Debt Settlement Blog

Credit card debt has been a significant problem for millions of Americans.  The amount consumers owed on their credit cards in this year’s second quarter dropped to the lowest level in more than eight years as cardholders continued to pay off balances in the uncertain economy. The average combined debt for bank-issued credit cards like those with a MasterCard or Visa logo – fell to $4,951 in the three months ended June 30, down more than 13 % from $5,719 in the same period a year ago, according to Trans Union.  The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.  In years past homeowners would take out a second mortgage for credit consolidation, but now those types of loan programs are no longer available.  Secure debt consolidation loans, like 2nd mortgages are difficult to find without owning a home and having a lot of home equity.

Negotiate Credit Card Debt and Save!

Credit card debt remained the highest in Alaska, but slid 7 % there to $7,148. A total of 22 states recorded debt higher than the national average.  Residents of Alabama paid off the most debt, dropping their average balance by 27 % to $4,753.  More borrowers also made payments on time. The rate of cardholders past due by 90 days or more fell to 0.92 % in the second quarter, from 1.17 % last year.

That’s the first time the delinquency rate has been below 1 % since the second quarter of 2007, before the recession, said Ezra Becker, director of consulting and strategy in Trans Union’s financial services unit. The rate fluctuates during the year, he said, but the improvement is more evidence that consumers are working to make sure their credit cards remain in good standing.  That concern reflects several economic factors, from the fear of unemployment to the fact that the collapsed housing market means it’s harder to cash in on home equity when money gets tight. “You can’t buy groceries with your house anymore,” Becker said.

Reflecting the weak economies in the states hardest hit by the housing crisis, the delinquency rate was highest in Nevada, at 1.5 % of cardholders, followed by Florida, 1.24 %, Arizona, 1.11 % and California, 1.08 %. In all, 16 states fared worse than the national average for delinquencies.

The lowest delinquency rates remained in North Dakota, at 0.54 %, and South Dakota, at 0.55 %.  In a twist, Becker said the foreclosure crisis could be helping to improve the timeliness of credit card payments and lower balances. When people don’t make mortgage loan payments, he suggested, they have a short-term cash boost. “That can provide extra money to pay down credit cards,” he said.  Besides paying off and refinancing debt, consumers are getting fewer new cards. Nationwide, the number of new accounts opened dropped almost 6.5 % from last year.  Trans Union predicts that the national delinquency rate will remain below 1 % for the rest of the year. However, on the high end, the Nevada rate is forecast to edge up to 1.6 %.  See the original article online

FTC to Limit Debt Settlement Companies

Debt settlement firms saw the Federal Trade Commission step in make some significant changes to the debt relief industry.  For the first time, the FTC has promised to impose new regulations that will prohibit most for-profit debt relief companies from charging a fee before they have reduced a client’s unsecured debts.   The FTC says the new debt settlement program with the new rules will take effect Oct. 27.  The new FTC law will prevent consumers from paying large up-front fees for debt settlement and debt negotiations that are not fulfilled. They do not limit the size of fees, only their timing. 

Will the New Debt Settlement Rules Kill the Debt Relief Industry?

The debt settlement industry says the rules will force most debt relief firms out of business because it will take at least a year to collect any fees.  “There are not a lot of debt settlement companies that can afford to spend month after month after month servicing clients without any money coming in,” says David Leuthold, executive director of the Association of Settlement Companies.

In a typical credit card debt settlement contract, the consumer stops paying his unsecured debts, such as credit card and medical bills, and starts putting money into a savings account that he controls. When there is enough funds in the account to settle one debt, typically after a year or more, the company negotiates with that creditor to accept less than the amount owed. This continues until all debts are settled, which in most cases takes eighteen months to three years.   Today, most debt settlement companies charge clients a percentage of the debt they bring into the contract; 15 % to 20 % is common. Some demand the entire fee up front; others spread it over the first half of the contract period. If the client drops out before completion, and most do, he is out the fee and often deeper in debt.   Instead of charging in advance, a few companies charge a portion of the debt reduced, typically 10% to 50%.

Both debt settlement and debt management offer significant financial benefits to consumers seeking debt relief solutions.  Debt management makes sense to consumers who are concerned with damaging their credit report now.  Like consumer credit counseling, debt management is the process of renegotiating the interest rates of credit cards and unsecured debt.  On the other hand, debt settlement is the process of negotiating the payoff for credit cards and unsecured debt.  Typically credit card debt settlement will take 12 to 24 months whereas debt management will likely take 36 to 48 months.

Most debt management programs are not for profit companies that appoint a certified counselor to evaluate your income, expenses and debts.  After assessing your debt to income ratio, the counselor will offer a solution to lower your monthly expenses for credit cards.  Keep in mind that your creditors must agree to lowering the interest rate on your credit cards for debt management to work.

Watch Video Debt Management vs. Settlement

Consider debt settlement programs if you want a quick resolution than debt management programs offer.  If you set up a debt settlement plan, then you will make payments monthly into an escrow account set up by the debt settlement company until enough money is deposited into your account to negotiate a settlement with your creditors.

eHow published an article recently that compared debt settlement to debt consolidation.  In years past many finance advisors would recommend debt consolidation to homeowners because they could take out a second mortgage to consolidate debt and debt settlement to non-homeowners because they were not eligible for secure home equity loans because they had no real estate to be used as collateral.

Here are the 3 steps that eHow reccomends when comparing a consolidation loan to a debt settlement program.
1. Compare the short-term advantages of each debt solution option.
2. Compare the long-term benefits of each debt relief solution option.
3. Determine which debt solution is best for you. Which program do you qualify for? Which one offers the best overall benefits? Which one can you afford?  Do you want to settle credit card debt?

American consumers continue to seek credit card debt settlement and relief because they owe more than $945 billion in credit card debt.  Last year President Obama signed a debt relief bill into law that is intended to limit the ability of credit card companies to raise interest rates and fees.  President Obama said, “With this bill we are putting in place some common sense reforms designed to protect consumers.”

The President signed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 (H.R. 627).  This debt relief bill largely codifies regulations imposed by the Federal Reserve in 2008, but became effective on February 2010.  This debt relief bill limits the abilities of credit card finance banks to increase the interest rates of existing customers, charge account maintenance fees and assess penalties will be greatly restricted.

“20% of consumers are currently carrying credit card debt that has been charged interest rates above 20%.”  Card issuers will also be banned from enacting rate increases on existing balances due to “any time, any reason” or “universal default” and severely restricted from imposing retroactive rate increases due to late payment.  In addition, credit card companies will be required to disclose all terms of their credit contracts online and in language that consumers can see and understand so they can avoid unnecessary costs and manage their finances.

Complete details about debt relief and solutions like credit counseling, credit debt settlement and a secured debt consolidation loan are available online.

Millions of American consumers have been in jeopardy of defaulting on credit cards as the unemployment rate soars and interest on charge cards soars.  Debt Settlement Nationwide was pleased to announce that their debt negotiation program was helping people get their finances back on track.  With bankruptcy laws and mortgage underwriting tightening more and more consumers have chosen credit card debt settlement to relieve them of the high rate burdens that go hand in hand with unsecured debt.  Debt reduction is now available to more Americans because credit card finance companies are encouraged and incentivized to forgive credit card debt greater than $10,000.  Check out our debt settlement program with no application fee and no obligation.

With credit card debt at an all time high, debt settlement and bankruptcy continue to soar in popularity as debt relief has hit “main street.” Many critics sneer at the fact that the bankruptcy offers the same level of financial protection that debt settlement offers. Both have a negative impact on the credit score and both help the individual.

Well, if the two concepts are compared in such a literal sense, there’s no doubt that both are debt relief options. However, as one of America’s most favorite President said, there’s a difference in the security offered by a grave and security offered by peace. In case of bankruptcy, you will enjoy the security of the grave. However, you will find it impossible to lead a respectable financial life after that.  It will become public knowledge that you opted for bankruptcy. You will be publicly ridiculed for having failed to keep your debts under control. On the other hand, debt settlement is a completely different thing. You receive a boost from your lender in the form of 50% to 70% waiver. Even more importantly, you are offered 2 to 3 years within which you have the opportunity of repaying the balance amount in full.

Your credit score will come down. However, prompt repayment of the balance amount will itself indicate that you have controlled the finances. They will quickly identify that you have successfully overcome the problem and have shown discipline for the past 1 to 2 years. Remember that lenders are in the business of assessing risk. There’s no such thing as zero risk. You just have to convince your future lenders that you pose a low risk. If that is done, you can be rest assured that you will get loans despite having a poor credit score due to settlement.  Hence, do not to worry too much about the risk of settlement. The only point you should take care of is to avoid dealing with fraudulent companies. Choose the right resources like the debt relief companies online and even this debt risk will come down to zero.

If you have over $10,000 in credit card debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called “Free Debt Relief Networks” that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below:

If you have $10,000 in unsecured credit card debt, you have options for debt relief. US consumers are choosing between debt settlement, debt consolidation and consumer credit counseling. Debt settlement provides quick payment relief for debt elimination.  According to finance expert, Jeff Morris, “Debt settlement can save you 40 to 60%! “ 

Consider your options with debt consolidation loans and debt settlement from trusted debt relief companies.  Remember that with bill consolidation and home equity loans, there are qualification requirements for borrowers, so if you don’t have any equity you likely will not qualify.  Read the original article online > Debt Relief Options

The debt settlement selection has become a respectable choice for debt elimination, because it works. The debt settlement choice has become a more popular option for debt relief in recent years.  however took lots of effort and the credit definitely goes to the federal stimulus money. The federal stimulus package released as a part of the fiscal policy helped stand many financial units that were knocked down. The benefits of this trickled down to the common mass as well. Debt settlement has been one of the biggest benefits to consumers as a result of the stimulus money. If you have over $10k in unsecured debt you can realistically eliminate 50% of this with the help of a trusted debt relief company.  Utilizing credit repair after debt negotiations is an effective way to restore your damaged credit scores.

There are free online debt management classes are also available.  If you are considering debt settlement it would behoove you to use a debt relief network first. Debt relief networks are affiliated with several financial institutions and debt settlement companies and pair consumers up with legitimate debt settlement companies.

Did you know if your debt is more than $10,000, you can get a waiver of 60 % on it, and be able to clear off the debt in 2-3 years only? Taking advantage of the situation there are a lot of fraudulent companies out there who simply want to make money, without any intention to help people settle their debt.

Debt Settlement Nationwide has put together some great lead generation campaigns for debt settlement, bill consolidation and loan modification agreements. If you are currently working in these areas this is the time to jump on some good debt relief leads. We are seeing great closing ratios on all of our debt leads.  The mortgage modification industry is alive and well and continues to pick up stream. The debt relief industry continues to grow steadily. Get these consumers into the right program now!

Debt Settlement Nationwide has debt relief candidates who are beginning to default on the credit card obligations.  This is a great to contact them as they just begin to run late and they still care about their obligations. Wall Street can set the criteria for the amount of debt and length of delinquency. We are finding the most active candidates are the ones who are maxed out the credit cards with a jumbo mortgage loan. These consumers are responding well to alleviating their debt to save their home. We also have been seeing good response from homeowners with large equity lines of credit or second mortgages. The response has been overwhelming at getting rid of the large debt amounts caused by the home equity and second mortgage. Get in touch with these motivated consumers now. We have internet leads, live transfer leads and direct mail marketing programs trageting consumers with high rate credit card debt.  Call Debt Settlement Nationwide today start consolidating tomorrow!

Debt Settlement Nationwide has loss mitigation candidates that are currently 30-60-90 day late on their mortgage. You can select the size of the mortgage and the length of delinquency. We have a lot of independent attorneys that are mailing these lead on their own.  Previously they were stuck in the clay and running in the red on their marketing. After switching into high octane Debt Settlement Nationwide data they are once again achieving phenomenal results. If you are not getting the results you need to be successful? Call Debt Settlement Nationwide and get back on the right track today!!

Credit card debt has exploded, with bankruptcy and debt settlement cases rising continue to rise at alarming rates.  The rate of U.S. credit card defaults showed signs of stabilizing last month, an indication that American consumers may not be in as bad shape as feared despite job losses and the housing slump.  Are credit card companies hiding their losses?

o    BofA credit card charge-offs edge lower

o    Capital One defaults rise, stock falls 1.1 pct

o    JPMorgan, Citigroup, Discover say defaults drop

o    Capital One Defaults rise

Credit card debt continues to calculate negatively for consumers straddled with high rates.  With delinquencies soaring the banks have been forced to cut available credit line for consumers across the country.  Consumer credit fell $10.3 billion in the U.S. in June, or at a 4.92 percent annual rate, to $2.5 trillion. It was the fifth straight month of decline, as banks cut limits on credit cards and some consumers remained wary of borrowing money for big purchases.  Home foreclosures have not slowed down and fears of more job losses have contributed to the credit reduction from banks and lenders

Economics blog Calculated Risk has this chart (it gets bigger each time you click on it) showing that in percentage terms the declines in consumer credit are the worst in at least the past four decades:

Looking at subcategories within the Federal Reserve report, credit-card debt fell $5.04 billion, or 3.8%, to $1.59 trillion — a record 10th straight monthly drop in credit card debt. And non-revolving credit, such as auto loans, fell $5.04 billion, or 3.8%, to $1.59 trillion.  Doesn’t seem consumers are ready to save the economy quite yet.  — Article written by Mathew Padilla

Today …we have a very special guest Edward Thomas from America’s Debt Solutions…He’s the founder of America’s most aggressive firm for removing debt from consumers and he is going to share some of his secrets today.

Find out why debt settlement companies that work with our marketing firm have increased their conversion ratios by 60%!  We offer unique hot live transfers that will connect your sales associates with consumers ready to settle their credit card debts.  Ask about our exclusive debt conference campaign that can be customized to generate leads for your debt relief company. 

Check out the latest conference call from Borris Bryan’s radio show, Debt Secrets Banks Don’t Want You to Know About.  If you are on this conference call right now you have been invited by someone you know…someone who cares about you and paid for this call. 

Debt settlement plans, chapter 7 bankruptcies and loan modifications continue to implode as unemployment rates rise and home equity decreases.  Borrowers are modifying their second mortgages in high volumes as well.  Second mortgage lenders are typically quick to renegotiate terms, because bankruptcy and foreclosures yield huge losses.

A sudden, drastic drop in income last year had Bob and Roxanne Curry fearing they would become another foreclosure statistic.  He works at a brokerage firm and she runs a child care business out of their Queen Creek home. In mid-2008, her weekly income fell from $1,000 to $300 as fewer parents could afford day care.“I was robbing Peter to pay Paul to make ends meet,” Bob Curry said. “I started charging up credit cards and taking money from my 401(k), and then, in November, there was finally no more money to rob Peter from. That’s when we started to get behind on our mortgage.”  

The couple’s loan servicer wasn’t interested in working with them until they were at least two months behind on the home loan. Bob Curry then compiled a 39-page document requesting a loan modification, with advice from Jeff Underwood, vice president for the Central Chapter of the Arizona Association of Mortgage Brokers. Underwood is also with AmeriFirst Financial in Mesa.  “It took two months from the time that we first faxed in the paperwork for it to finally come to a close,” Curry said. “We did all that we could do. We didn’t get into a home we couldn’t afford.”  The couple was able to get their mortgage interest rate cut from 7.45% to 5%, and all late fees and charges were moved to the end of the loan.“Basically we saved about $700 a month,” Curry said. “The mortgage loan is fixed for five years, and so hopefully when that time comes we’ll be able to do what we need to do.”

The Currys are part of a growing trend of distressed homeowners reaching deals with their lenders to get back on track with their mortgage payments and remain in their homes. “We’re seeing more (mortgage) modifications and we’re also seeing for the first time … balance write-downs as part of a modification to avoid any sort of foreclosure,” said Andrew Loubert, vice chairman of the Arizona Foreclosure Prevention Task Force. “What didn’t work six months ago is working today. We are seeing the lenders more proactive in their understanding that the market has substantially dropped and as a result they need to be more flexible with how they handle balances and things like that.”

In April, 270,000 modified mortgages and repayment plans were completed nationally, according to Hope Now, a private sector alliance of mortgage servicers, nonprofit counselors and investors. It was the largest number in any month since Hope Now began compiling data in July 2007. It has not yet released any 2009 figures for Arizona.  In the Valley, President Barack Obama’s Homeowner Affordability and Stability Plan prompted some increase in mortgage loan modifications, Underwood said. “I do think that banks have opened up a little bit to the reality that if we don’t work with these folks, it’s most likely going to go to a foreclosure process and that’s not what the housing market obviously needs,” he said.

The major difference between a Debt Management Program and Debt Settlement Program is that through a debt management option, creditors are being paid monthly whereas in debt settlement options the creditors are no longer being paid until such time as the debtor has built up sufficient funds to allow the debt settlement company to initiate negotiation procedures to reduce the amount of the debt and enact a lump sum settlement.  

Either way, in most cases, settling credit card debt or enrolling in a credit counseling program should eliminate harassing phone calls from bill collectors and collection companies.

Debt settlement can have a significant effect on a debtor’s credit score and rating as a whole, whereas a debt management after a period of time may have a positive effect on a debtor’s credit score, but may still be damaging to the debtor’s credit worthiness.  The good news is that credit can be repaired and credit repair solutions are affordable.  Take your time, when considering debt negotiations or any type of credit counseling.

Bad credit mortgage options remained non-existent for struggling homeowners seeking home refinancing with fixed rates and reduced monthly payments.  Millions of homeowners have been turned down by mortgage lenders across the country, because of low credit scores, delinquent mortgages, negative equity or employment instability.  Some homeowners may qualify for loan modification plans if they happen to have their mortgage collateralized by Fannie Mae and Freddie Mac.  However, only conforming home mortgages qualify for the federal mortgage modification program.  Jumbo mortgage loans do not qualify for the FHA mortgage, FDIC or federal foreclosure prevention plan, even if the homeowner resides in a high cost area like California, New York, Virginia or New Jersey. 

Today the Minnesota-based credit score developer FICO released the results of a study measuring the breadth of credit card limit reductions as well as the subsequent impact to consumer’s FICO credit scores. The study is the first of its kind since credit card issuers began to heavily ramp up their credit limit reduction activity in early 2008. Here are some highlights of the FICO study: 16% of the U.S population had their overall available revolving credit reduced between April and October of 2008. With credit bureau databases holding 200+ million consumer credit files, this would seem to indicate that at least 32 million cardholders lost some of their credit limits during the study timeframe of April 2008 through October 2008.

11% of the U.S. population, or 22 million consumers, lost some of their credit limits for a reason other than risky credit activity such as making payments late, having accounts go to collections, or having a negative public record added to their credit report during the study time frame. Credit card inactivity or low balances likely caused the lowered credit limits for this group. The median FICO score in this group is 770, so the adverse changes to their credit limits are not a result of poor credit risk.

A recent Fair Isaac report indicated that 10 million consumers acknowledged that their credit limits were reduced by a credit card company or home equity lender.  The financial companies that hold the debt on these credit cards claim that the maximum revolving debt for these accounts changes “because of some sort of risky credit activity including late payments, accounts in collections, or a negative public record added on their credit reports.”  However thousands of consumers with good credit scores ( borrowers with no late payments and no increased risks) reported to have their credit lines cut or significantly reduced without any changes in the credit profile.  Many of these consumers also claim that the reduction in credit limits caused their credit scores to drop on average of 40 points. 

Serious “bottle necks” are being reported where properties are significantly delinquent, meaning loan payments are over 90 days past due. Potentially, this could make the foreclosure inventory explode, according to the data. About 6.3% of mortgage loans were seriously delinquent during the fourth quarter, compared with 3.62% during the same period a year earlier. The administration aims to help up to 9 million homeowners either refinance mortgages or attain a loan modification that keeps them out of foreclosure. 

The states that took the biggest losses continue to be California, Florida and Nevada, but Louisiana, New York and Georgia have also seen sharp increases in delinquencies, indicating that the recession is spreading, the group said.  On a related note, the House voted for legislation that enables bankruptcy judges to modify and restructure the home loans of distressed borrowers seeking mortgage relief for their owner-occupied property. The See the complete article > Obama Team Announces Loan Modification and Housing Relief Plan

The increase in debt settlement and home loan delinquencies and foreclosure actions in the state came as no surprise to Joe Cox, a community organizer for housing advocate group Maryland ACORN.  “Mortgage service companies and home loan lenders have been avoiding meaningful loan modification at every step of the way,” Cox said yesterday.

Chris Traczyk, a real estate agent with Long & Foster in Elkridge, said most of the listings he has been showing to new home buyers recently have been foreclosed properties.  With several of his clients, “that’s all they’re requesting to see because they’re thinking they’ll get a great deal,” despite knowing the house must be bought in as-is condition, and the bank must approve the price.  But the competition from home foreclosures makes it tough for sellers of other homes, who often have to settle for reducing their sales prices, Traczyk said.

Banks have said they are taking steps such as Citigroup’s plan, announced earlier this week, to lower mortgage payments for some borrowers to an average $500 a month for three months if they lost their job. But ACORN contends banks are just offering short-term solutions, such as tacking a missed loan payment to the end of the mortgage balance, that do little to help borrowers.  Many homeowners come to ACORN fearing they will become late on payments but say their lending company will not consider a mortgage modification unless their payments become delinquent, Cox said. The group says it wants to see mortgage loan modification programs offered more with terms like lowering the mortgage rate or reducing the monthly payments simply by extending the amortization schedule of the mortgage.  “The message people are getting is ‘Don’t try to work this out ahead of time. Wait until you have a problem,’” Cox said.   Sun reporter Jamie Smith Hopkins and the Los Angeles Times contributed to this article

Debt Leads -- & Types of Debt Settlement Leads You Should Consider for More Business

Debt Lead buyers can choose from real-time internet leads or live transfer leads that connect consumers directly with a debt advisor or broker. Visit  the Mortgage Lead Planet for debt consolidation leads online and read some of the debt settlement and mortgage refinance articles at the the Blog for Mortgage Leads and more lead generation.

Listen to Lead Planet Founder, Bryan Dornan as he discusses the opportunity for sales people to make money helping consumers eliminate their revolving debts.

This morning on the radio, I heard an ad that asked listeners if they knew they had a right to settle with credit card companies for a fraction of what they owed. Unfortunately, that’s not really how it works. No one has a “right” to settle with credit card companies for a fraction of what they owe. Anyone has a right to ask, sure, but the credit card company also has a right to say no.

In fact, debt settlement companies aren’t always as good a deal as they seem. While they can help negotiate with credit card companies for lower settlements, they also charge hefty fees, usually over 10% of the total balance owed. Settling a debt in other words, paying just a fraction of it also hurts consumers’ credit scores. Consumers also find themselves liable for taxes on the debts that were forgiven.

The National Foundation for Credit Counseling recently warned about the slew of advertisements taking over the airwaves promoting debt settlement. “The reality may be very different from the rosy picture painted by the commercials,” says the NFCC’s Gail Cunningham. She also warns that the debt settlement industry is largely unregulated, which can make it hard for consumers to select an experienced company.  See the original article >

As bad as things have been for U.S. banks over the past year, things could actually be taking a turn for the worse. The Chairman of the Federal Reserve, Ben Bernanke, said Tuesday during a speech at the London School of Economics that the stimulus package now being planned by the Obama administration will not be enough by itself to turn the economy around and that “more capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets.”

It looks like Bernanke has made an economic policy break from the new administration, because he appears to be warning Mr. Obama and Congressional Democrats that most of the remaining $350 billion, or possibly even more, has to go to shoring up banks if they are to resume lending at normal levels.

Here’s the problem; Congress already feels it got “burned” when out-going Treasury Secretary Hank Paulson changed the focus of the TARP from purchasing troubled assets to a recapitalization program. It isn’t likely the Congress will be willing to release the second half of the $700 billion without assurances from the new administration that a large portion of the proceeds will be used to directly support homeowners.

Indeed, according to the New York Times, “Mr. Obama and his economic team have assured Congress that they would use a sizable chunk of the new money from the Troubled Asset Relief Program to help distressed homeowners refinance mortgages and escape foreclosure, “ and that Lawrence Summers, who will head the new administration’s National Economic Council, actually “assured Democratic lawmakers in writing on Monday that the administration would use some of the money to help reduce foreclosures.”

It appears as if Nouriel Roubini’s prediction that credit losses will approach the $2 trillion level is becoming more and more likely. Rising numbers of job losses, which have accelerated sharply in the fourth quarter, show no signs of abating heading into 2009. Together with the expected wave of business failures this year, additional losses in the $500 billion to $700 billion range on bad loans and credit provisions can be expected.

Most agree the TARP was successful in one aspect: the banking system has been stabilized and the risk of systemic failure has been averted. But as more consumers default on mortgages, credit cards and auto loans while business loans, commercial real estate mortgages and leveraged private equity deals go sour, it will become more and more likely to see additional pressures mount on all the big banks.

Acknowledging how unhappy congress is with the way the first part of the TARP money was spent, Mr. Bernanke said he could see why lawmakers would be “understandably concerned” that banks were receiving money when troubled homeowners and other businesses were not. But he justified further cash injections into the banks, saying “this disparate treatment, unappealing as it is, appears unavoidable. Our economic system is critically dependent on the free flow of credit.”

The implied message from Mr. Bernanke is very clear; the banks will be under increasing pressures in 2009 from further loan losses and increased credit provisions, which directly affects their tier 1 ratios. The financial system will become threatened once again as losses mount. Without either further capital injections or a plan to take these troubled assets off bank balance sheets, credit will not return to normal and the economy will continue to decline. A fiscal stimulus by itself will not be enough to return the economy to normal.  Read the original article.

In light of the credit crunch and the wave of foreclosures that have swept the country, buying a house after bankruptcy has become a lot more difficult. In most cases, mortgage lenders  not offer a home loan for someone who has filed bankruptcy in the last two years. Getting a home loan after that will largely depend on the size of the down payment you can make and whether your income is verifiable. That being said, even then the mortgage loan you will qualify for will likely have high mortgage rates and monthly payment. This being the case, maintaining on time payments and perfect credit history after bankruptcy is extremely important. Even the slightest sign of consistently delinquent payments, overuse of credit, or having too much debt and your eligibility for a mortgage loan will be thrown into question. Unfortunately, the subprime mortgage crisis has made life after bankruptcy even more difficult.

If you have already filed, there is no reason to dwell on the credit impact. Instead, you should start focusing on the ways that you can start improving it. Despite what you may have heard, removing a bankruptcy from your credit is unlikely (unless of course you filed Chapter 7 more than 10 years ago and it should be off your credit report anyway). Bankruptcy is intended to give you a fresh start, but from a credit standpoint, it will take time for you to rebound.

Here are a few tips to improve your credit score after filing for bankruptcy: First, always make on time payments to your creditors. Getting the credit in order to do this may be more difficult; however, getting secured credit cards or gas cards are easy ways to get credit again after declaring. Second, don’t max out your credit lines. This is a simple way for potential mortgage lenders to see if you have a problem abusing credit—if you are using the full line it is a huge warning sign that you may be a big spender. Third, don’t apply for too much credit. In the same light as the above, applying for several credit cards or loans at once is a warning sign you may be abusing your credit.  Read the original article >

I saw some credit related news this morning that was SO shocking that I felt I should share. On Good Morning America there was a segment about a man named Kevin Johnson. His father worked in the credit card industry, so Kevin is a very financially savvy guy because his dad taught him to manage his credit wisely. He pays his bills on time EVERY month and keeps his balances down. He is a homeowner and does everything that a consumer should do to keep his/her FICO credit scores up – keeping his debt to income ratio down, paying his bills on time and applying for credit only when he needs it. He got the opportunity to apply for an American Express Blue card and was approved. He had a credit line of $10,000, but was shocked to find that his credit line was recently slashed to $3,800 (probably what he owed them). The reason for this: WHERE he used the card.

When American Express slashed his credit line, they gave him the lame reason that he used his card somewhere where it has been observed that other people who have problems paying their bills have used theirs. Thus, they claimed he now is a risk of not paying his bills. They are engaging in behavioral analysis now. Apparently, now WHERE you shop and use your credit card can affect how much of a risk your creditor thinks you are. Because this has happened to someone with a stellar credit score, Good Morning America took it to House Speaker Nancy Pelosi because American Express received TARP funds. American Express was contacted for a comment, and they said they were trying to “balance servicing their card members while monitoring risk.” This is a company that took taxpayer money because they can’t manage their debt, but instead of using it to be able to lend to consumers, they, like other TARP recipients, are hoarding the money and coming up with MORE reasons to slash credit lines and NOT lend to consumers.

The credit card companies have been able to run carte blanche on consumers, slashing their credit lines for the lamest reasons. Mine have been repeatedly slashed because my creditors claim I have “seriously delinquent accounts”. These “seriously delinquent accounts” to which they are referring are ones that are 4.5 years old or older. Three of them are due to fall off my credit reports THIS YEAR due to age. I have one that drops off in May of this year, one in July and one in November. But, yet, the creditors are allowed to continue to punish me for these past financial problems that were actually a result of identity theft. Credit card companies REALLY need to be monitored, and now they are on the radar screen. Now, that it has happened to someone who is high-profile enough to have drawn attention, it will be interesting to see if these practices stop.  The Debt Settlement Nationwide Blog, recently posted some similar comments.

The key to all of this is that creditors have been doing behavioral analysis, which apparently affects people’s credit scores, without telling their customers. Kevin Johnson has created a website called “New Credit Rules” as a result of this.

Kevin Johnson apparently created a blog as a result of what happened to him. Here’s where the debt story came from:

I also checked and found out that MARKET CONDITIONS are among the ways creditors determine lending risks. So, with the market being in bad shape, consumers are taking it up the rear. Consumers are now also being punished for high balances and past financial mistakes, even if those mistakes are several years old or, in my case, the result of identity theft. Banks are getting away with writing their own rules on how they assess credit risk.

In the criminal justice system, a person cannot be punished twice for the same crime. It’s called “double jeopardy”. But, banks are allowed to continue to punish consumers again and again. Plus, they can also continue punishing for high balances that resulted from another creditor cutting credit lines down to what the balance is on a consumer’s credit card. Thus, the endless loop of having credit lines slashed and interest rates and fees jacked up to phenomenal rates on not just new purchases but also old balances continues. This makes it even more impossible for people to pay off their balances. I’m a good example of that because on one of my credit cards I quite literally pay more than twice the minimum payment each month, but my balance never goes down. My minimum payment on the card in question is $84. I pay $200 each month, but it doesn’t bring my balance down. Maybe this would somehow make a great article with a headline something like this: Banks Go Carte Blanche on the Taxpayer’s Dime

And, the article can go into some of the new ways banks scalp consumers and force them to pay for the bank’s mismanagement of their bottom line. Let me know what you think. – Maria Ny

Bloomberg recently examined trends with consumer debt and savings. Many people believe that bankruptcy is a four letter word, but if you’re drowning in debt, it may offer you the chance you need to regain your financial footing.  Larn exactly what bankruptcy is and how it affects your life. 

Our debt relief specialist will review your finances and then quickly provide you with solutions that will reduce your monthly payments and increase your cash flow.  Credit card debt settlement services may provide you with a solution that gets you out of debt quickly without needing to file for a bankruptcy. 

Debtors who find themselves in serious financial trouble may have or will soon have several liens placed on them. A lien is a recorded document that states that the Debtor owes the creditor a certain amount of money. Once recorded, the lien will attach to any real property owned by the debtor in the County it was recorded. By recording this obligation, the creditor reserves the right to collect their money if the Debtors ever sells the property before the debtor gets the money. This lien is very similar to a First Deed of Trust or Second Deed of Trust that a standard mortgage lender might file before they lend additional funds.  Many borrowers with combination mortgages are making efforts to negotiate a loan modification agreement on the 1^st mortgage while attempting to settle the 2^nd mortgage.  Second mortgage settlements are being reported from lenders holding notes on properties that have declined so significantly that the lender is willing to settle on the 2^nd mortgage for a small percentage of the outstanding balance.  The mortgage lenders have decided that in these cases nobody wins with a foreclosure or bankruptcy.  Debt settlement and forgiveness remains a separate issue when attempting negotiate credit card debts for less than agreed.

The creation of a lien is a very powerful tool for the creditors. Specifically, this lien may survive the Debtor’s bankruptcy. This means that the Debtor may discharge the debt during bankruptcy but if the Debtor ever sells property, the lien will still be paid because it is attached to the property and not to the debtor.

It may be even possible, under the right conditions, that a second mortgage can be stripped from the property.  Read the original article> http://www.californiabankruptcylawyerblog.com/2009/01/san_jose_attorney_talks_about.html