Rowland and his friends can be insured for up to $934,200.

“F.H.A. financing was a lost language in San Francisco, the real estate equivalent of Aramaic,” said Michael Ackerman, the agent who represented Mr. Rowland and his friends. “Once the limits were raised, smart buyers started calling.”" ...more...

"Unless foreclosure modification efforts begin succeeding on a permanent basis — which many analysts say they think is unlikely — millions more foreclosed homes will come to market.

“I’ve been pretty bearish on this big ugly pig stuck in the python and this cements my view that home prices are going back down,” said the housing consultant Ivy Zelman.

The overall third-quarter delinquency rate is the highest since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008." ...more...

"Consumer lawsuits against debt collectors claiming violations of the Fair Debt Collection Practices Act (FDCPA) are on the rise.
With SearchReceivables.com, you can quickly search hundreds of ARM sites for the latest news on FDCPA lawsuits. (see a search on "FDCPA lawsuits"). Although this a site for creditors, it follows both creditor-focused and consumer-focused websites and blogs." ...more...

"Senator Chris Dodd (D-Conn.) has introduced the Senate side version of financial reform legislation that would put control of much of the financial services industry, including mortgages and credit cards, under the control of a new, independent Consumer Financial Protection Financial Agency (CFPA).

The CFPA would also oversee the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA).
" ...more...

"Starting today, we're enabling people everywhere to find and read full text legal opinions from U.S. federal and state district, appellate and supreme courts using Google Scholar. You can find these opinions by searching for cases (like Planned Parenthood v. Casey), or by topics (like desegregation) or other queries that you are interested in. For example, go to Google Scholar, click on the "Legal opinions and journals" radio button, and try the query separate but equal. Your search results will include links to cases familiar to many of us in the U.S. such as Plessy v. Ferguson and Brown v. Board of Education, which explore the acceptablity of "separate but equal" facilities for citizens at two different points in the history of the U.S. But your results will also include opinions from cases that you might be less familiar with, but which have played an important role.
" ...more...

"U.S. credit card companies said on Monday that defaults fell more than expected in October, but delinquencies mostly rose in a sign consumers remain under stress and the sector can expect more pain ahead.

The drop in defaults reflected a decline in late payments earlier this year thanks to tax refunds and economic stimulus actions." ...more...

"The U.S. Department of Agriculture said Monday that 17 million U.S. households experienced some sort of food shortage in 2008, up 31% from 13 million households in 2007.

In 2008, a year marked by rising food costs and recession, the prevalence of "food insecurity" in the U.S. soared to the highest levels in the history of the USDA's national annual survey, which began in 1995.

According to the survey, 14.6% of U.S. households experienced food insecurity at least some time during 2008, up from the 11.1% of U.S. households in 2007 that fell into the USDA's definition of food insecure." ...more...

"Accounts receivable management companies are shifting their collection strategies to include more settlement offers and payment arrangements as debtors struggle through a recession that shows little sign of letting up on the American consumer.

In insideARM’s most recent Credit & Debt Collection Industry Confidence Survey, more than 72 percent of collection agency respondents said that they have tried “more payment arrangements” in the past six months in an effort to increase revenue. Nearly 68 percent of debt buyers responded in a similar way." ...more...

"The Federal Housing Administration, the government agency whose loan-insurance programs have become a crucial source of support for the housing market, said on Thursday that its cash reserves had dwindled significantly in the last year as more borrowers defaulted on their mortgages.
“There is a real risk. Nobody has a crystal ball,” said Shaun Donovan, secretary of Housing and Urban Development.
The agency released an audit that spelled out the rapid deterioration of its finances. It is tightening loan standards in hopes it will not become another drain on the United States Treasury, but is reluctant to clamp down so much that it snuffs out the tentative recovery in housing." ...more...

"For many families across the country, the greatest damage inflicted by this recession has not necessarily been financial, but emotional and psychological. Children, especially, have become hidden casualties, often absorbing more than their parents are fully aware of. Several academic studies have linked parental job loss — especially that of fathers — to adverse impacts in areas like school performance and self-esteem." ...more...

"Some of the key points of the bill include:

— Establishing a consumer financial protection agency that will end abusive practices and provide clear and accurate information to Americans.

— Ending the era of "too big to fail" regulation in order to prevent large and complex companies from harming the U.S. and global economy. This would include imposing new capital requirements on such companies and requiring them to write their own "funeral plans" in the event that they fail.

— Creating a single federal bank regulator in lieu of a system in which multiple regulators have unnecessary overlap and conflicting regulators. Dodd said the system now in use enables large banks to shop for a regulator that fits their needs rather than the public interest.

" ...more...

"Since September 2008, Americans have shed $86.2 billion in credit card debt. Although many credit consumers restrained card spending, much of the mathematical credit for the plunge can be given to soaring charge off rates at banks (“Banks Charging Off Debt at a Higher Rate than in Great Depression,” Oct. 28)." ...more...

"Banks began raising interest rates and pulling back credit lines about a year ago as delinquencies crept upward and regulators discussed reforms. As banks have become more aggressive in making changes, lawmakers have accused them of trying to impose rate increases before many of the new rules take effect in February.

On Monday, the Federal Reserve provided new evidence of the banks’ actions. About 50 percent of the banks responding to the Fed’s survey said they were increasing interest rates and reducing credit lines on borrowers with good credit scores. About 40 percent said they were imposing higher fees. The banks also said they were demanding higher minimum credit scores and tightening other requirements." ...more...

"Gov. Schwarzenegger signed Senate Bill 94 Oct. 11, immediately prohibiting any person, including attorneys and real estate licensees, from collecting an advance fee to perform foreclosure relief services. The new law, adopted as an emergency measure, closes a loophole that permitted foreclosure scam artists to exploit the ability to charge advance fees.

It is now unlawful for any licensed attorney or real estate agent “who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower … to claim, demand, charge, collect, or receive any compensation until after the [attorney or agent] has fully performed each and every service the licensee contracted to perform or represented that he, she, or it would perform.”" ...more...

"Advanta became notorious among small business borrowers for offering credit cards at attractive low interest rates and then raising APRs steeply, often to over 30%. The company stopped all new credit card lending in May and entered into a settlement with the FDIC over the interest rate hikes, which the regulator said constituted unfair and deceptive practices. (Advanta didn’t admit or deny liability in the settlement.) When settlement checks began arriving in September, the average settlement of $131 seemed laughable to many business owners who were still paying sky-high interest on thousands of dollars of charges they made under the initial low rates. At least one group filed a lawsuit seeking class action status. (An Advanta spokesman declined to comment about any pending litigation.)" ...more...

"In upscale communities such as Los Altos, Greenbrae and Alamo, where median prices top $1 million, about twice as many households received default notices from January to September as in the same period in 2008, according to recorders' office data compiled by MDA DataQuick, a San Diego real estate research firm.

The same is true for mid-scale areas with median prices around $500,000, such as Walnut Creek, Los Gatos and Campbell.
...
Overall, 17 percent of Bay Area default notices this year were in communities where the median price topped half a million dollars, up from 12.2 percent last year." ...more...

"In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.

This includes the officially unemployed, who have looked for work in the last four weeks. It also includes discouraged workers, who have looked in the past year, as well as millions of part-time workers who want to be working full time.

The official jobless rate — 10.2 percent in October, up from 9.8 percent in September — remains lower than the early 1980s peak of 10.8 percent.

The broader rate is highest today, sometimes 20 percent, in states that had big housing bubbles, like California and Arizona, or that have large manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina." ...more...

"In separate actions to address Americans’ continuing economic hardship, the government moved Thursday to assist long-unemployed workers and struggling businesses, as well as home buyers and homeowners facing foreclosure.

Fannie Mae, the federally controlled mortgage company, announced a Deed for Lease program in which those in danger of eviction may be able to stay as tenants in their houses for at least a year.

At the same time, Congress gave final approval to a stimulus measure that will extend unemployment benefits for the longtime jobless, aid that will bring total assistance for many to nearly two years. Other provisions of the bill will expand two popular tax breaks — one for home buyers, the other for businesses operating at a loss." ...more...

"Borrowing by consumers for revolving credit, including credit cards, fell at an annual rate of 13.3 percent in September, the same as August. This category has declined for a record 12 straight months.

Borrowing for non-revolving loans, including auto loans, dropped at an annual rate of 3.7 percent in September after edging up 0.1 percent in August. The August gain reflected the surge in car sales as consumers rushed to take advantage of the government's Cash for Clunkers program.

The $14.8 billion overall decline in borrowing left total consumer credit at $2.46 trillion in September. The 7.2 percent annual rate of decline followed a 4.8 percent drop in August. The Fed's report doesn't include mortgages or other loans secured by real estate.

" ...more...

"The jobless figure stands in contrast to other economic indicators that suggest the economy is beginning to turn around. Gross domestic product grew in the third quarter for the first time in more than a year, suggesting the deep recession may be ending.

But the new unemployment data are sparking concern that the recovery in jobs may be lagging even further than usual behind the broader economic recovery. The unemployment rate is expected to continue rising into early next year and remain high through most of 2010.

" ...more...

"In the six decades since the government began compiling such data, the highest level of unemployment came at the end of 1982, when it hit 10.8 percent. Despite the widespread assumption that the recession has already ended, and even as the economy has resumed growing, the government’s latest snapshot of the labor market released Friday testified to the uncomfortable truth that expansion had yet to translate into jobs." ...more...

"Federal law guarantees free credit reports each year, but many consumers who got theirs from FreeCreditReport.com unintentionally paid for an expensive credit monitoring service" ...more...

"Just flip on the television or radio, or surf the Internet, and you will find countless ads placed by companies offering to help you get a loan modification.

The only problem is, it's tough to know if they truly will be able to help you. Why? A new study reveals that servicers actually make more money when a loan goes into foreclosure than if it is modified." ...more...

"mortgage servicers -- companies that collect monthly mortgage payments and distribute them to investors -- have found it's cheaper to foreclose on homeowners than to offer loan modifications that would benefit homeowners and investors, according to "Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior," a new report from the National Consumer Law Center (NCLC)." ...more...

"Slowly, Wall Street is reprising its critical role in the credit markets. In the third quarter investment banks sold nearly $20 billion worth of car loans, six times as much as in the same period of 2008. The yields on bonds backed by credit-card payments have fallen drastically, a sign that investor appetite is back. And the volume of mortgage securities, the largest segment of the credit market, is on track this year to nearly match the peak levels of 2005. "The core consumer finance sectors seem to be reasonably intact," says Joseph R. Mason, a finance professor at Louisiana State University." ...more...

"Ending a year of contraction, the United States economy grew in the third quarter, the Commerce Department said on Thursday. But even if a recovery is technically in the offing, job seekers likely will not begin to feel the benefits for months to come." ...more...

"Moody’s Investors Service reported earlier this week that bank charge-offs had reached $116 billion year to date, or 2.9 percent of outstanding loans on an annualized basis. According the report, the rate is higher than the charge off rate during the Great Depression.
...
“While the latest reports of net charge-offs to banks are alarming and unprecedented, the credit economy during the Great Depression and the one we have now are very different from each other,” cautioned Dana Wiklund, research director for Financial Insights' Risk Management Advisory Service." ...more...

"None of the credit cards offered online by the 12 largest U.S. banks would meet requirements of new federal curbs on the industry’s rates and fees, a report from the Pew Charitable Trusts said.

All of the cards surveyed used practices considered “unfair or deceptive” by the Federal Reserve, according to the report released today by the Philadelphia-based nonprofit organization. The study examined almost 400 cards advertised by banks and credit unions and compared terms for cards offered in July 2009 and December 2008." ...more...

"Michael Moore's Capitalism: A Love Story made a splash, but critic John Powers says its critique of capitalism is "the kind of scattershot tirade I used to hear in my college dorm." Better object lessons: New documentaries, Schmatta and American Casino, that do far more to explain how grand economic forces shape our daily lives." ...more...

"In 2008, only 10% of chapter 7 debtors had above-median incomes. And nearly all of that 10% passed the means test once expenses are deducted. According to its report, the U.S. Trustee filed a motion to dismiss for abuse in 2,881 Chapter 7 cases--that works out to 4% of all above-median cases and .4% of all chapter 7 cases. Those numbers are hard to square with any fear that there will be any measurable change in the fraction of people made ineligible for chapter 7 this year. Importantly, these numbers don’t reflect how the very existence of a median income test may discourage people from filing a bankruptcy case or may push people directly to chapter 13 rather than risking an abuse determination. But again, that effect—whatever its magnitude—probably won’t change with median income fluctuation." ...more...

"Lawmakers worked this week on defining what the agency covers and what it doesn't.

These kinds of credit will face scrutiny: payday loans, paycheck cashing, debit cards, overdraft protection and mortgages.

Providers would have to register with the new agency, pay its fees and fines; and face its regulators.

Not included are: auto dealers, retail stores, doctors, lawyers and anyone else who's not in the finance business but who might extend credit. " ...more...

"A recent study suggests that most homeowners have qualms about abandoning a mortgage that they can afford to pay, even if it straps them to an investment that’s unlikely to pay off anytime soon

But if the house has lost significant value, or if many neighbors walk away from their mortgages, the study says, “strategic defaults” are significantly more likely.

It is an increasingly common question facing homeowners, many of whom have seen their properties lose large amounts of equity in recent years: would you give up a home that is considered to be “underwater” even if you could still afford the monthly payments? " ...more...

"A committee in the U.S. House of Representatives was expected to move forward this week with legislation that would create a new regulator, the Consumer Financial Protection Agency (CFPA), which could supplant the Federal Trade Commission as the primary regulator for collection firms.
A bill currently before the House Financial Services Committee, H.R. 3126, would also take regulatory powers from the Federal Reserve and other agencies and place it in the hands of independent regulators who would oversee products such as credit cards and other financial services. As such, the CFPA would oversee the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA).
" ...more...

"Over months of debate, the agency's scope and scale have been cut back through the bill-drafting process in the U.S. House of Representatives Financial Services Committee.

The panel is likely to approve a bill that would exempt a long list of businesses from CFPA jurisdiction but expose large banks to tougher new oversight.

The new agency would have purview over credit cards, mortgages, bank fees and other financial products. It would strip existing agencies, including the Federal Reserve, of consumer protection duties, centralizing them.

A full House vote was not expected until November. The outlook for the proposed agency was unclear in the Senate, where lawmakers are moving more slowly on financial reform." ...more...

"Yesterday, the Senate Judiciary Committee held a hearing titled “Medical Debt: Can Bankruptcy Reform Facilitate a Fresh Start.” The hearing examined medical bankruptcies in America, and witnesses included CAP fellow Elizabeth Edwards and Kerry Burns, a Rhode Island mother who was forced into “financial ruin” by her late son’s medical bills.

One of the highlights of the hearing was when Sen. Al Franken (D-MN) questioned Hudson Institute Senior Fellow Diana Furchtgott-Roth about medical bankruptcies. Franken asked Furchtgott-Roth — who claimed that moving towards a European-style system of universal health care would increase bankruptcies — about how many medical bankruptcies there were in countries that have universal health care, like Switzerland and France. Furchtgott-Rott repeatedly told Franken that she didn’t “have that number,” and Franken informed her that the number was actually zero:" ...more...

"On October 5th, 2009, the Ninth Circuit Bankruptcy Appellate Panel (BAP) published its decision in In re Martinez, wherein it concluded that debtors who strip junior liens off mortgages are not entitled to deduct those payments from the chapter 13 projected disposable income test. While the decision was ordered published, the 3 judge panel disagreed with each other in a 2-1 split decision. Unfortunately, it also technically comprised three seperate appeals, yet all of which were entirely unopposed by the debtors with only the Chatper 13 Trustee arguing the appeal in favor of eliminating the deduction.

" ...more...

"Credit card customers say they aren’t going to take it anymore, with CNBC's Suze Orman." ...more...

"A lawsuit was filed in May alleging that Phoenix-based Nationwide Asset Services, Inc. (NAS) defrauded consumers in New York who were seeking help with their debts. The judge ruled for the state, finding that 1,981 consumers had been victims of fraud.
......
The court found that the majority of NAS customers were promised a 25 to 40 percent reduction in their outstanding debt but never saw such reductions. Only one-third of one percent of consumers received such savings. The other customers suffered continued harassment and lawsuits by creditors and debt collectors and had their credit ratings destroyed. " ...more...

"The Associated Press sent an article out over its wires Thursday afternoon that was innocuously titled, "States raise limits on creditors as debtors squirm." But the main focus of the article is the growing trend of individual states passing laws targeting the accounts receivable management industry that supersede the Fair Debt Collection Practices Act (FDCPA).

The AP article notes that several states or local government entities have already proposed or passed laws stricter than the FDCPA, with most focusing on debt purchasing. More states are expected to follow suit.

The list of states – North Carolina, Idaho, Colorado, New York, Arkansas, Maryland, New Jersey and Massachusetts, along with New York City – is not new to the ARM industry." ...more...

"National consumer credit laws already prohibit collection agencies from harassing, deceptive, or unfair practices like telling neighbors or family about what is owed, or calling before 8 a.m. or late at night. Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court. Other states may follow suit.

Lawmakers are increasingly focusing on outfits that buy bad debt from credit card companies and other lenders for pennies on the dollar and profit when they collect more than they paid." ...more...

"Older Americans are heading into and through retirement with a boatload of debt. They're carrying everything from mortgages and home-equity loans to big credit-card balances, and many are finding the burdens harder and harder to bear. In the last eight years, the over-55 crowd has become the age group most likely to declare bankruptcy, according to the AARP." ...more...

"The Senate Committee on the Judiciary, Subcommittee on Administrative Oversight and the Courts has scheduled a hearing on "Medical Debt: Can Bankruptcy Reform Facilitate a Fresh Start?" for Tuesday, October 20 at 10:00 a.m. in Room 226 of the Senate Dirksen Office Building. " ...more...

"The Chicago Cubs filed for bankruptcy as part of a plan by owner Tribune Co. to sell the baseball team to the family of TD Ameritrade Holding Corp.’s founder, Joe Ricketts.

" ...more...

"Local governments, like many businesses, are struggling with a data glut. Agencies collect huge amounts of information about topics as diverse as building permits, potholes, Medicaid cases and foster-child placements. Technology, according to computer experts and government officials, can be a powerful tool to mine vast troves of government data for insights to streamline services and guide policy.

“The mistake people make is to think that collecting the data is the endgame,” said Michael R. Bloomberg, the mayor of New York. The real payoff, he said, takes another step. “We actually use the data,” he noted.

Indeed, New York has been a pioneer among cities in the use of computing firepower to sift through data to improve services. It began in the 1990s with the city’s CompStat system for mapping, identifying and predicting crime. The system, combined with new policing practices, reduced crime rates in New York and was later adopted by Los Angeles, Philadelphia, Baltimore and other cities. " ...more...

"In what must seem like a cruel joke to many, the accounts proved the most dangerous for those closest to retirement. During the market downturn, the 401(k)s of 55-to-65-year-olds lost a quarter more than those of their 35-to-45-year-old colleagues. That's because in your early years, your 401(k)'s growth is driven mostly by contributions. You control your own destiny. But the longer you hold a 401(k), the more market-exposed it becomes. It's a twist that breaks the most basic rule of financial planning." ...more...

"The Federal Reserve reported late Wednesday that revolving debt, mostly from credit cards, dipped at an annual rate of 13.1 percent in August. Almost $10 billion in credit card accounts outstanding were wiped off of banks’ books in the month. Both numbers are among the highest ever reported for a month.

August marked the 11th consecutive month of declines in credit card debt. Since September 2008, when card debt peaked at an all-time high of $975 billion, banks have shed nearly $76 billion in card account balances. The Fed said that the total outstanding figure was $899 million at the end of August.

The last time the figure was that low was May 2007, meaning the contraction in card balances is much more rapid than the growth before the downturn." ...more...

" Holstein argues that the filing of a bankruptcy case is "an entirely clerical act" that doesn't require the skills of a licensed attorney. However, the bankruptcy court's mandatory e-filing rule holds that only lawyers are allowed to register for the service, Holstein says.
He bases his challenge on federal antitrust law, which he says favors competition and is based on the principle that increased competition stimulates lower prices in the public interest.
...
He seeks a declaration that the mandatory e-filing rule, the ABA rule and a new Illinois Rule of Professional Responsibility that is to go into effect on Jan. 1, 2010, are unconstitutional and go far beyond their stated aim of protecting consumers. " ...more...

"Five hundred thousand troubled homeowners have had their loan payments lowered on a trial basis under the Making Home Affordable Program, said Treasury Secretary Timothy F. Geithner in a morning telephone briefing with reporters. Mortgage payments are now being lowered faster than homes are being sold in foreclosure proceedings, he added, and roughly 40 percent of the 1.2 million homeowners deemed eligible have been helped." ...more...

"For many people who do not have bank accounts, or cannot get a credit card, the appeal is irresistible, making the reloadable cards among the consumer banking industry’s fastest-growing products. But their convenience comes with a catch: fees, often hidden in the fine print.

The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service." ...more...

"How so many people could make so much money on a company that has been driven into bankruptcy is a tale of these financial times and an example of a growing phenomenon in corporate America." ...more...

"4. “This could actually improve your credit score down the road.”

Yes, bankruptcy will pummel your credit score, says Barry Paperno, consumer-operations manager for FICO, the company that develops the credit scoring formula used by the three major credit bureaus. Yet bankruptcy can be less damaging in the long run than juggling late payments on credit cards for years in a bid to postpone the inevitable. Bankruptcy stays on your credit report for 10 years, but you can begin repairing it immediately, if gradually.

The fact is, most people go bankrupt with lousy credit. They’ll be able to return to (and maybe surpass) their prebankruptcy FICO score more quickly than the rare debtor with pristine credit who needs to file bankruptcy after, say, a serious illness—which could mean a credit score drop of 100 points or more, Paperno says." ...more...

"Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000. According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed." ...more...

"Did you know that because of legislation dating back to 1976 under the Higher Education Act private student loans are unable to be discharged through bankruptcy? In other words, feel free to run up the credit card and splurge, but take out loans to pay for education? That’s just reckless.
" ...more...

"This week, the Federal Reserve published its quarterly report on debt levels in the economy. While Uncle Sam borrowed more, others borrowed less. The accompanying chart shows that total domestic debt — the amounts owed by individuals, governments and businesses — climbed just 3.7 percent from the second quarter of 2008 through the second quarter of this year. That is the smallest increase since the Fed started these calculations in the early 1950s." ...more...

"Credit card debt outstanding has plummeted in the past year, and the prevailing narrative has credited the decline to consumer frugality. But with charge-off rates well beyond historic highs, other factors are at play." ...more...

" Beginning Oct. 19, Bank of America will stop charging any fees for customers who overdraw their accounts by less than $10 in a single day. It will also limit the number of overdraft fees it charges to four a day, although the bank will continue to charge a fee of $35 per overdraft.

Chase will cap the number of overdraft fees it charges a day to three. It will stop charging fees when accounts are overdrawn by less than $5. Chase’s overdraft fees are $25 for the first fee each year, $32 for the next four and $35 after that.

Current customers who want to opt out of Bank of America’s automatic overdraft protection can go into their branch on Oct. 19 and turn off the ability to overdraw their accounts. The bank will cut them off when their debit card purchases or A.T.M. withdrawals go beyond the money in their checking account, and will no longer cover bounced checks." ...more...

"Authorities say that if a borrower missed the repayment, the companies employed venomous collection tactics. The FTC alleged that they falsely threatened consumers with arrest or imprisonment, falsely claimed that consumers were legally obligated to pay the debts, threatened to take legal action they could not take, repeatedly called consumers at work using abusive and profane language and improperly disclosed consumers’ purported debts to third parties.
" ...more...

"Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.

August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed." ...more...

"The statistics also showed that real median household income declined nationwide, rising in only five states — New York, New Jersey, Kansas, Louisiana and Texas — compared with 33 states in 2007. It ranged from $37,790 in Mississippi to $70,545 in Maryland. Income inequality was highest in metropolitan New York, where the top fifth of households received 20 times as much as the bottom fifth." ...more...

"From 2004 to 2008, "one in five people who took out a mortgage loan (for both purchases and refinancing) in the San Francisco metropolitan region (San Francisco, Alameda, Contra Costa, Marin and San Mateo counties) got an option ARM," said Bob Visini, senior director of marketing in San Francisco at First American CoreLogic, a mortgage research firm. "That's more than twice the national average.

"People think option ARMs (will be) a national crisis," he said. "That's not really true. It's just in higher-cost areas like California where you see their prevalence."" ...more...

"While the young have lost ground, older people have grown more prosperous over the years and the decades. Older women have done best of all.

The dividing line between those getting richer or poorer: the year 1955. If you were born before that, you're part of a generation enjoying a four-decade run of historic income growth. Every generation after that is now sinking economically.

Household income for people in their peak earning years — between ages 45 and 54 — plunged $7,700 to $64,349 from 2000 through 2008, after adjusting for inflation. People in their 20s and 30s suffered similar drops. Older people enjoyed all the gains." ...more...

"A weak U.S. labor market led to bigger bank writedowns of credit card debt in August as a record-high jobless rate left consumers struggling to pay their bills.

Charge-offs, or the writedown of uncollectible debt by banks, increased 81 basis points to 10.62 percent in August, after a 31 basis points decline to 9.81 percent in July. On the retail front, credit card writedowns increased 49 basis points to 9.99 percent in August, according to JPMorgan Securities." ...more...

"“From a technical perspective, the recession is very likely over at this point,” he said, adding that “it’s still going to feel like a very weak economy for some time, as many people will still find that their job security and their employment status is not what they wish it was.”

The cautiously optimistic assessment came at the conclusion of a speech by Mr. Bernanke at the Brookings Institution marking the anniversary of the market crisis that was precipitated by the collapse of the investment bank Lehman Brothers." ...more...

"Title VII of the Helping Families Save Their Homes Act provides uniform federal protection to tenants after foreclosure--at least until the law expires on Dec. 30, 2012 (apparently the date by which someone thought the foreclosure "crisis" will have abated). The law requires the new owner of a foreclosed property to allow tenants to stay in the foreclosed property for the remainder of the lease. If there is no lease, or if the lease is terminable at will under state law, tenants must be given at least 90 days' notice before they may be evicted. This is a floor that does not preempt more generous state law.

I'm interested in how financial institutions and tenants are going to deal with these requirements. Lenders have attorneys who routinely handle evictions after foreclosure. Being a landlord is a different task. Are tenants supposed to call the former owners' mortgage servicer when their pipes burst? If not, how is the tenant supposed to learn exactly who is the new owner of the property? Are note holders actively hiring property management companies to comply with this rule? Perhaps more interestingly, the bill doesn't seem to permit an eviction during the 90 days even if the tenants declare they aren't going to pay a dime of rent!" ...more...

"Debtors whose budget shows they can’t afford to reaffirm the loan on their car may get to keep the car without reaffirmation under a line of decisions by bankruptcy judges.

A number of judges have ruled that “pay and drive” survives bankruptcy reform if the debtor signs a reaffirmation agreement that is denied by the judge as not being in the debtor’s inerest. Lose in court and drive away in your car!" ...more...

"In another sign of both the recession and the long-term stagnation of middle-class wages, median family incomes in 2008 fell to $50,300, compared with $52,200 the year before. This wiped out the income gains of the previous three years, the report said.

Adjusted for inflation, in fact, median family incomes were lower in 2008 than a decade earlier." ...more...

"Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.

In the four decades that the Census Bureau has been tracking household income, there has never before been a full decade in which median income failed to rise. (The previous record was seven years, ending in 1985.) Other Census data suggest that it also never happened between the late 1940s and the late 1960s. So it doesn’t seem to have happened since at least the 1930s." ...more...

"Credit card debt outstanding in the United States has fallen by nearly $70 billion in less than a year and continues its downward spiral, according to a government report released yesterday.

The Federal Reserve said Tuesday that consumer credit outstanding in the U.S. declined by $21.5 billion in July, the largest monthly drop on record. The annualized rate of decline, 10.4 percent, was also the largest on record.

" ...more...

"Cramdown is back.

House Financial Services Committee Chairman Barney Frank (D-Mass.) tells the Huffington Post he plans to revive the effort to give bankruptcy judges the authority to renegotiate home mortgages -- by making it part of this fall's much-anticipated financial regulatory reform bill" ...more...

"When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully.

So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.
" ...more...

"Ron Lieber, author of the Your Money column, explains the inner workings of debit cards and how to avoid overdraft fees that can cost hundreds of dollars a month." ...more...

"The Labor Department’s latest employment report, released Friday, added weight to a growing belief that, at least technically, the economy had already escaped the grip of recession. Though 216,000 net jobs vanished in August, the losses continued to moderate from their worst numbers of the year.

Yet the report also lent credence to a deepening consensus that, even as the economy resumes expansion, the recovery was likely to be weak, prompting most companies to hold back from aggressive hiring." ...more...

"Outstanding credit balances classified as subprime or deep subprime have grown by more than 33 percent since the third quarter of 2008, according to a study released this week by Experian.
Further, the number of consumers in the highest grade, superprime, has declined by 10 percent since Q3 2008.
" ...more...

"“I submitted the paperwork three times, and nothing happened,” said Mrs. Giguere, 41, who has a high school education and worked as restaurant manager before losing her job.

On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath.

The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case." ...more...

"Accounts receivable management industry experts say that the recently approved North Carolina law -- SB 974, which will go into effect October 1, barring an unexpected governor’s veto -- will have harmful unintended consequences on consumers along with an unknown impact on debt buyers." ...more...

"People who are insured often find themselves in debt because their insurance has limited benefits and high out-of-pocket costs, Lavarreda said. She said a growing number of people are buying policies with high deductibles or those that require them to pay a percentage of the total bill.

"When you get a high deductible plan, you have less coverage and you're exposed to more risk," she said, adding that some people buy policies with deductibles of several thousand dollars in order to afford the monthly premiums." ...more...

"how can you avoid being caught in a hospital debt collector nightmare? Here are some practical, worthwhile tips for you to know and share. These came from many sources, but kudos go especially to the California Hospital Association, for pro-actively providing detailed information." ...more...

"The National Top 10 Consumer Complaints List for 2008 is:
Debt Collection
Auto Sales
Home Repair/Construction
Credit Cards (tie)
Internet Goods and Services (tie)
Predatory Lending/Mortgages
Telemarketing/Do-Not-Call
Auto Repair
Auto Warranties (tie)
Telecom/Slamming/Cramming (tie)" ...more...

"Even as evidence mounts that the Great Recession has finally released its chokehold on the American economy, experts worry that the recovery may be weak, stymied by consumers’ reluctance to spend.

Given that consumer spending has in recent years accounted for 70 percent of the nation’s economic activity, a marginal shrinking could significantly depress demand for goods and services, discouraging businesses from hiring more workers." ...more...

"The hospital arranged a conference call with a social worker, who outlined how the dementia and its financial toll on the family would progress, and then added, out of the blue: “Maybe you should divorce.”

“I was blown away,” M. told me. But, she said, the hospital staff members explained that they had seen it all before, many times. If M.’s husband required long-term care, the costs would be catastrophic even for a middle-class family with savings." ...more...

"Last year, debit card use surpassed credit card use for the first time in history: Americans made 28.4 billion debit purchases compared with 21 billion credit card purchases, according to payment systems newsletter The Nilson Report.
It happened, industry watchers say, because of tighter credit, recession-weary and strapped consumers, wider acceptance of debit cards for small purchases, and a burgeoning youth market that prefers paying with debit cards." ...more...

"The foreclosure crisis will get much worse before it gets any better.

That’s the only conclusion to draw from a recent survey by the Mortgage Bankers Association, which found that six million loans were either past due or in foreclosure in the second quarter of 2009, the highest level ever recorded by the group. Worse, loan defaults are not the only cause of foreclosures. In some areas, unpaid property taxes are provoking foreclosures, even for homeowners otherwise current on their payments." ...more...

"Late last week, rating agency Moody’s said that the charge-off rate on U.S. cards in July was 10.52 percent, down from a record-high of 10.76 percent in June. The overall delinquency rate fell to 5.73 percent in July -- the lowest level all year -- from 5.81 percent in June. " ...more...

"more than a half-million option ARMs scheduled to reset in the next four years, at rates many homeowners cannot afford. ..... Default and foreclosure rates on option ARMs recently passed those of subprime mortgages, according to the research firm First American CoreLogic, in part because so many subprime mortgages have already failed" ...more...

"California Attorney General Edmund G. “Jerry” Brown, Jr. announced Monday that his office won a judgment against an Anaheim-based small-balance lender that will force the company to stop using “loan shark tactics in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action.”" ...more...

"A big feature of the 2005 changes to the U.S. bankruptcy law was supposed to be a means test that would get people into chapter 13 instead of chapter 7. Because a chapter 13 requires a 3- or 5-year repayment plan, the law's advocates pitched it as an attempt to force "can pay" debtors to repay a portion of their debts. Initially, chapter 13 rates did go up, but that was a statistical artifact of the huge surge in filings just before the 2005 law. As I have noted previously, the chapter 13 rate has been declining ever since.

I am now officially going to call it ....

Anyway you measure it, chapter 13s have returned to their historical level..." ...more...

"On Thursday, the first of a set of new rules went into effect resulting from the landmark credit card legislation earlier this year.

Banks must now provide written notice to customers 45 days before increasing the interest rate or changing the terms on a card. So banks raced to get out in front of that requirement, making a bunch of changes before Thursday, lest they have to give you a month and a half of warning.

Irritated by the changes? Inclined to take your business elsewhere now? This is exactly the right instinct, since plenty of people can still get a better deal from a different card. Fee-free balance transfers still exist. And banks have barely touched the most lucrative rewards programs — and wouldn’t dare fiddle too much given the revenue they generate.

The best revenge is a better card. Here’s how to find one." ...more...

"Advocates say the new rules are a good first step but don't go far enough in protecting consumers. For instance, even though issuers now must give 45 days notice of "any significant change," account closures and credit line reductions don't count as major changes.

" ...more...

"After trying unsuccessfully to make ends meet, more people are opting to make the financial choice of last resort: filing for bankruptcy. .... How do you know when it's time to file? " ...more...

"What debt should you pay first, and what debt should wait till last, with CNBC's Suze Orman." ...more...

"Starting Thursday, credit-card users are getting more time to avoid late fees and maybe rate hikes.

A new consumer-protection law won’t lift all debt burdens, by any means, but supporters call it a victory against some of the most abusive practices of the bank-card industry.

Here’s a rundown on what the Credit Card Accountability, Responsibility, and Disclosure Act means to you, both right now and in February when Phase 2 takes effect." ...more...

"Not many people would knowingly pay more than $35 for a cup of coffee. But far too many people are getting saddled — with no warning — with outsized bills for minor purchases, under a euphemistically labeled “overdraft protection program” that most major banks have adopted over the last 10 years." ...more...

"As mortgage delinquencies rise each month, and as the number of foreclosures increase each quarter, the “new mantra” of many pro-se and represented consumers is to demand that the mortgage servicer “prove up the original note.” Is this just some new and creative gimmick that has been sold to the desperate homeowners and to a few lawyers who have attended “progressive” seminars or is there really something to it? I submit that there is really something to it." ...more...

"Taken together, the reports made clear that consumers were likely to continue hoarding their dollars into the usually robust back-to-school shopping season, a crucial time for retailers.

The Commerce Department said Thursday that retail sales fell by a seasonally adjusted 0.1 percent in July from a month earlier, far below the 0.7 percent increase economists were expecting. Comparing this July to the same month a year ago, retail sales were down 8.3 percent. Stark as that drop sounds, it is actually a slight improvement from recent months, when sales were down 9 percent or more compared to the same month a year ago." ...more...

"according to data from the 2007 Consumer Bankruptcy Project, the mean credit card debt for bankruptcy filers is $23,543, with a median of $13,279. Among chapter 7 filers, the mean credit card debt was $26,267 and the median $17,032. For chapter 13, those numbers were $18,076 and $6,079, respectively. This actually seems fairly modest when you consider that, by the end of 2008, the average accredit-card balance was $8,329, more than a quarter the average bankruptcy total of $23,543. In addition, 7.9% of our chapter 7 filers and 18.2% of those in chapter 13 reported no credit card debt at all. In the general population, 53.9% of Americans held no credit card debt – a much larger difference." ...more...

"“July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” noted James J. Saccacio, chief executive officer of RealtyTrac. “Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we’re seeing significant growth in both the initial notices of default and in the bank repossessions.”
" ...more...

"The Massachusetts Supreme Judicial Court announced last week that it has changed some of the rules governing the use of small claims courts. The Court said that the changes were made specifically to address the volume of debt collection cases that are filed in small claims courts.

The rules changes come on the recommendation of the Small Claims Working Group, a panel of legal experts that was convened in 2006 to “examine and improve current small claims practices.” The Working Group was created, in large part, in response to a series of articles that appeared in the Boston Globe chronicling the perceived imbalance of debtors and collection law firms in small claims courts, which allow cases with remedies of up to $2,000." ...more...

"Revolving credit, principally credit card accounts, led the declines, dropping at an annual rate of 6.8 percent. Non-revolving debt – like that found in auto, student and personal loans – contracted at an annual rate of 3.8 percent in June.

For the second quarter, revolving credit decreased at an annual rate of 8.2 percent. Over the past three quarters, revolving credit has declined 7.86 percent. Overall consumer credit has declined 4 percent.

" ...more...

"PolitiFact is a project of the St. Petersburg Times to help you find the truth in American politics. Reporters and editors from the Times fact-check statements by members of Congress, the White House, lobbyists and interest groups and rate them on our Truth-O-Meter." ...more...

"Editorial note from LegalConsumer.com

The pending health care reform legislation is perhaps the most important legislation , regarding the financial health of this nation, and the financial health of future generations of Americans.

There is a torrent of scare mongering and misinformation being spread on this issue on the airwaves and through e-mails and discussion boards all over the internet. (Lots of “extremely uninformed debate” -- to borrow an Onion joke.)

Whether you ultimately agree or disagree with what is being proposed regarding health care, at least take the time to LEARN the FACTS about what is actually being proposed.

This site is a good source of straight FACTS about what is -- and, more importantly, what is NOT -- being proposed in the pending health care reform legislation.

As you discuss this issue with friends and loved ones this month by e-mail or in online discussion threads, send them this link.

The long term financial health of this nation and our ability to be a dynamic economic power in the global economy depends on getting our health care costs under control.

Take the time to learn the facts...
And then... (and ONLY then!....) ... call your congressperson and tell them where you stand.

Thanks for listening.
- A. Renauer, editor
LegalConsumer.com" ...more...

"The chapter 7 debtor’s mortgage payments were about $4,000 per month. Including them on the means test, his net disposable income was minus $2,376. His statement of intentions said that he was giving up the home. Without the secured payments, his means test net was plus $1,430. In a footnote, the 1st Cir said, the debtor “actually deducted both the housing allowance and his mortgage debt, which is clearly impermissible. Accordingly, his disposable income amount needs to be revised regardless of the treatment of his mortgage debt.” The UST filed a motion to dismiss. The bankruptcy court denied the motion and the 1st Cir. BAP affirmed. “The BAP held that the means test calculation is meant to be ‘a 'snapshot' of the debtor's situation as of the petition date,’ rather than a "'forward-looking'" consideration of "only those payments that will actually be made.’"

The 1st Cir affirmed also. " ...more...

"Once reserved for government jobs or payroll positions that could involve significant sums of money, credit checks are now fast, cheap and used for all manner of work. Employers, often winnowing a big pool of job applicants in days of nearly 10 percent unemployment, view the credit check as a valuable tool for assessing someone’s judgment.

But job counselors worry that the practice of shunning those with poor credit may be unfair and trap the unemployed — who may be battling foreclosure, living off credit cards and confronting personal bankruptcy — in a financial death spiral: the worse their debts, the harder it is to get a job to pay them off." ...more...

"During Franklin Roosevelt's first 100 days in office, congress granted every request the new president made. Barack Obama, despite enjoying a decisive majority in both houses of Congress, hasn't been so fortunate. His economic stimulus package failed to win a single Republican vote in the House, and conservative members of his own party are trying to block his ambitious plans to provide universal health care and curb global warming. What's more, Obama himself has alarmed supporters by compromising on key issues, and he has yet to flex his political muscle by mobilizing the tech-savvy network of grass-roots activists he assembled during last year's campaign. All of which raises the question: Is Obama raising false hopes? Or does he have what it takes to deliver real change?" ...more...

"
The issue of deceased collections gained national attention earlier this year when U.S. Senator Chuck Schumer (D-N.Y.) called for an investigation into “debt collectors that shake down relatives of deceased debtors.” The call came after the New York Times ran a piece detailing the practices of deceased debt collection agencies like DCM." ...more...

"There are many web sites that provide a link to the means test, one in particular I personally recommend is www.legalconsumer.com. The calculator is free and does not require registration as most others do. You simply click on the Free Means Test Calculator link which will prompt you to either enter your zip code or you may also choose your state of residency since bankruptcy laws are different for many states and you want to make sure you're getting the information specific to the state you live in.
" ...more...

"Industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans." ...more...

"The government’s long-awaited cash for clunkers program is underway. So we’ve attempted to answer your questions about it here. Visit our complete cash for clunkers special section, where you’ll find more information about the program, guidance on vehicle choice, and buying advice." ...more...

"The group, which calls itself Wealth for the Common Good, believes that people who have taxable income of more than $235,000 a year should support restoring their top federal income tax rate to 39.6% from 35% -- and now, not in 2011, when the higher rate is scheduled to return anyway." ...more...

"Vulnerable consumers are turning to credit cards for necessities, not luxuries, Demo's survey shows. For instance, more than half of households say medical expenses contributed to their credit card debt.

"The frivolous spending idea, that's not what's driving families into crazy debt," says Jose Garcia, a Demos associate director. "The expense that most affects families is the cost of living."" ...more...

"While the economic recession continues to threaten the financial security of low- and middle-income households, its effects have been heightened by the reality that, even before the downturn, millions of households were experiencing difficulties meeting the most basic expenses. Now, as families experience declining home values and tightened credit markets, many are falling behind on their mortgage and credit card payments.

" ...more...

"With Nowlin, the 5th Circuit joined the 8th and 10th Circuits in ruling that §1325(b)(2)'s definition of "disposable income" is a starting point for calculating the disposable-income figure, and that changes in a debtor's income should be taken into account.

"We join the Eighth and the Tenth Circuits in adopting a forward-looking interpretation of 'projected disposable income' in §1325(b)(1). It accounts for the relevant statutory language, including the phrases 'to be received in the applicable commitment period,' 'as of the effective date of the plan,' and 'will be applied to make payments,'" wrote 5th Circuit Judge Jennifer Elrod in an opinion joined by Judges Carolyn Dineen King and James Dennis." ...more...

" “They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”

(That’s certainly true in the mortgage crisis. According to a Quinnipiac University poll in February, 62 percent of those polled blamed lenders “who loaned the money to people who may not be able to pay it back.” Only a quarter blamed homeowners.) " ...more...

"WEBCAST: The Senate Committee on the Judiciary, Subcommittee on Administrative Oversight and the Courts will hold a hearing entitled "The Worsening Foreclosure Crisis: Is It Time to Reconsider Bankruptcy Reform?" on Thursday, July 23, 2009 at 10:00 a.m. in Room 226 of the Senate Dirksen Office Building." ...more...

"Durbin represents a somewhat lonely crowd. Not only is the bankruptcy-reform proposal anathema to Republicans, but the Obama administration, once a cheerleader for the change, has abandoned the legislation altogether. Without the active backing of the White House, a cramdown bill that passed the House in March was shot down in the Senate less than two months later. Still, Durbin has vowed to bring it back to the Senate floor this year. But, a crowded legislative calendar, including sweeping health care and climate change reform, he’s running out of opportunities.
....

Adam Levitin, housing expert at the Georgetown University Law Center ,... estimates that 30 percent of all families who bought homes in the last five years currently owe more than their homes are worth." ...more...

"According to Mike Lillis of the Washington Independent, leaders of the Senate Judiciary Committee have scheduled a hearing for tomorrow morning titled: "The Worsening Foreclosure Crisis: Is It Time to Reconsider Bankruptcy Reform?" The answer to that question seems clear. Anger is simmering in Washington over bureaucratic delays in the Obama administration's "Making Home Affordable" plan, which has secured only 50,000 successful loan adjustments since it was launched in April. Meanwhile, foreclosures continue to stack up. Already this year, the Center for Responsible Lending estimates that 56,872 new foreclosures have been filed in Illinois alone. After his bill died in the Senate this spring, Durbin said he wanted to revisit the issue as soon as possible. The hearing tomorrow will hopefully give us some sense of whether that is going to happen. " ...more...

"Friday, two freshmen representatives -- Dina Titus, from suburban Las Vegas, and Colorado's Jared Polis, representing Boulder, Vail and some of the tonier suburbs of Denver -- joined Republicans to vote against Mr. Obama's top-priority health-care overhaul when it faced a vote in their House Education and Labor Committee. One reason was a one-percentage point-surtax on couples earning between $350,000 and $500,000 -- gradually increasing to 5.4 percentage points on earnings more than $1 million -- to pay for it.

" ...more...

"The fact that four old clients, all in their fifties and sixties, are all going back to ground zero via bankruptcy tells me a new wave of defaults is beginning.

None of these persons fit a bad-credit profile or an irresponsible-person profile. They all have a history of outstanding credit scores and hard work and strong savings. They have been ruined first by bad investments in real estate. Two of four are self-employed, and bad times in business have killed the chance for a turn around and getting through it. One of four borrowed irresponsibly on credit cards. Negative equity for all of them destroys all reason for struggling to keep up. In a way they have all been impoverished to their debt for years. It’s obvious they should pull-the-plug." ...more...

"Many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.

Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company." ...more...

"The state's unemployment rate rose to 15.2% in June. It was the highest of any state since March 1984, when West Virginia's unemployment rate exceeded 15%.

Michigan, which has been battered by the collapse of the auto industry and the housing crisis, has had the highest unemployment rate in the nation for 12 months in a row." ...more...

"New figures show the number of people in trouble with their mortgages continues to rise. According to foreclosure listing service RealtyTrac Inc, more than 336,000 households received at least one foreclosure-related notice in June. That's 33 percent higher compared to June of last year." ...more...

"It would create a one-stop financial protection agency for consumers, with authority over financial products from credit cards and home mortgages to payday loans. Proponents say the measure would stop people from getting mortgages, for example, that they don't understand and can't pay for. Opponents say the new entity would create unnecessary bureaucracy and shrink consumer choices.

Committees on both sides of the Capitol started working on the legislation this week. The Senate banking committee heard from Assistant Treasury Secretary Michael Barr. He said that even with half a dozen regulators out there, the system has major gaps.

"The present system of consumer protection is not designed to be independent or accountable, effective or balanced," Barr said. "It is designed to fail."" ...more...

"The nonpartisan Congressional Budget Office estimates that Obama’s plan to switch to federally funded direct student lending, instead of guaranteeing loans by private companies, would save $87 billion over 10 years. The administration has said the savings would be directed into other programs including Pell Grants to help low-income families afford college." ...more...

"Bank of America Corp., the biggest U.S. bank by assets, said net charge-offs on its credit-card trust rose to 13.86 percent in June from 12.5 percent a month earlier.

Payments overdue by 30 days or more fell to 7.73 percent from 7.95 percent in May, according to data posted today by the Charlotte, North Carolina-based lender on it Web site.

Bank of America’s charge-off rate was the highest among five U.S. credit-card issuers that reported today, and one of only two that climbed from the previous month." ...more...

"Bankruptcy holds traps for the unwary. There is always a learning curve for attorneys to know the written rules and the unwritten rules of practicing bankruptcy. The bankruptcy court and bar are supportive of their fellow practitioners and provide assistance and opportunities for education and sharing of ideas. If you are new to bankruptcy practice, take advantage of that assistance." ...more...

"Banks and other private lenders made about $56.7 billion in government-guaranteed loans during the 2008-2009 school year; the direct loan program lent about $20.1 billion to students.

Under the proposal from Rep. George Miller, all new federal student loans -- the largest source of college aid -- would be made by the government's direct lending program as of July 1, 2010." ...more...

"The prepackaged bankruptcy under discussions by Cubs officials would be designed to clear the team of liabilities and make its sale easier, sources close to the team said." ...more...

"The total number of lawsuits filed by consumers against accounts receivable management firms claiming violations of the Fair Debt Collection Practices Act (FDCPA) increased nearly 30 percent from May to June this year." ...more...

"The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with congressionally sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation's history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. " ...more...

"Pope Benedict XVI on Tuesday called for a radical rethinking of the global economy, criticizing a growing divide between rich and poor and urging the establishment of a “true world political authority” to oversee the economy and work for the “common good.”" ...more...

"To most people, bankruptcy is a four-letter word. But when all else fails, declaring bankruptcy can be an honest and time-tested legal maneuver to save your house from foreclosure.

If nothing else, filing for bankruptcy protection will buy you some breathing room, which is particularly important in "non-judicial" states where the clock on foreclosure starts as soon as your lender posts a notice that it intends to accelerate your note." ...more...

"Sponsored by Assemblyman Ted Lieu, D-Torrance (Los Angeles County), AB350 is supported by the industry's two main trade groups, who say they want to weed out unscrupulous firms giving the business a bad name." ...more...

"Despite what the ads say, "This is not an easy way to get out of your debts," she says. Settling for less than the full amount can do serious harm to your credit score, and the debt that is canceled can be taxed as income." ...more...

"For people who choose to defer benefits until age 66, it generally takes about 12 more years to collect as much as if you started getting checks at 62. So you break even, so to speak, about age 78, according to Avram Sacks, a Social Security law analyst for CCH, a tax and accounting information service. “If you are in good health, and you expect to live to 78 or longer, then the advantage goes to the person who waits,” he says. “But that’s assuming we’re all prophets and we know what’s going to happen tomorrow, and we don’t all know.”" ...more...

"The 8th U.S. Circuit Court of Appeals reversed a bankruptcy court and a district court and found that attorney Mark Allen Jesperson could not discharge more than $360,000 in student loan debt in a Chapter 7 proceeding.

The two lower courts had found that repaying the "shockingly immense" debt would create an undue hardship for Jesperson. But the appeals court on Wednesday determined that his "self-imposed limitations," which resulted in a gross income of $48,000, were no excuse for nonpayment. " ...more...

"Are there any nonprofit or government agencies that provide free consultation or advice about applying for bankruptcy?" ...more...

"A full three quarters of loan volume of the payday lending industry is generated by borrowers who, after meeting the short-term due date of the loan, must re-borrow before their next pay period" ...more...

"It's certainly true that Dodd has been a standout consumer advocate in the Senate. Recently, he shepherded credit card reform legislation that reined in some of the industry's more abusive practices. But he hasn't been able to escape the perception that he's way too cozy with K Street and the industries he oversees and out of touch with his own constituents. Not that Dodd has done much to dispel that image. Until now, that is. " ...more...

"The American Bankruptcy Institute said that consumer bankruptcy filings in the first half of 2009 are higher than at any point since bankruptcy reform in 2005, and are on pace to hit levels seen before the legislation passed.
" ...more...

"Despite massive government efforts to bolster the credit market, banks are pulling back severely on card lending." ...more...

"A soaring unemployment rate is causing more Americans to fall behind on loans of all types in record numbers, according to data released Tuesday by the American Bankers Association.

In the first quarter of 2009, the ABA’s composite ratio of delinquencies across eight loan types reached its highest level since the association began tracking late payments in 1974. " ...more...

"Valley Chapter 7 filings jumped from 4,407 to 8,938. Statewide, Chapter 7 filings jumped 98.4 percent from 6,211 to 12,322.

All filings were up 92.1 percent in the Valley (from 5,711 to 10,973) and 88.3 percent statewide (from 8,003 to 15,071)." ...more...

"The were about 124,800 bankruptcy filings in June which, spread over the 22 business days in the month, is a daily bankruptcy filing rate of 5,672. In May, the daily bankruptcy filing rate was 6,038." ...more...

"Card loss rates have been closely tracking the unemployment rate over the past year, according to Fitch Ratings. The firm expects credit card performance to “deteriorate further over the balance of the year as unemployment rises and card portfolios contract” according to a recent analysis report. " ...more...

"The papers collected on this site are written by Bankruptcy Project Fellows. Many of the papers are empirically based, and most are about bankruptcy, consumer law, and related areas." ...more...

"Use pulldown menus to view bankruptcy filings by district and date" ...more...

"Why congress should adopt Obama’s proposal for a consumer financial protection agency" ...more...

"As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.

" ...more...

"At issue: Coercing debtors into waiving rights they don't know they have." ...more...

"At issue is a section of the law that prohibits “debt relief agencies” from encouraging clients to take on more debt in advance of a bankruptcy filing. The provision was intended to prevent knowledgeable advisors from getting consumers deeper into debt so that a judge might rule favorably in a bankruptcy hearing." ...more...

"The study of medical bankruptcies has been under attack for not taking proper account of the effects of the change in bankruptcy law in 2005. The authors are accused of leaving this out of the article, or at least obscuring its effects, and the suggestion is that this has been intentional. However, reading the study I find that they deal directly with this issue:" ...more...

"Total credit card debt outstanding can contract on a monthly basis if consumers pay off their balances at a quicker rate than they make purchases on the cards. U.S. banks have been slashing credit limits over the past two quarters, making less credit available to consumers. But the figure can also drop when banks increase their credit card chargeoffs. " ...more...

"Before Congress passed the “Bankruptcy Abuse Prevention and Consumer Protection Act” (BAPCPA) in 2005, dealing with car loans in Chapter 7 cases in most states was pretty simple—if you made your payments you could keep your car, and if you didn’t, even though the car finance company could repossess the car, you wouldn’t be personally liable for any deficiency.

This has changed.

Now, you are given three options. ..." ...more...

"unaffordable bills directly contributed to 92 percent of medical bankruptcies, and loss of income due to illness caused 40 percent. Many people lose their heath insurance after suffering an illness or injury. A quarter of businesses that offer health insurance cancel coverage immediately when an employee suffers a disabling illness, and 25 percent more cancel coverage within a year, according to the study.

" ...more...

"Harvard study finds 50 percent increase from 2001" ...more...

"" ...more...

"helps determine exemptions if you have moved your domicile from one state to another state within the past year or so." ...more...

"our citizens declare bankruptcy at a rate that astonishes the rest of the world.... Nonetheless, our system works so well that other nations are trying to move away from their harshly punitive treatment of insolvent debtors, and closer to our free-and-easy, all-is-forgiven model." ...more...

"9th Circuit held (in an issue of first impression for the court) that the section 401(k) plan loan was not a “secured debt” or a “necessary expense” of the debtor." ...more...

"Issue: Is the repayment of a secured loan against the debtor’s 401(k) deductible on the means test? Holding: No. " ...more...

"America's wealthiest families are pouring millions into slashing the estate tax - and some Democrats are siding with the super-rich" ...more...

"The Senate voted overwhelmingly on Tuesday to put new restrictions on the credit card industry, passing a bill whose backers say will make card-issuers spell out their terms in fewer words, using plain English, and treat customers more fairly.

The 90-to-5 vote, following a 357-to-70 vote in the House on April 30, made it likely that President Obama will have a measure on his desk before the Memorial Day recess." ...more...

"First, let’s lay out the things we know will change because of the new legislation. The bill is chock-full of new rules, which will take effect at various points in the year after President Obama signs the final legislation. " ...more...

"How bankers took power, and how they're impeding recovery." ...more...

"“Binding oneself financially is not something that trumps every other need,” added the Rev. Brian Daley, a Jesuit priest and professor of theology at the University of Notre Dame. Scripture suggests that the redistribution of property is also a reasonable thing to do. “You just can’t mention it in public in the United States,” he said. “Our notion of capitalism is so absolutized that we give it a quasi-religious value.”" ...more...

"A bill introduced recently in the New Jersey General Assembly would require debt collection agencies operating in the state to provide debtors with additional information about their accounts, a copy of the Fair Debt Collection Practices Act (FDCPA), and would increase fines per violation to at least $10,000.

The proposal, A3839, was introduced by Democrat Assemblyman Paul Moriarty of Gloucester. Moriarty said of the bill, "Debt collectors may have a responsibility to get consumers to make good on what they owe, but they also have an obligation to treat consumers with respect and within the rule of law."" ...more...

"New York City’s recently passed collection law, Int. No. 660-A, could present a country-wide threat for the debt collection industry if other legislative bodies use the new rules as a model for their collection laws.

The amended law passed in mid-March. (“NYC to Require Debt Buyers to Register as Collection Agencies,” March 17, 2009).
" ...more...

"Oregon state legislators are tightening the reins on the accounts receivable management industry.

Last Wednesday, the Oregon House of Representatives and the Senate passed Senate Bill 328, which gives the Oregon Attorney General authority to sue any collection agency in the United States that practices unjust collection tactics against Oregon residents.
" ...more...

"Critics of the 2005 reform say filing is more tedious, more difficult and costlier for ordinary debtors. They also believe the reform benefited banks over consumers." ...more...

"Dozens of specially trained agents work on the third floor of DCM Services here, calling up the dear departed’s next of kin and kindly asking if they want to settle the balance on a credit card or bank loan, or perhaps make that final utility bill or cellphone payment.

The people on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they take responsibility for it anyway." ...more...

"In re Simpson, --- F.3d ----, 2009 WL ------ (9th Cir. Feb 2009)(single-premium annuity here does not qualify as exempt property under California Code of Civil Procedure Sec. 704.100 where debtor purchased it as an individual and annuity was not established for debtor by employer)" ...more...

"Issue: Where the debtor intends to surrender collateral which will result in substantial “net disposable income,” can that be the basis for dismissal of the case under 707(b)(3)? Holding: Yes. " ...more...

"Mr Obama’s chances of being any more successful depend on whether his team has correctly diagnosed what is driving the wave of foreclosures. Is it that homeowners cannot afford to pay; or is it that they are declining to do so, because their homes are now worth less than their mortgages, the phenomenon known as negative equity?

Both factors play a part, but economists are divided on their relative importance. One school thinks that, even in cases of negative equity, most homeowners will not default if they can afford the payments—not least because defaulting will wreck their credit records. A second school believes that once the home is worth less than the mortgage, homeowners have a significant incentive to walk away even if they can make the payment, since in many states lenders cannot then pursue them for the shortfall." ...more...

"" ...more...

"“Before the reform, overindebted households might file bankruptcy and get rid of their credit card debt, and that would free up income to pay the mortgage,” Morgan said. “The new law blocks that escape route and forces better-off households to continue paying credit card debt, which makes it harder than before to continue paying the mortgage.”" ...more...

"The glut of clients is a welcome turn of events for bankruptcy lawyers" ...more...

"" ...more...

""You can't swing a dead cat in Wilmington without hitting a bankruptcy lawyer,"" ...more...

"Issue: Does the debtor’s admission that he did not keep business records establish a prima facie case that his discharge should be denied such that summary judgment is appropriate? Holding: Yes " ...more...

"" ...more...

"" ...more...

"A recent study found that the typical family who filed for bankruptcy in 2007 was carrying about 21 percent more in secured debts, like mortgages and car loans, and about 44 percent more in unsecured debts, like credit cards and medical and utility bills, than filers in 2001.

Their incomes, meanwhile, remained static over those six years, according to the study, which used data from the 2007 Consumer Bankruptcy Project, a joint effort of law professors, sociologists and physicians. Researchers surveyed 2,500 households nationwide that filed for bankruptcy in February and March 2007." ...more...

"Most people want to repay their debts and turn to bankruptcy only as a last resort. Yet when Congress toughened the bankruptcy laws in 2005, one main reason given was that there was too much "fraud" in the system. I didn't buy it then and I don't now." ...more...

"Issue: When a confirmed chapter 13 plan is completed and the discharge injunction is entered, is the unpaid portion of the student loan discharged when the lender received actual notice of its treatment in the plan and did not object?
Holding: Yes, the discharge injunction may be set aside only pursuant to FRCP60(b) and then based on a lack of sufficient notice. " ...more...

"Complaints against collectors amounted to 20.8 percent of all complaints received by the FTC" ...more...

"to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes" ...more...

"Banks of all sizes will continue to hoard cash and restrict lending ways at a time when their customers need it most.
Rising default rates among consumer and commercial borrowers will challenge recovery efforts from lenders and agencies alike.
Placement levels among some creditors will surprisingly start to level off and even decrease as some credit card issuers and lenders curtail their lending ways.
Some issuers and debt buyers will flood the market with inventory at the same time, resulting in plummeting prices in both the primary and secondary markets.
Capital-constrained debt buyers who see purchase opportunities in the market might not have the financial means to capitalize on them.
A growing list of troubled banks that appear on the FDIC watch list (126 as of 8/26 up from 90 at the beginning of the year). Most of these are relatively small institutions that local businesses rely on for financing to operate or expand their business and that consumers rely on for mortgage loans.
Regulators notorious for making hasty changes in troublesome times. Just yesterday, for example, regulators proposed a new rule that would reduce the cost for healthy banks to buy distressed ones which will fuel yet another round of consolidation among local and regional banks.
" ...more...

"national credit card debt per credit card borrower increased 2.63 percent in the second quarter. The average credit card borrower had debts of $1,717 at the end of the second quarter.

the ratio of credit card borrowers delinquent on one or more of their credit cards declined to 1.04 percent in the second quarter of 2008, down 12.6 percent over the previous quarter. However, on a year-over-year basis the national delinquency incidence rate has risen 14.3 percent from 0.91 percent in the second quarter of 2007.

Moody’s said that the biggest drivers of credit charge-offs — namely, the unemployment rate and bankruptcy filings — are expected to continue to rise. Card companies are responding to the current economic environment by tightening credit standards, selectively reducing credit lines, limiting credit authorizations, increasing fees and rates, and more diligently pursuing collection strategies" ...more...

"Cap One reported an annualized charge-off rate of 5.96 percent in its U.S. Card unit, down from the 6.08 percent annual rate in July. The company reported net charge-offs of $341 million in its card unit for August.

But the 30 Days + Delinquency rate rose in the card unit rose in August to 4.07 percent, compared to 3.96 percent in July.

Cap One’s auto finance unit, meanwhile, reported a fairly sharp increase in its charge-off rate. The annualized charge-off rate in the auto finance unit was 5.35 percent in August, up from 4.67 percent in July. Delinquencies in the auto finance unit were also up, with the 30 Days + Delinquency rate standing at 8.84 percent in August compared to 8.33 percent in July." ...more...

"seniors will be facing a “perfect storm� of financial struggle after graduation, especially due to increased college student credit card debt

31 percent of students polled did not worry about college student credit card debt because they believed they could pay back outstanding balances once they were out of school and earning a regular paycheck." ...more...

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"The bill would require credit card issuers to give account holders 45 days notice of any increases in interest rates. Monthly bills would have to be mailed at least 25 days before the due date, up from the current minimum of 14 days, and fees could not be charged on the remaining interest-only balance of a customer who has paid their bill on time.
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"More than a quarter of college students think it is reasonable to run up a debt that might take months or years to pay off to "enjoy the moment."" ...more...

"consumers continued to cut discretionary spending from their monthly budgets – with more than 69 percent of respondents to Discover indicating cut backs to entertainment expenses and 62 percent having changed vacation plans – overall spending has continued unabated. Price inflation can be singled out as one of the most prominent factors contributing to overall spending increase." ...more...

"Vote totals ran mostly along party lines, with all Democrats on the committee voting in favor of the bill and two Republicans joining their ranks. The bill, HR 5244, now moves to the full House for consideration.
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"Medical problems contribute to a large proportion of bankruptcies. I wonder how much a health care plan that protects people from losing everything when serious illness hits would have helped to soften the economic crisis" ...more...

"Bankruptcy Study (PDF)
Medical Bankruptcy – Q&A;
Medical Bankruptcy – Fact Sheet" ...more...

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"Consumer reporter at USA Today that routinely writes interesting and timely articles." ...more...