My Blog

Category: Debt Settlement

  • Bankruptcies hit new high point in 2009

    Bankruptcy's rose in 2009 In a very telling example of how Americans fared throughout 2009 as many sought to consolidate debt amid the Great Recession, consumers’ bankruptcies soared to their highest rate since 2005.

    According to data filed by both the American Bankruptcy Institute, consumer bankruptcies totaled 1.4 million by the end of 2009. The figure was noticeably higher than the 1.06 million bankruptcies counted by the institute in 2008.

    The rise in bankruptcies also marked the fourth consecutive year that the figure has increased since the Abuse Prevention and Consumer Protection Act was enacted in 2005.

    “A combination of economic stress, including high debt loads, rising unemployment and unsustainable mortgage burdens, left many consumers with little choice but to seek the financial relief of bankruptcy,” said ABI Executive Director Samuel J. Gerdano. “As these strains continue for U.S. households, we expect that consumer filings will rise still higher in 2010.”

    According to CrediCards.com, the state with the highest per-capita rate of bankruptcy filings in 2009 was Nevada, which had more than 11 filings out of every 1,000 residents. Tennessee came in a distant second with more than 8 filings per 1,000.

    Arizona saw the greatest increase in bankruptcy filings from year-to-year, as their figure spiked up by 77 percent from 2008 to 2009.

  • Debt settlement more effective than credit counseling, says TASC

    The Association of Settlement Companies is claiming that debt settlement is better for consumers than credit counseling In an attempt to prevent the Federal Trade Commission from passing amendments to the Telemarketing Sales Rules that could harm the debt settlement industry, the Association of Settlement Companies has come out in support of the industry and detailed why it better serves consumers in need than credit counseling.

    For consumers who are struggling to consolidate debt, the TASC argued that debt settlement programs not only take less time than credit counseling – with the former usually lasting three years while the latter can take up to five years – but are also significantly cheaper and easier to afford.

    Dan Leuthold, the TASC’s executive director, added that while debt settlement companies work on the consumer’s behalf to reduce outstanding debt balances, credit counseling services often have other interests they seek are looking to satisfy as well.

    "Credit counseling companies in essence work as a collector and agent for the credit card companies,” he said. "As such, they not only receive fees from the consumer but they also receive compensation from the banks, so they may not have the client’s best interest at heart."

    The TASC’s differentiating between debt settlement and credit counseling programs comes as the FTC considers changes to the Telemarketing Sales Rule what would effectively ban the use of advance fees. The TASC stated that eliminating the fees would fore debt settlement programs to essentially for free for much of the settlement process and therefore force many out of business.

  • Survey: Unemployment has negative effect on mental state

    Unemployed workers have been shown to be more likely to develop mental illnesses than the employed Workers forced into unemployment or a reduced role at their jobs are more likely to exhibit symptoms of mental illness, according to a new survey released by Mental Health America and the National Alliance on Mental Illness.

    The survey, which was conducted via telephone among a sample of 500 men and 502 women 18 years of age and older, found that unemployed workers were four times more likely than those with jobs to have symptoms "consistent with severe mental illness."

    Workers with jobs who experienced an "involuntary change" to their employment situation, such as taking pay cuts or working reduced hours, were found to be twice as likely to have the same symptoms.

    Unemployed workers were also twice as likely to be concerned about their mental health or use of drugs/alcohol, while 42 percent of those who had not consulted a physician about their concerns cited debt consolidation and the lack of insurance as their primary reason for avoiding the doctor.

    "This survey clearly shows that economic difficulties are placing the public’s mental health at serious risk, and we need affirmative action to address these medical problems," said Dr. David L. Shern, president and CEO of Mental Health America. "Individuals confronting these problems should seek help for their problems – talk to their doctor, trusted friend or advisor or mental health professional."

    The survey’s release comes in the midst of Mental Illness Awareness Week, which is being held from October 4 to October 10, and on the verge of National Depression Screening Day, which takes place on October 8.

  • Bank of America and Chase adjust handling of overdraft fees

    Bank of America and JPMorgan Chase has announced that they will both be adjusting the way their debit card programs handle overdraft fees by allowing the opting out of overdraft protection and adjusting how charges are credited.

    News of the adjustments will likely be welcomed by those looking to consolidate debt that may have been caused by paying steep fees when their accounts have been overdrawn.

    Beginning October 19, Bank of America will cease charging overdraft fees for customers who overdraw their account by less than $10, impose a limit of four overdraft fees per day and allow customer to opt out of overdraft protection and not allow any charges to go on the card once it reaches its balance.

    “We made the decision that we had to help customers now and help those most stretched by the economy,” Brian Moynihan, the president of Bank of America’s consumer and small-business banking operations, told the New York Times.

    Chase will impose similar changes, not charging fees for accounts overdrawn by less than five dollars and capping the amount of fees per day at three. By the end of Q1 2010 the bank will also stop lumping transactions for one day together and processing the highest charges first.

    Upon hearing of the changes made by the banks, House Financial Services Committee Chairman Barney Frank of Massachusetts was pleased with the move and hoped that change would confirm to other banks that “it’s doable.”

    “No one else will be able to argue that it’s too burdensome,” he added, according to the Wall Street Journal.