Category: Debt Management

Approximately 30 million Americans have an average of $1400 debt in collection, according to the Consumer Financial Protection Bureau (CFPB). Their proposal: they should police companies with more than $10 million in annual receipts from debt collection. Their goal: help consumers hoping for debt relief to get a break from abusive and unfair debt collectors.

An article in Forbes indicates that the CFPB currently oversees payday lenders, mortgage companies and private student lenders. This next step is significant because since the recession the Federal Trade Commission (FTC), the group that normally helps consumers dealing with unscrupulous debt collectors, has not been able to keep up with the rising debt levels and consumer complaints.

The in-depth series by the Wall Street Journal, “The Debt Collectors,” reported that the FTC database received nearly 165,000 complaints as of December 8, 2011. That number is 17% higher than all debt-collection complaints recorded by the FTC for 2010. Additionally, in a 2010 report, “Repairing a Broken System,” the FTC noted that the “system for resolving disputes about consumer debt is broken.”

So now it is in the hands of the CFPB to provide supervision over debt collectors and certain reporting agencies the same way the government oversees the banking industry. Estimates are that this will likely include about 175 debt collection firms that account for 63% of the annual receipts collected.

For consumers who find themselves in over their heads, caught up in a never-ending cycle and seeking debt relief, there are organizations on your side. Of course, there is the CFPB. However, if you are looking to get out of debt and put an end to harassing debt collection phone calls, we have the answer. Contact us and let us show you the benefits of debt settlement.

More and more Americans are finding themselves deeply in debt and looking for a way out. They are turning in greater numbers to experts that can help them consolidate, manage or settle that debt.

While 45 percent of Americans say they are in debt, 5 percent have sought or are currently seeking the help of a debt consolidation, management or settlement program. According to the U.S. Consumer Study on Debt, 5.13 million consumers have enrolled in such a service.

At the same time, the study found that many Americans spend a large part of their day worrying about debt. A full 10 percent of consumers reported that they worried about how they would pay off their debt for 10 or more hours a day. Another 11 percent fret over it between four and 10 hours. The majority of consumers – 54 percent – they worry about it between one and three hours a day. Only a quarter said they don’t worry about it at all.

A recent report from USA Today said that the Association of Settlement Companies helped settle more than $1 billion in consumer debt last year.

Many consumers across the country often wonder how they can improve their credit while reducing their credit card debt.

This can be a confusing process, because many consumers are unsure whether paying off their credit card debt will actually help or hurt their credit score. A new report from the Washington Post says that consumers should always be confident that paying off their debt and not accumulating more of it is always going to boost their score.

The best way to do this, the Post’s report says, is to pay bills on time. This is because payment history comprises 35 percent of an individual’s credit report, and the more on-time payments a consumer makes, the better their score will be. Paying when a bill is due is also a way to save money because it lowers the total amount due, and therefore how much interest the consumer pays, as well as eliminating any threat of late fees.

A recent report in the New York Times said that reducing credit card debt is important because more lenders are taking greater steps to verify the finances of those that apply for loans.

On Saturday, April 24, Debtmerica, LLC teamed up with the Orangewood Children’s Foundation to help foster children learn to manage their personal finances with an all-day event set in a fictional “Independent City.”

Volunteers helped construct and operate “Independent City,” which simulated some of the day-to-day challenges faced by adults in modern American society. Orangewood’s foster teens were able to learn valuable lessons about paying for housing, child care, groceries, and utilities at various stations in the exhibit, which was held in Irvine, California’s Pretend City Children’s Museum.

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While legitimate debt settlement and debt consolidation firms can be among the most effective tools available to consumers looking to escape a tight financial spot, the Better Business Bureau warns that there are also less-trustworthy operators in the marketplace.

Stephen Cox, president of the Council of Better Business Bureaus, said that "the process doesn’t work for many consumers, it has potentially serious negative consequences, and should primarily be used as a last-ditch effort to stave off bankruptcy." Any firm promising a quick and easy fix to serious financial issues should be viewed with a great deal of suspicion.

The BBB says that it has received more than 3,500 complaints, emanating from every state in the union, which allege misleading or fraudulent practices on behalf of rogue debt settlement companies. One of the most frequently seen complaints said that such companies took large up-front fees and provided little, if any, help.

Legitimate debt consolidators are also damaged by these fly-by-night operators, experts say, and some consumers could be driven away from the industry as a whole if they erroneously believe all such companies are illegitimate.

Three companies offering U.S. consumers assistance in consolidating their debt were effectively closed down Thursday by a federal court order enjoining them from practicing their deceptive telemarketing.

The Federal Trade Commission said that the FBI, IRS, and Secret Service were also interested in the three companies, and while a criminal complaint has not yet been filed against them, those three agencies are working together to find any evidence pointing to violations of criminal law.

The firms, according to the FTC, bilked already debt-saddled Americans out of up-front fees for ostensibly guaranteed debt reduction services and then doing nothing except for resisting attempts to gain a refund. The FTC said that "consumers who complained and demanded refunds allegedly were denied outright, got the run-around, or had a $199 ‘nonrefundable fee’ deducted from their refund."

Consumers looking for help in pulling themselves out of debt should be careful of offers that seem too good to be true, and be particularly cautious of anyone demanding money up front or promising reduced principals.

Military personnel in financial trouble could find it difficult to concentrate on their critically important duties, so the Defense Department recently announced several new programs to help service members consolidate debt and stay out of fiscal minefields.

A program analyst for the Pentagon’s military community and family policy office, Marcus Beauregard, said that "anything that will help a service member to do their job better and feel more prepared for their duty in taking care of their finances is certainly beneficial. The most important thing we can do is to educate service members and their families, make them aware of things that may be a problem, [and] make them aware of how to deal with transactions."

Beauregard urged military personnel to view businesses and organizations that claim to have the service member’s best interests at heart, as some of these can offer genuine services to them, while others are scam artists looking for a quick buck.

Other studies have shown that many veterans benefit from job skills training and career placement programs, which can help them stay out of debt after their service.

The demand for credit among American consumers is heading upwards, according to a FICO study released on Wednesday, but this could cause an uptick in credit card delinquencies going forward.

Bankers surveyed by the research firm generally agreed that the combination of the slowly improvingeconomy and the effect of soon-to-be-implemented federal regulations would cause them to place a higher priority on risk management in the future. They also expect interest rates to either stay the same or increase.

Additionally, well over half of bankers expected to see delinquencies rise in the near future across most categories of consumer loan. Fewer than 60 percent said that credit card delinquencies would move upward soon, and even more were pessimistic about the future return rates of small business loans.

Experts say that this pending spike in consumers facing financial trouble could provide the consumer credit counseling industry with a corresponding leap in potential customers, as Americans look to consolidate debt and escape the worst effects of the economic downturn.

While the U.S. credit card market is still plagued by heightened levels of delinquency and above-average amounts of consumer debt, the major card issuers say that the trends are moving in a broadly positive direction, according to the Wall Street Journal.

Keefe, Bruyette, and Woods analyst Sanjay Sakhrani told the Journal that "we are definitely past the peak in charge-offs. From an investor’s standpoint, this data begs the question whether we can see a pick-up in growth or at least a stemming of the decline in credit-card balances."

Annualized charge-off numbers declined across the board in March, the Wall Street Journal reported, with the amount of money written off as bad debts by the major card issuers slowly but steadily decreasing.

While this is hardly conclusive proof of a burgeoning economic recovery, it could still be a positive sign that the financial position of the average U.S. consumer is beginning to improve toward the point where consumer spending might begin to recover. Experts say that this development would be one of the signs that the crisis is well and truly past.

Americans born in the early 1980s – also known as the "millennial" generation – have seen their spending habits drastically reshaped by the recent recession, spurring a need for debt consolidation, according to Northwestern University’s Medill Reports.

FD International’s senior vice president of Americas, Brent McGoldrick, told the publication that "the early evidence is that it [spending habits] have changed and it will continue to change. They understand that things might not get better." The Medill Reports story also cites a recent poll showing that Millennial’s confidence in their ability to earn a living is quite low.

Americans of this age group are much more focused than previous generations on keeping themselves out of debt and managing what debt they are forced to take on with skill and responsibility, the Medill Reports story said.

For free-spending young people who were caught off-guard by the sudden economic downturn and found themselves in a surprise economic hole, debt consolidation and counseling could be a necessary step on the road back to financial stability.