Tag Archive | Debt

New Limitations on what Debt Collection Agencies are allowed to do

There could be no national economy without debt. Owing money is one of those things that is just a part of life. However, personal debt can get out of control and people may find it difficult to pay back the money that they owe to creditors. This is where debt collection comes into the equation. And it turns out that the people of this country are having some very big problems with debt collections companies. There are over 6,000 of these companies in the country and some of them use aggressive collections tactics in order to reclaim money that people owe.

There have been so many complaints about debt collections companies that the CFPB is proposing new rules that are designed to help bring this industry under control a bit, while providing some much-needed relief for American consumers who are struggling with repaying their debts.credit card debt

There are more than 130,000 people who work in the debt collection industry and those folks bring in over $13 billion each year. This industry has become more complex over the past few years. Some creditors will sell outstanding debts for pennies on the dollar. Third party debt collection firms purchase these debts and often use some very shady tactics to get their job done.

Chiming in on the current state of debt collections in the United States the CFPB Director, Richard Cordray said, “Often debt collectors are motivated to go to almost any lengths to try to extract as much as they possibly can from the debtor. This is because they are typically paid based on the amount they collect, the relationship may be fleeting, and the more distant risk of being called to account later may not outweigh the immediate urgency of getting paid today.”

If Cordray and the CFPB get their way, here are some of the things debt collectors will not be able to do in the future:

  • Collect on debts that do not exist. Some consumers have been hit up by debt collectors for money that they don’t even owe. This happens sometimes due to error and sometimes due to fraud on the part of debt collections companies. The CFPB has proposed that collectors will have to verify that a debt exists prior to beginning any collections actions.
  • Demanding payment without letting consumers know their rights. Debt collectors often rely on using confusing statements when they contact people. Debt collections companies will often only let people know their rights via cryptic, legalistic language the most people cannot understand. The CFPB wants to make these types of communications more transparent and easy to understand for consumers.
  • Endlessly harassing people to repay. Some collections agencies will call and even email people non-stop. They seem to think that the more they annoy people the more likely it is that they will be able to collect. The CFPB has proposed that limits be put on how many times debt collections agencies are allowed to make contact with consumers. The proposed limit is 6 times per week that agencies are allowed to contact people. This applies to phone calls, email or even letters sent to people.

The best way to avoid the hassles of dealing with debt collectors is to avoid getting in so much debt that you cannot repay what you owe. However, sometimes that is impossible, and sometimes you may not even really own money, but still wind up getting hassled by debt collectors. These new limitations should help people to avoid the potential nightmare that can happen when dealing with the worst kinds of debt collections companies.

Payday Lending Restrictions will harm Lower Income American Households

It is no secret that the mainstream media and some government watchdog groups seem to loathe the payday lending industry. If you believed everything that got reported on this industry, you might think that there is no reason for it to be in existence. However, that would fly in the face of the fact that millions (some say 10 to 12 million) of people every year rely on payday loans. The Consumer Financial Protection Bureau recently proposed some rules that they say will help to protect consumers from the potential pitfalls of payday loans. Opponents of payday lending have applauded these new rules, but the elephant in the room is the fact that the new rules may wind up hurting the very consumers that they were supposedly created to protect.Banks Are Offering Payday Loan Type Services

The CFPB has never come out and demanded that the payday lending industry go away completely. But the new rules are based on extensive underwriting for the loans; essentially forcing lenders to do extra leg work to make sure that consumers are able to pay back the loans that they take out. The additional checks and balances that payday lenders will have to go through in order to make loans will likely result in many of them being unable to afford to stay in business.

Some crafty investors are working on their own versions of payday loans to swoop in and snatch up their share of the growing number of people who demand short term, small dollar loans. Uber recently announced that it will allow its drivers to get payday advances of up to $1,000 against their paychecks. The money will be paid back directly from the drivers’ pay checks. And Uber is not the only company that is cooking up new ways to offer services that look a heck of a lot like traditional payday loans.

The CFPB has done what the government is known for doing from time to time. They have stepped in to put new regulations on an industry that is already undergoing massive transformations. And if the CFPB gets its way, the new rules will more than likely limit the options available to poor people. All the while similar financial services and products will become more available to middle class households. It is a reversal of fortunes that should never take place, and one that could have lasting negative impacts on lower income households for decades to come.

The CFPB has come right out and said that the new rules will raise costs for lenders and that they will ultimately lead to a reduction of total loan volume by more than 50 percent. So, the money that would have been lent to lower income consumers (higher risk borrowers) will more than likely end up in the wallets of people who have higher incomes (lower risk borrowers.) Anytime an aspect of lending is regulated the lenders will react by enacting new prices in their loan contracts. They have to account for the increased risk/cost somewhere, right?

They say that bad things tend to roll downhill. The poor in this country know this fact all too well. Unfortunately, it is usually the government who is causing the lack of fortunate financial circumstances that millions of people must contend with. The new rules being proposed by the CFPB are just another example of how a government agency can act on the “behalf” of a group of people and wind up making things even worse on that group of people in the process.

Credit Card Debt will rise to HOW MUCH in 2016??

Just about everyone is at the very least thinking about reducing their level of debt. It is no fun walking around from one day to the next, owing creditors thousands of dollars. And while not everyone will take action to reduce their consumer debt levels, the fact that people are becoming more informed about dealing with debt is most definitely a good thing. A recent study indicates that by the end of the year credit card debt here in the United States is going to rise to… wait for it… a stunning $55.billion. The study that revealed this new figure was conducted by CardHub and used information from the Fed’s preliminary G.19 consumer credit report.098303c025b64b3da866d55de5907528

According to this report, American consumers paid nearly $35 billion toward their credit card debt in just the first quarter of 2015. This represents a seven percent increase from the first quarters of 2013 and 2014. Some of this increase has been attributed to factors, like the reception of annual bonuses, New Year’s resolutions and people getting their tax returns. Whether or not these things contributed toward debt payments being so low at the beginning of 2015 has yet to be determined. The bottom line seems to be that there was just more debt to pay in 2014 than there had been previously.

Previous year’s studies have usually shown that the 1st quarter of the year regularly results in plenty of debt being paid off, only for that debt to raise back up over the remainder of the year. Going back as far as 2009, the first quarters of each year showed the average pay off level reaching $35.9 billion with the median amount being about $33.5 billion.

Back in 2009 American consumers paid off about $874 million in debt. By the time 2010 rolled around debt began to eclipse payment levels by about $2.5 billion. And when it got to be 20111, things got even uglier, with the level jumping 1,696 percent. The year 2012 saw things settling down by about $12 billion, but credit card use was still on the rise. Debt increased in 2013 by nearly $39 billion, and didn’t slow down in 2014. That year, debt increased by $57 billion. There is no doubt about it – credit card debt can increase so quickly that it is no wonder it gets out of control on a nationwide level. According to data provided by CardHub’s study, American consumers currently owe about $831.2 billion in consumer credit card debt, with the average per-household amount being $7,177.

As 2015 crept into the final quarter, the Fed’s G.19 report indicated that debt levels were continuing to rise. Revolving debt (think credit cards here) rose up to nearly $900 billion, and that after staying close to the $890 billion mark since the fourth quarter of the previous year. Credit card debt, however, was not the only type of debt to increase. The total amount of consumer debt – revolving debt, student loans, car loans, etc… – rose nearly $21 billion dollars in April of 2015. With that debt tallied in the complete number for total debt levels settles in at $3.384 TRILLION!

As much information as people have about the importance of avoiding getting into debt, it is almost shocking that debt levels continue to increase. But, with employment issues and salaries pretty much stagnating in recent years, it is understandable that many working class American consumers are simply relying on their credit cards and other forms of credit in order to just keep their heads above water each month.

Less Than Half of Americans Really Understand Bad Credit Scores

Everyone knows the importance of staying on top of their financial situation. We do all that we can to live on a reasonable budget, to pay bills on time and maybe even to save a little bit of money. One of the measures of how well we are doing financially is our credit score. Like everyone else, you probably know that it is in your best interest to have a higher credit score. But do you know the impact that a bad credit score can have on your entire life? If you are like more than 50 percent of American consumers, you may not.credit-score

It is true that credit scores can be a bit difficult to understand at times. For example, you may have up to three different FICO scores, dependent upon which of the three credit reporting agencies you choose to turn to when you are checking up on your credit score.

A new report published by the Consumer Federation of America (CFA) indicates that very few American consumers actually understand just how much their credit scores really matter. It appears that there is a fundamental lack of understanding about how credit scores are calculated and the different things that actually affect how high or low a credit score really is.

The study, which is quite enlightening, states that less than 50 percent of consumers in the United States know how costly it can be to have a bad credit score. The report also shows that people do not know that multiple credit checks can cause their credit scores to drop.

Every year the CFA releases its Annual Survey of Consumer Knowledge About Credit Scores, and this yearly report may help to explain just why so many Americans are in rough financial conditions. There are multiple sites that allow people to get free annual credit checks, but it appears that most people either aren’t aware of these sites or simply do not understand how to put the information from their credit reports to good use.

According to the study, the U.S., as a nation, has a current $800 billion in credit card debt. To top that off, our total consumer debt level is right around $25 trillion! With so much money on the line, you would expect that American consumers would be better educated about their credit scores. Sadly, though, that does not seem to be the case.

Stephen Brobeck, the executive director over at the CFA, said, “Credit reports and scores are so important to consumers that they should be trying to improve their knowledge.”

The CFA study shows that only 29 percent of people know that people with bad credit scores will likely pay up to $5,000 more on a typical car loan than someone with good credit will end up paying over the same amount of time.

It is too bad that so few people really understand what their credit score means. It is likely, however, that this lack of understanding is going to continue to cost people even more money in the years to come. And right now is simply a time when none of us can really afford to pay more than we should have to. We can all hope that people begin to take their credit scores a little more seriously in the coming year and that we all – as a nation of consumers – begin to work toward improving our credit scores, while reducing our overall level of consumer debt. If we plan on really recovering from the recent financial problems that we have all dealt with, it is high time that we all begin doing what we can to improve our financial outlook.

The Topic No One Wants to Talk About: Credit Card Debt

People like to do all that they can to keep up appearances. Most folks go out of their way to keep their homes and even their vehicles looking good. We put energy and money into looking our best; either through wearing nice clothes, taking better care of our bodies or both. And who can deny that we all like to brag a bit about our families and careers when we meet someone new?sgiwoxtdkkilttb8ixhk

Any time we meet someone for the first time, the dreaded small talk will come up. You know, those conversations about the mundane aspects of life. Even during these types of conversations, we all like to put our best foot forward and to project the best image of our lives as possible. There is one subject, however, that people often avoid talking about as much as possible – credit card debt!
A recent poll indicates that Americans consider credit card debt to be the worst topic possible to discuss with people who they just met. Americans were asked in this poll to rate how likely they would be to talk on a certain topic with a total stranger. Poll participants were asked to rate each topic with a rating between very likely, somewhat likely, somewhat unlikely and very unlikely as their ultimate answers.

Eighty Five percent of poll responders said that they would either be somewhat unlikely or very unlikely to talk about credit card debt with a stranger, which makes this the lowest rated category on the poll.

To put this in perspective, people rated ‘Details about your love life at the second worst, with 84 percent and their work salaries at third worst, with about 80 percent. These are very personal topics, so it is apparent that people feel very embarrassed or put on the spot about credit card debt to place it as being worse to talk about than these hot button topics.
The poll indicated that younger Americans were a bit less embarrassed to talk about credit card debt than their older counterparts. But even with that in mind, 79 percent of Americans aged 18 to 24 stated that they would not be comfortable talking about credit card debt with a stranger.

Debt and Personal Failure

Why are people so afraid to talk about credit card debt? It is probably because many people view debt as being a symptom of personal failure. This is especially true in the years following the most recent financial recession. Americans do not like to admit that they are struggling with debt. If you are someone who finds it hard enough to pay the bills every month, how much harder is it to actually talk with someone about these types of struggles?

Before the most recent recession, credit card debt was not considered to be such an off-limits topic of discussion. Most people were used to living off of credit cards, and it didn’t seem like a serious issue. Today, however, things have certainly changed. People obviously find credit card debt to be a touchy, if not downright painful topic. This study really proves that the majority of us simply don’t want to discuss our credit card debt problems.

If we don’t feel like discussing credit card debt, then we at least need to take action about this embarrassing subject. More American consumers need to do what they can to stop using credit cards for every day purchases and to pay off their consumer debts sooner rather than later… It is a heck of a lot easier to talk about credit card debt when you don’t have any!

Some Financial Advice for Women

There are so many tips and tricks out there about finances it can be difficult to figure out which ones to follow. There may be some that you are familiar with and some that you are unfamiliar with. Here are some tips to help you to navigate the financial world.

You need to know when it is time to get professional help with your finances. There are financial planners out there that are a wealth of information. They will be able to answer any questions that you may have. They will also be able to help you get back on the right financial track.myths

If you do not want to go see a financial advisor there are other resources that you can use to get the help that you need. There are many websites that have tons of articles on different articles on different parts of finances. There are also finance magazines out. You may have to go to a book store with a huge variety of magazines.

You need to make sure that you are keeping retirement plan on the top of your to do list. You need to make sure that you are doing everything that you need to do to prepare for retirement. Retirement savings are a big deal and you need to make sure that you stay on top of it.

You need to do what you can to get out of debt. Ladies you most likely have been told this time and time again, try paying off the debts with highest interest rates. This will help you to save money on the amount of interest you have to pay. Do this with all of your bills in order from largest interest rate to lowest interest rate.

Ladies, does your employer offer retirement plans? This is something that you need to know. If they do how much will they match percentage wise on your contributions? That is also something that you need to know, because you should be contributing at minimum the amount that is their maximum contribution. This will help you to build up your retirement savings quicker.

No matter what you need to be in charge of your finances. Know what is going on and how to work with your budget and how to manage your money. Even if you are not the one in the family who regularly handles the finances you need to make sure that you take charge and know how to do what needs done.

Ladies, the financial world can sometimes be confusing and overwhelming. This does not have to be the case. You can learn how to make your finances work for you. It does not have to be a difficult thing to do to stay on top of your finances.

Some Good Tips for Women Who are bad with Money

It is no secret that some women are better with money than with others. This can be changed though, there are ways to turn it around and go from bad with money to great with money. Here are some tips for those ladies who are not the best with money so they have a fighting chance to become great with money.

Forex Money for Exchange in Currency Bank

The first thing you need to do ladies is to start by changing one habit at a time. Do you have a bad habit that costs you money? It could be smoking, eating out, shopping, or anything, it does not matter. If you have a bad habit or two you should start by working on getting rid of one bad habit at a time. This will help to free up money for other things such as bills.

Work on your debt. Even if you can only afford to pay twenty extra dollars over the minimum amount due, you should pay it. This will help not only to pay your bill down faster but it will also help you to save money on interest. While you are trying to pay down debt you need to make sure that you do not build up debt on another credit card.

It is okay to seek help when needed ladies. You can go online and find a wealth of information and various articles such as this one to help you navigate yourself through the financial world. If you need more help than you can find online and you need someone to talk to, that is okay as well. Financial advisors have so much information; they have the ability to answer any question you may have. If you need their help, find one to help you.

Work on that budget ladies. Having a good budget is something that should be considered a must. You should be reviewing it regularly so that you can make any changes needed. A budget is key to helping you stay on track financially so do not just slop one together, spend the time to do it right.

Find small ways that you can save money in your everyday life. Do you buy a coffee every morning? Why not make coffee at home? Use coupons when you go shopping. There are many different ways that you can make small changes every day to help you save money, you just need to sit down and think about the changes you can make.

Ladies do not despair if you are not good with money. You have the power to change that. Ladies you are strong and you can be financially independent if you do certain things to help you down that road. Your financial future depends on the things that you do today.

Tips for Young Women on Paying Down Debt

With the gender salary gap getting smaller all the time young women today are making more money than before. With the increase in salary, there is a chance that young women today can end up in more debt than ever before. Here are some tips to help all the young women who have debt work toward paying it off.

Of course you need to work on paying off any debt you have, from say student loans. What you need to do when working to pay off debt is to make your regular payments every month. On top of that you need to figure out what debt that has the highest interest rate and pay more toward that debt. Then keep doing this until all of your debt is paid off.

Debt Snowball

Debt Snowball (Photo credit: LendingMemo)

Most experts agree that if you are looking to add some debt to what you already have, say you want a new car or are planning on buying a home, then you need to be careful. The experts recommend that if possible try to keep your payments on your debt be no more than about fifteen percent of your monthly income. This way you will still have money for the other bills you have, other necessities, and still have some money to put into various savings accounts.

Another tip that most experts agree on is that if you have credit cards you need to keep your balance low. While credit cards are able to help you to build credit, if used inappropriately used they can ruin your credit too. To get the best out of your credit card experts say that you should keep your balance at no more than twenty percent of your credit limit. This way you are not ruining your credit with huge bills, and you are still working at building up your credit.

If you can, you should pay more than your minimum monthly balances. Doing this will help you to pay off your debts faster. This also looks good on your credit score. It will also help you in the future should you want to take out a loan. The bank will see that you try to stay out of debt and make larger payments and they will feel confident that you will be able to pay the loan back. After all banks like loaning money to people who do not need it so they can be sure they will be paid back.

Young women today need to watch out for debt. They need to work on getting rid of any and all debt they have once they are out of school and in the real world. It does not have to be overwhelming when you are working on paying off your debt, but if you do not work at it, you could end up in an overwhelming financial situation.