Debt

Feds looks into debt-collection practices

Martha C. White Feb 8th 2010 @ 6:00PM EST Filed Under: Debt, Credit Cards

We told you about the debt collection hassles endured by people shouldering a large amount of credit-card debt. Then we invited debt collectors to tell their side of the story. Both sides had a lot to say about just what goes on in the debt collection industry, but one assertion -- by the head of a collections industry trade group -- that debt collectors were courteous and professional raised many eyebrows. Many of you vociferously disagreed with this in the comments section.

As it turns out, government watchdogs agree with you. A new report has led to the Federal Trade Commission stepping up its enforcement of debt-collection abuses.

"I'm pleased the FTC is cracking down on debt collectors, and has identified harassment and targeting the wrong debtors as examples of what's wrong in the industry," Linda Sherry, director of national priorities for Consumer Action, a consumer advocate group, told WalletPop via email.

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Consumers cutting the credit card habit, but is it voluntary?

Lita Epstein Feb 8th 2010 @ 3:00PM EST Filed Under: Credit, Debt, Credit Cards

More and more consumers are saying no to credit cards and shifting to debit cards, but are they permanently changing spending habits or finding a way to make do because lenders aren't lending? It's probably a little of both.

Whatever the reason, new credit card origination was down by 54.5% in November 2009 compared to figures from November 2007. In November 2007, 64 million new bankcards were issued year-to-date. In November 2009, that number was down to just 29.1 million new bankcards year-to-date, according to Equifax's January 2010 new account trends report.

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Lenders plan to guess your income from credit report

Lita Epstein Feb 7th 2010 @ 3:00PM EST Filed Under: Credit, Debt, Shopping, Credit Cards

You may never know when it happens, but lenders may begin guessing your income before they approve your credit application when the new Credit CARD Act takes effect on February 22.

The new law requires lenders to consider your ability to pay any new or additional debt before approving a credit card application. While they could do something as simple as ask you, they may want to verify what you tell them.

Since most people don't carry around a pay stub when they go shopping, if you decide to apply for a credit card during a shopping trip, the stores may look for a clue about your income when they ask for your credit score.

"Retail stores are quite upset about this change in the instant approval of their cards," Bill Hardekopf, CEO of LowCards.com, wrote to WalletPop by e-mail. "Consumers now need to show proof of income when they apply for a card, and not many of us carry this around when we are shopping in the mall."

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You'll know your foreclosures by the poop

Sarah Gilbert Feb 6th 2010 @ 3:00PM EST Filed Under: Debt, Real Estate, Investing

The house sits behind an upholstery shop on the corner, and while I'm too young to know for sure, I'll bet the upholstery shop has thrived since the streetcar ran down Gladstone Street in the 1950s. The house, like mine, was built in the first few decades of the 20th century. An old grande dame, she is, brilliant with leaded glass windows and gingerbread detailing and a formal dining room and built-ins that must have had the real estate agents in a tizzy four years ago when the market was so hot she was flipped twice in a season, sold last for $417,000 -- nearly three times what we'd paid for our house, a block away, in 2002.

When she was first for sale my husband, who's worked for a few of the city's top residential real estate agents, called his old friends, dreaming of an investment -- he loves how enormous and elegant she is. I told him it was a foreclosure waiting to happen: even pre-crash I could see it couldn't work. The numbers just didn't make sense; the house had been a rental for many years and, despite its great "bones," there were problems that would prevent even the slummiest of landlords from breaking even.

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Lifetime earnings boost from college education smaller than touted

Zac Bissonnette Feb 5th 2010 @ 2:00PM EST Filed Under: Money College, Debt

Post-college earning less than you think

The Wall Street Journal dropped a bombshell this week, noting with little fanfare (subscription required) that the college degrees we're told are a ticket to wealth and happiness aren't all they've been cracked up to be.

The College Board, a glorified trade group representing the interests of colleges and universities, has long touted an $800,000 lifetime earnings advantage for college grads. Now other researchers, armed with more rigorous data, are suggesting that the lifetime earnings advantage of college may be less -- a lot less. Mark Schneider of the American Institutes for Research calculated that the lifetime earnings advantage of a college degree is just $279,893.

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Investigation reveals banks illegally denied loan modifications

Amy Pyle Feb 5th 2010 @ 8:00AM EST Filed Under: Banks, Debt, Real Estate, Mortgages, Refinancing

An investigation by the nonprofit journalism operation, ProPublica, raises intriguing questions about reasons desperate homeowners are being turned away for the very government program aimed at helping them.

Some of the problems ProPublica uncovered echo complaints WalletPop heard when we wrote about troubles with the federal Home Affordable Modification Program last year: trial modifications being extended just as they are completed, and loans being denied because an income decline is considered temporary.

That temporary hardship, the focus of ProPublica's latest story, was not intended to be legitimate grounds for denial, as was clearly explained by the Treasury Department in a December memo. Now, JPMorgan Chase -- which was involved in all of the cases the investigation uncovered -- has acknowledged its error and encouraged anyone denied for that reason to reapply. A spokeswoman told ProPublica that the company "adapts as quickly as possible" to the Treasury guideline missives.

As of the end of 2009, the government reported, more than 900,000 trial modifications had been started, but only 66,465 had transitioned into permanent breaks for the borrowers. The report also showed JP Morgan Chase was second only to Bank of America as a participant in the federal HAMP program.

Which banks are the worst overdraft fee offenders?

Lita Epstein Feb 4th 2010 @ 5:30PM EST Filed Under: Banks, Credit, Debt, In the News

Consumers overwhelmingly want limits and additional disclosures on bank overdraft fees, according to a survey released by the Consumer Federal of America (CFA). Yet Congress has done nothing to fix the problem since it held hearings late last year and banks continue to make billions on overdraft fees. The Center for Responsible Lending (CRL) estimates that consumers paid $23.7 billion for overdraft fees in 2008, which is an increase of 35% over just two years.

CRL reported that 50 million Americans overdrew their checking accounts at least once over a 12-month period with 27 million account holders paying five or more overdraft or insufficient funds fees per year.

The Federal Reserve is implementing new rules requiring banks to get customers' consent on overdrafts when they get a debit card, but the new rules do nothing to rein in the high fees or provide real-time disclosures. The rule does mandate an opt in at the time one opens an account, but does not require banks to discuss the opt out provision after a customer experiences an overdraft.

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Overdraft anger? Call Congress

Geoff Williams Feb 4th 2010 @ 2:30PM EST Filed Under: Banks, Credit, Debt, In the News

If you're fed up with overdraft fees, you're not alone. During a telephone press conference held earlier this afternoon, which I sat in on, Consumer Federation of America released the results of a national poll today showing that (surprise) just about everyone wants limits and additional disclosures on bank overdraft fees.

I'll get to that in a moment, but there was really a second message that the CFA and the Center for Responsible Lending, which had a representative at this conference, wants to get out: If you're truly fed up, call your Congressman or woman and ask them to get behind two bills circulating in Congress that intend to put much more severe restrictions on overdraft fees.

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Need relief from credit card bills? Ask for it

Martha C. White Feb 3rd 2010 @ 3:30PM EST Filed Under: Banks, Debt, Credit Cards

It's no big secret that a lot of Americans are having trouble making their credit card payments these days. High interest rates and punitive penalty fees just heap it on, and make getting out from under those bills a daunting task.

This article from MSN Money, though, explores a possible solution many people aren't even aware of: Asking their issuer to cut them some slack.

The technical industry term for this is "forbearance." It's not loan forgiveness; you still have to pay. But, according to the article, an issuer can do anything from postpone payments to lowering minimum payments to reducing your interest rate or the amount you pay in fees.

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