Numerous instances of inaccurate, and sometimes dead wrong, consumer financial information were reported. In fact, almost 200 complaints dealt with people who were wrongfully listed as deceased according to their credit reports, effectively hampering those individuals' ability to get credit of any kind.
]]> Other bizarre reporting errors showed that cars had been repossessed or credit cards were delinquent or defaulted even though such loans and credit card debts had already been paid. Some consumers reported simple name mix-ups. Still, these individuals were unable to stop creditor harassment even when attempts were made to prove the creditor was harassing the wrong person.To add insult to injury, more than half of these filings showed that credit reporting agencies were unwilling or unable to correct even the most basic reporting errors. Maryland residents seeking a fresh financial start, or even just a correct credit report, may be forced to take drastic measures to even make their voices heard. Essentially, it appears that the Fair Credit Reporting Act is in many cases failing consumers.
The problem has come to national attention, but so far most attempts at corrective measures have been ineffective. People who are looking to stop creditor harassment and wipe off damaging information regarding credit card debt should take the necessary steps to ensure that their rights as consumers are protected.
Source: WSET, "Report: Law on credit-reporting fails consumers," May 6, 2012
]]>Politicians at the national level are currently debating over various methods to repair the mortgage crisis. Homeowners struggling with insurmountable mortgage debt in Maryland may consider personal bankruptcy as an option to find much needed debt relief.
]]> Advocates in Washington, D.C., are pushing for a pilot program whereby mortgage lenders Fannie Mae and Freddie Mac would reduce the payment amounts on loan principles for struggling homeowners. Freddie Mac and Fannie Mae support nearly 60 percent of all homeowner mortgage loans across the nation, and loan principal modifications would help people throughout the country build equity in their homes.However, opponents of the pilot program argue that reducing the principal amount due on mortgages may provide an incentive to homeowners who are already making payments to stop doing so in order to lower their debt.
Regardless, this plan has stalled. The acting director of the Federal Housing Agency has refused to go along with this proposal, claiming it would be too costly. He says there are more efficient ways to use taxpayer funds to reduce the number of distressed homeowners struggling with mortgage debt.
Until a resolution is reached, homeowners may have to look elsewhere when dealing with a difficult financial situation. For many homeowners and families, declaring bankruptcy may the best option in a bad situation.
Source: Los Angeles Times, "Calls for mortgage assistance get louder in Washington," Jim Puzzanghera, May 1, 2012
]]>In 2005, Congress altered federal bankruptcy laws to make student loans very difficult to discharge in bankruptcy proceedings. However, the most recent legislative developments and proposals regarding debt relief may offer hope for students facing heavy loan debt.
]]> Nationally, student loan debt has reached approximately $870 billion, surpassing credit card debt and car loan debt. In the US Senate, a hearing was recently convened to discuss the student debt crisis as it relates to a proposed law: the Fairness for Struggling Students Act.As many are unfortunately aware, under the current federal guidelines of the bankruptcy code, student loan debt is not dischargeable in the vast majority of cases. However, the newly proposed Fairness for Struggling Students Act would allow students to discharge private loans through bankruptcy proceedings. Still, students would still be expected to pay back government loans, as those would not be dischargeable through bankruptcy proceedings.
Advocates of the law believe it would level the playing field between borrowers and lenders, and allow for better negotiations when borrowers face financial difficulty in repaying loans. Opponents believe that if private loans become dischargeable, lenders will simply raise interest rates and make loans more costly for everyone else.
Student loan lender Sallie Mae claims it would support the idea of allowing students to discharge their private-funded loans through bankruptcy if the students make a good-faith effort to pay back the loans in a five to seven-year period.
While deciding to file for personal bankruptcy is certainly a difficult choice, sometimes bankruptcy is the best option for getting out from under debt. Baltimore residents who are dealing with financial difficulties related to student loan debt will want to keep a close eye on the Fairness for Struggling Students Act as it makes its way through the legislature.
Source: The Seattle Times, "Student-loan debt seen as growing threat to economy," Becky Yerak, April 21, 2012
]]>According to a study by the National Bureau of Economic Research, it is estimated that more than 200,000 households across the nation will use their tax refunds to file for bankruptcy this year. Last year, the average tax refund was $2,913, which would likely cover the cost of filing for most people looking for debt relief.
]]> Bankruptcy laws are federal, meaning they apply equally to every state, including Maryland. But ever since federal bankruptcy laws changed in 2005, filing for bankruptcy has become a slightly more complicated process.The average cost of fees, both legal and administrative, increased from approximately $921 in 2005 to $1,477 in 2007. The government altered the bankruptcy laws in 2005 to prevent repeated filings. As part of this alteration, there are more steps to verify information from debt-stricken clients than before. In general, one effect of the law has been that fewer people are getting the help they need to avoid foreclosure or stop creditor harassment.
Filing for bankruptcy can certainly be a trying experience. Even so, those first difficult steps can eventually help Maryland residents emerge on a firmer financial footing. People who are overwhelmed by debt from credit cards, mortgages, job loss and medical bills deserve some relief. Personal bankruptcy is another tool that many people use to achieve that relief.
Source: USA Today, "Tax refunds being used to pay for bankruptcy filings," Christine Dugas, April 12, 2012
]]>Maryland residents may welcome the news of a recent White House proposal involving Fannie Mae and Freddie Mac. The new proposal from the Obama administration is being discussed regarding the possible value of mortgage write-downs by the government-controlled mortgage industry giants. The proposal would offer financial incentives to the two companies while forgiving some of the debts owed by homeowners with underwater mortgages.
]]> The program, if agreed upon, is expected to help approximately one million homeowners hit by the mortgage crisis. Right now the government, Fannie Mae and Freddie Mac are trying to figure out a way to offer debt relief for struggling homeowners while at the same time limiting the cost for taxpayers. Further, the government would pay approximately 63 cents on every dollar of mortgage debt that the two companies would forgive. In essence, the goal is to create a win-win situation for both the defaulting homeowner and the taxpayer.While discussions are still underway, this initiative, if enacted, might have a tremendous effect on qualifying homeowners in Maryland who have fallen behind on their mortgage payments. Should homeowners not qualify for the proposed mortgage payout, other options still exist to obtain debt relief. Personal bankruptcy, for example, is an option to stop creditor harassment, and in many cases homeowners can keep their homes during the reorganization process.
It is not yet clear if the White House proposal will be approved, as the government is currently balancing the benefit to the burdened homeowner versus the extra cost to the American taxpayer. Nevertheless, struggling homeowners may feel a tremendous sense of relief if Freddie Mac and Fannie Mae are able to write down the number of mortgage debts due.
Source: Reuters, "Fannie, Freddie loan write downs possible: regulator," Margaret Chadbourn, April 10, 2012
]]>Such is the case for outspoken former NFL player Warren Sapp, who recently filed for personal bankruptcy. Sapp, who is currently an NFL commentator and recent contestant of the popular TV series "Dancing with the Stars," is seeking Chapter 7 bankruptcy protection. According to reports, Sapp owes creditors just under $7 million, while also owing for alimony and child support. The former athlete is currently said to have $6.45 million in assets while bringing in around $118,000 a year in income.
]]> Like many people facing creditor harassment and mounting debt, Sapp is likely looking for a fresh start through bankruptcy. Chapter 7 bankruptcy is commonly known as "liquidation," and is used by many people to rid themselves of many types of debt. By filing for bankruptcy, the debtor can immediately stop creditor harassment and begin the process of rebuilding personal finances. In some situations, there are options available to continue payments on certain accounts to avoid the loss of a car or a home.Regardless of the reasons for crushing debt, Maryland residents should take note that even the rich and famous can find themselves falling on hard times. In these situations, personal bankruptcy may be a path to regaining control of one's financial future.
Source: The Baltimore Sun, "Warren Sapp files for bankruptcy protection in Florida," Dan Loumena, April 7, 2012
]]>Consumers would do well to give very close attention to the fine print in their credit card agreements. In the case of taxes, credit card companies may tack on extra charges the minute the plastic gets swiped, adding even more to your credit card debt. In fact, there could be a 3 to 4 percent charge right off the bat.
]]> Credit cards are notorious troublemakers for consumers. It is simply too easy to swipe first and think later. Unfortunately, few consumers are aware of the full implications of using their cards. Hidden fees and high rates often go unnoticed until bills start to add up. In this case, a tax bill of $10,000 could lead to a charge in the range of $300 to $400, which would essentially wipe out any perk available with common credit cards.Rather than digging deeper and deeper into debt, consumers may want to speak with professional debt relief counselors or bankruptcy attorneys about available options. Credit cards can often become band-aids, and eventually the credit line may run out.
With federal and state taxes coming due on April 17, some Baltimore residents may want to consider a monthly payment plan or an installment plan. There are often many more options available than consumers realize, and individuals who are faced with crushing debt will want to be fully aware of their options under Maryland and federal laws.
Source: WBOC 16, "Paying Tax Bill with Credit Card a Bad Idea," Aisha Khan, March 28, 2012
]]>In an attempt to help ailing consumers who are struggling with piles and piles of debt, numerous media outlets are offering advice to consumers on how to make and conserve money. For example, financial news network CNBC recently released its annual "Investor Spring Cleaning" special report. The report offers an array of information on how to improve your financial life and move forward beyond tough economic times.
]]> But the trouble is, while many of these types of articles are filled with heartwarming tips on how to convert a 401(k) into an annuity or how to refinance, for many American consumers this news is vastly removed from their daily reality. Residents throughout Maryland are struggling with massive debt and underwater mortgages. The concern for a lot of people is more about getting through today, not about retiring 10 years from today.Sometimes the only answer to our economic problems is bankruptcy. But even if bankruptcy is not the answer, it is important to explore all of the options for debt relief. And options are available. In any case, Maryland residents who are fighting to get out from under debt should know that they are not alone.
Source: CNBC, "How Investors and Consumers Can Take on Debt," Albert Bozzon, March 16, 2012
]]>In Maryland and throughout the country, the cost of school has skyrocketed over the last few decades, and with three months until the interest rate on federally subsidized student loans doubles, young people are more eager than ever to seek out debt relief. With these issues in mind, readers in Baltimore may be interested to know that eight million students nationwide are currently utilizing federally subsidized loans, and those loans may see a doubled interest rate if lawmakers don't intervene.
]]> According to a report from CNN Money, students borrowing $23,000 in federally subsidized loans may end up paying an extra $5,000 over a 10-year repayment cycle. The doubling of the interest rate on already egregious education costs is motivating consumer advocacy groups to become involved, and these groups are asking lawmakers to do the same.With increasing costs and higher interest rates, students are struggling more than ever to repay their loans. Loan delinquencies among students rose nearly 15 percent in 2011. The impending rise in the interest rate on student loans will likely only exacerbate these problems, pushing more and more students into financial trouble at a young age.
Managing debt at any point in one's life can be difficult, but for young people fresh out of school and at the beginning of their careers, debt management can feel impossible. Sometimes seeking debt relief through bankruptcy is the only answer to seemingly unmanageable problems. There are a number of options for people struggling with debt, including filing for Chapter 7 or Chapter 13 in bankruptcy court.
While student loan debt is not easy to discharge through bankruptcy, it is possible. Other kinds of debt -- for example, a mortgage, credit card debt, medical bills or other monthly expenses -- are more easily discharged than student loan debt. But choosing an appropriate debt relief plan can still give overburdened students some breathing room to get all of their financial affairs, including student loans, in order.
Source: CNN Money, "Students lobby to keep interest rates lower," Jennifer Liberto and Stacey Samuel, March 13, 2012
]]>According to a recent report issued by the Federal Reserve, consumer borrowing is once again at pre-recession levels. The report indicates that American consumer borrowing reached $2.5 trillion in 2011, and according to forecasts, consumer borrowing will likely increase an additional $10.45 billion in the Fed's upcoming report.
]]> Some economists say the growth in consumer borrowing is a good trend, signaling economic growth. One such economist argued that increases in credit are historically linked to strong economic growth. Among other economists, however, the news is not so sunny.They argue that the growth in consumer credit is temporary and will taper off in time. According to one source, the major driver behind consumer credit growth in the past was home equity, and now nearly a fourth of all mortgages that are currently outstanding are underwater.
Another concern is the type of credit consumers are borrowing. Car loans and student loans, which are non-revolving, are not as stimulative as short-term revolving credit card debt. Unfortunately, credit card debt is also where American consumers tend to get themselves into the most trouble.
Well-managed debt is potentially beneficial to everyone involved, but as people in the Baltimore area know, too much of the wrong type of debt can be crippling. Fortunately, a number of tools are available for managing debt. For instance, Chapter 7 bankruptcy is a tool that gives consumers some breathing room while they get their financial affairs in order and plan for a brighter future.
Source: CNBC, "Does Rising Consumer Debt Show Strength or Stress," Jennifer Leigh Parker, March 7, 2012
]]>Some of the largest collection agencies, along with a few large consumer-reporting agencies, are currently beyond the reach of federal regulators. According to the National Association of Consumer Advocates, the Federal Trade Commission investigates reporting agencies and companies that deal in debt collection, but the work of the Federal Trade Commission can only go so far.
]]> As readers in the Baltimore area know, debt collection is a major issue in America these days. With most Americans being burdened by some sort of debt, the effort to collect on that debt has become its very own industry, and unfortunately, it is not always the best behaved industry in the U.S. While the need for more regulation may exist, there is still much that consumers can do to protect themselves from unethical debt collectors.The first action consumers will want to take is to become fully aware of their rights, and to achieve that end, many people seek the help of legal professionals who are familiar with the ins and outs of debt relief. Each debt situation is different, and there are options available under federal and state law to make significant improvements in credit scores, as well as end creditor harassment.
Source: U.S. News, "CFPB Takes Aim at Debt Collectors, Credit Reporting Agencies," Meg Handley Feb. 17, 2012
]]>One of the biggest traps consumers fall into in an attempt to avoid filing for bankruptcy is the debt consolidation loan. These loans can be appealing, especially if you are drowning in high monthly payments, but the long-term effects of these loans are bleak and often cause more problems than they solve.
]]> The loans are appealing because they lower monthly rates by extending the amount of time you have to repay the loan and increasing the interest rate. The loans often have additional penalties and fees that consumers are not aware of, at least until an event triggers a new fee or penalty. These fees and penalties can be substantial.Everyone understands the motivation to avoid filing for bankruptcy, but sometimes personal bankruptcy is the best option. Over 75 percent of U.S. citizens have debt, and more than 51 percent recently reported that they worry about being able to manage monthly payments. These are concerns that nearly everyone in the U.S. has.
Bankruptcy is always a difficult choice, and it is important for anyone considering bankruptcy to weigh the available options and fully understand the terms of the specific agreements. And Maryland residents might keep in mind that some financial options, such as debt consolidation loans, may only be appealing from the outset, especially if they look too good to be true.
Source: Business Insider, "What Lenders Won't Tell You About Debt Relief Loans," Marcia Geffner, Feb. 21, 2012
]]>In an attempt to advance that goal, the state school system has begun providing financial literacy lessons to schoolchildren between third and twelfth grades. The hope among state educators is that teaching children to manage money earlier will protect them from the overwhelming debt that burdens many Maryland residents later in life.
]]> The push for financial literacy education could not be timelier. As consumer debt continues to swallow families whole and debt management remains as difficult for governing officials as it does for recent graduates, providing our children with basic financial knowledge may be long overdue.With so many adults in financial crisis and so many financial institutions collapsing under the weight of the current economic recession, it is difficult to believe that financial literacy is the key to all of our problems. As we all know, many of the institutions hit the hardest by the recent recession were supposedly overseen by some of the brightest economic minds in the world.
While financial literacy is certainly a step in the right direction, it is clear that education alone is not the answer. Sometimes debt happens. Unforeseen accidents, medical bills, lost jobs and poor economies can all affect our economic health. When these things happen, it may be time to seek the assistance of a bankruptcy attorney to learn more about what options are available. Even the best and the brightest find themselves in hard times now and again.
Source: Washington Post, "Financial education can't wait till high school," James H. DeGraffenreidt Jr., Charlene M. Dukes and Bernard J. Sadusky, Feb. 3, 2012
]]>For example, in Maryland and throughout the country, law students are incurring astronomical debt, especially when the cost of education is compared to graduates' earning power. According to recent data, law students are borrowing on average $106,000 for private schooling and $70,000 for public schooling. Some students report debt as high as $150,000 at a time when fewer jobs are available to pay back school loans.
]]> Further aggravating the problem is the fact that law-school debt has increased nearly 50 percent in the last ten years, and debt is now drastically outpacing law school graduates' earning power. Because of this perfect storm of events, more and more law students are beginning to default on their student loan repayments.One avenue some students have sought out to relieve the burden of crushing student debt is personal bankruptcy. Unfortunately, federal law prohibits bankruptcy courts from discharging student-loan debt, except in very rare cases. The law only allows such loans to be discharged if the debtor can show that undue hardship would be caused by repaying the loan. Moreover, there is already a high standard for proving that a student loan causes undue hardship. This problem is forcing lenders and law schools alike to think long and hard about how they lend and the amount of tuition they charge.
While the noted statistics apply to law school graduates seeking to make ends meet, the perils of unpaid student loans or other forms of debt reach much further, affecting people from all walks of life. If someone is experiencing creditor harassment and is unable to keep up with mounting payments, bankruptcy may be an option worth exploring for debt relief.
Source: Reuters, "Law grads go to court for bankruptcy protection," Leigh Jones and Moira Herbst, Feb. 3, 2012
]]>In Maryland, homes lost between 7 and 10 percent of their value during the recession. Compared to states like California, where homes lost nearly 30 percent of their value, this statistic may seem fairly good. However, the average per-person mortgage debt is still over $40,000 greater in Maryland. With that said, debt relief options, including Chapter 13 bankruptcy, can help homeowners avoid foreclosure.
]]> One of the reasons for the high amount of mortgage debt in Maryland is attributable to the state's having the fifth-highest median home value in the country. The high rate of the initial mortgages taken out in Maryland virtually guaranteed residents a place in the top 10.How have states with so much mortgage debt avoided high foreclosure rates? The answer is that many of the states with the highest amounts of mortgage debt also have the highest median incomes. Maryland, for example, has the highest median income in the country.
While the debt is certainly cumbersome, many residents in the Baltimore area are able to manage the decline in home value. Unfortunately, this is not true for everyone. Despite even the positive conclusions of the Karma Credit report, there are many Maryland residents who need help.
For homeowners who are unable to manage the dramatic drop in home values, bankruptcy may be the only available means of protection. Chapter 13 bankruptcy can be a solid step in the right direction for people who can no longer afford their mortgage payments, but because of the complex nature of bankruptcy, it is always a good idea to discuss the matter with a qualified professional.
Source: msnbc.com, "States where citizens carry the most mortgage debt," Michael B. Sauter, Jan. 30, 2012
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