They call or drop by her credit-counseling office in a steady stream.
They are distraught. Collectors are dogging them, and they desperately need help to consolidate and pay off their bills.
While their problems might have lots of causes — maybe they’re suffering under a subprime home loan — credit-card debt is often part of the mix, according to Barbara Mascarin, operations director for the nonprofit American Financial Solutions.
She is hoping new credit-card consumer protection rules help. They were signed by President Obama in May and go into effect this month through February 2010.
“I think that people maybe will not get into so much trouble,” Mascarin said. Her staff of about two dozen often set up debt management plans for clients, and within three to five years, many clients are back on track.
Under the new protections, consumers will have to be more than 60 days behind on payments before credit-card companies can raise interest rates on balances. And, credit-card companies will have to revert to previous, lower rates if consumers pay minimum balances on time for six months.
Credit-card companies also have to give 45 days’ notice and an explanation to consumers before they change their rates.
The rules also will make it much harder for credit-card companies to issue cards to people younger than 21. Soon, applicants younger than 21 will have to prove they have the ability to pay off debt, or a parent will need to co-sign.
“If you’re a student, it will be hard to get a credit card,” said Mascarin, whose own daughter was heavily solicited by credit-card companies while a student at the University of Washington. She later canceled cards she realized she didn’t need or want.
Credit-card companies are changing terms on millions of credit card accounts before the law takes effect, according to the Los Angeles Times. At least two are changing fixed rates to variable rates.
“The credit card companies are trying to find their way around it,” Mascarin said.
But they’ve also taken steps to help firms like American Financial Solutions assist more people. This spring, the nation’s 10 largest credit-card companies agreed to provide more affordable debt management plans and hardship programs for consumers.
“These new concessions are really making a big difference,” she said.
Those who come to her office have an average card debt of $13,000. Usually it’s some big life change — a job loss, divorce or death of a spouse — that has caused them to pull out the cards and start using them for daily expenses like groceries. One man that American Financial Solutions helped had gone through a divorce and charged up $90,000 in card debt, she said.
“One of the biggest things is medical problems,” Mascarin said.
On average, they have eight credit cards, including some from the big companies and a smattering of retail cards.
The immediate advice they get is to put down the cards.
Her firm works with credit-card companies to lower rates, cut penalty fees and buy time for the consumer neck-deep in debt.
Not everyone can be helped. For those who can’t, the next step is bankruptcy. That path has become so common in this recession that American Financial Solutions began pre-bankruptcy counseling for clients in February. About 70 troubled clients get it a month.
But those who can be helped get a heavy dose of financial literacy, through counseling, classes and learning materials. The Bremerton-based company currently has 25,000 clients around Puget Sound and throughout the nation.
Mascarin wishes financial literacy were taught in schools, long before her clients got to this point.
“If you have to take a class on your state history, good grief, you should have to take a class in managing your money,” she said.
But if that’s not going to happen right away, it’s up to parents to teach the kids, she said. If you do a family budget, show them how. Show them how you balance your checking account. And explain credit cards to them, and how to use them.
But for those who cards helped get them into trouble, there may be help.
“It’s not the end of the world,” Mascarin said.
Source
Sunday, November 15, 2009
Wednesday, October 28, 2009
Sacramento Attorney Sued for Student Loan Default
SACRAMENTO, CA - A Sacramento attorney who hasn't made a payment on her student loan in over a decade is being sued by the federal government for more than $150,000.
According to a civil suit filed Tuesday in U.S. District Court, Robbin Michelle Coker consolidated multiple student loans in 1996 with a single federally-guaranteed loan of $60,466. The complaint indicates Coker stopped making payments on the new loan 18 months later.
The U.S. Department of Education reimbursed the lender for the defaulted loan and is trying to collect a total of $138,212.23, which includes the original loan amount plus interest which continues accruing at $17.25 per day.
The U.S. Attorney, which filed the suit, is seeking an additional 10 percent "debt surcharge" authorized by federal law.
Federal court records indicate Coker specializes in personal bankruptcies. With few exceptions, student loans cannot be discharged in a bankruptcy.
According to an online directory of attorneys, Coker was licensed to practice law in 1995 following graduation from McGeorge School of Law.
Source
According to a civil suit filed Tuesday in U.S. District Court, Robbin Michelle Coker consolidated multiple student loans in 1996 with a single federally-guaranteed loan of $60,466. The complaint indicates Coker stopped making payments on the new loan 18 months later.
The U.S. Department of Education reimbursed the lender for the defaulted loan and is trying to collect a total of $138,212.23, which includes the original loan amount plus interest which continues accruing at $17.25 per day.
The U.S. Attorney, which filed the suit, is seeking an additional 10 percent "debt surcharge" authorized by federal law.
Federal court records indicate Coker specializes in personal bankruptcies. With few exceptions, student loans cannot be discharged in a bankruptcy.
According to an online directory of attorneys, Coker was licensed to practice law in 1995 following graduation from McGeorge School of Law.
Source
Thursday, October 15, 2009
Bad Credit Consolidation - Can It Help You Get Out of Debt?
Bad credit consolidation is a financial tactic that can help you lower the amount of your bills as well as lowering your interest rate. If you have several types of debt including credit cards, car loans, student loans and personal loans, consolidating them all into one payment may be the best way to go for you. Not only will you save money, but you will only have to make one payment a month. No more worrying about the bills be paid on time.
Every single day we notice companies advertising for these types of services. On the Internet and on television we see ads that offer you a lower interest rate and one payment a month for all of your bills. The one good thing about the bad economy is that these companies are doing what it takes to help you out! It is a win-win situation for you and the company. The company makes money off the consolidation and you save money by having a lower interest rate and making one payment.
Almost all of the advertisements offer an 800 number to call and speak to a representative. Even if you do not want to give away all your personal information, it might still be a good idea and call just to see what types of offers they can give you. There are MANY different companies that do this, so please do not feel like you have to work with the first company that you talk to. Now get out there and save some money by consolidating your debt.
Source
Every single day we notice companies advertising for these types of services. On the Internet and on television we see ads that offer you a lower interest rate and one payment a month for all of your bills. The one good thing about the bad economy is that these companies are doing what it takes to help you out! It is a win-win situation for you and the company. The company makes money off the consolidation and you save money by having a lower interest rate and making one payment.
Almost all of the advertisements offer an 800 number to call and speak to a representative. Even if you do not want to give away all your personal information, it might still be a good idea and call just to see what types of offers they can give you. There are MANY different companies that do this, so please do not feel like you have to work with the first company that you talk to. Now get out there and save some money by consolidating your debt.
Source
Monday, September 28, 2009
A borrower's look at using Lending Club to consolidate debt
Peer-to-Peer lending is everywhere these days. You can start a business, get student loans and consolidate high interest debt. Still, borrowing money from your peers is a new experience for most of us, and for many people new things are daunting -- which makes this borrower's look at peer-to peer-lending by Matt Jabs at Debt Free Adventure all incredibly useful.
After the interest on three of his credit cards jumped, "due to bad economy", he looked into LendingClub.com to consolidate his high-interest debt into a lower fixed-term loan. But he didn't just consider the interest rates and say to himself, hmm, I'll chase that lower rate and who cares about the fees! Instead he compared the total cost and by doing so saved himself over $500. His story covers the details of his process, including his interest rate savings, 10% on one card. You'll also find links to help you figure out if you can save by consolidating to a lower rate loan the same way he did.
For me one of the biggest benefits to switching to a Lending Club peer-to peer-loan which was not covered in Jabs' article is that it is a fixed-length loan. While credit card debt can drag out year after year, a Lending Club loan gives you a specific payoff date. Having an end in sight can be a huge motivator to tackling your debt. I also like that you can't add to this debt over time and that there is no prepayment penalty.
While I have not personally used Lending Club or a peer-to-peer lender, this type of information,is leading me to look at a peer-to-peer solution to consolidate my current credit card debt when my promotional 0% rate expires.
Source
After the interest on three of his credit cards jumped, "due to bad economy", he looked into LendingClub.com to consolidate his high-interest debt into a lower fixed-term loan. But he didn't just consider the interest rates and say to himself, hmm, I'll chase that lower rate and who cares about the fees! Instead he compared the total cost and by doing so saved himself over $500. His story covers the details of his process, including his interest rate savings, 10% on one card. You'll also find links to help you figure out if you can save by consolidating to a lower rate loan the same way he did.
For me one of the biggest benefits to switching to a Lending Club peer-to peer-loan which was not covered in Jabs' article is that it is a fixed-length loan. While credit card debt can drag out year after year, a Lending Club loan gives you a specific payoff date. Having an end in sight can be a huge motivator to tackling your debt. I also like that you can't add to this debt over time and that there is no prepayment penalty.
While I have not personally used Lending Club or a peer-to-peer lender, this type of information,is leading me to look at a peer-to-peer solution to consolidate my current credit card debt when my promotional 0% rate expires.
Source
Tuesday, September 15, 2009
Student loans puts college graduate into deep financial hole
Student loans were a fact of life for Marjorie Dillon and she was OK with that — even though she didn't keep close track of how much she borrowed or completely understand the agreements. She and many of her former classmates at Robert Morris University in Moon relied on loans to pay tuition and expenses.
Ms. Dillon, 26, of Coraopolis, was the first in her family to attend a four-year university and loans were the only way to finance the business administration degree that would be her passport to a better life.
But six months after graduating with her bachelor's degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She's nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.
"Honestly, I wouldn't have gone to school if I knew I would be in debt the rest of my life," Ms. Dillon said. "I won't be able to ever own anything. If you look at my credit report, it's (loaded) with Sallie Mae loans."
The financial crisis she is facing provides a snapshot of the worrisome outlook confronting many college graduates who find themselves juggling a mountain of student loans and other forms of debt in the early stages of their working lives.
Her case might be considered a worst-case scenario. The average cumulative debt for four-year college graduates has reached $22,656, according to Finaid.org, a leading Web site for financial aid information.
Some relief is on the way thanks to a new federal student loan repayment plan that will set monthly payments based on how much borrowers make and the size of their families instead of how much they owe. In some cases, graduates will make no monthly payments if their income falls below a certain level. And after 25 years of payments, any remaining balance is cancelled.
But the reduced income repayment program is only available for federal student loans under Stafford, Grad Plus and federal consolidated loan programs.
Source
Ms. Dillon, 26, of Coraopolis, was the first in her family to attend a four-year university and loans were the only way to finance the business administration degree that would be her passport to a better life.
But six months after graduating with her bachelor's degree, Ms. Dillon is making $7.25 an hour plus tips serving beer at a bowling alley, working 25 to 30 hours a week. She's nearly $120,000 in debt, behind on her bills and, despite her best efforts, cannot find a better job. Her 80-year-old grandmother co-signed for the loans and could lose her house in North Fayette if the debts are not repaid.
"Honestly, I wouldn't have gone to school if I knew I would be in debt the rest of my life," Ms. Dillon said. "I won't be able to ever own anything. If you look at my credit report, it's (loaded) with Sallie Mae loans."
The financial crisis she is facing provides a snapshot of the worrisome outlook confronting many college graduates who find themselves juggling a mountain of student loans and other forms of debt in the early stages of their working lives.
Her case might be considered a worst-case scenario. The average cumulative debt for four-year college graduates has reached $22,656, according to Finaid.org, a leading Web site for financial aid information.
Some relief is on the way thanks to a new federal student loan repayment plan that will set monthly payments based on how much borrowers make and the size of their families instead of how much they owe. In some cases, graduates will make no monthly payments if their income falls below a certain level. And after 25 years of payments, any remaining balance is cancelled.
But the reduced income repayment program is only available for federal student loans under Stafford, Grad Plus and federal consolidated loan programs.
Source
Friday, August 28, 2009
7 Expensive Mistakes College Students Make
Every August, millions of parents nationwide load up minivans and head out to drop off their high school grads at college. But while college freshman may be academically prepared for school, they often still have a lot to learn when it comes to managing money. Most new college students have little to no experience handling money on their own, and they end up paying dearly for that inexperience by making costly mistakes. Here we look at some of the most common money mistakes college students make, and provide some tips on how to mitigate or avoid them.
1. Getting a Credit Card
When the Credit Card Accountability Responsibility and Disclosure Act of 2009 takes full effect in 2010, college-age students will be restricted from applying for credit cards on their own. Until then, this demographic is ground zero for credit card companies' marketing efforts. According to the Department of Education, more than 50% of all college students receive a credit card application on a daily or weekly basis. Credit card companies set up booths on campus and at sporting events, enticing students to sign up for a pre-approved credit card with free T-shirts, concert tickets, water bottles, bobble-head dolls and more - including high fees and interest rates. According to Sallie Mae, 84% of all college students have at least one credit card and the average college student has nearly five cards. And they're using them: the average college students carries a credit card balance of $3,173, and most grads are entering the workforce with a significant amount of high-interest credit card debt. (Find out what you're getting into before signing up. Read How To Read Loan And Credit Card Agreements.)
Money Saving Tips:
If you do sign up for a credit card, either with your parents' help or on your own, ask you parents to help you formulate some guidelines for how much you can charge, and what types of things you can charge for.
Review the bill carefully to monitor your credit usage.
Watch the movie "Maxed Out", a 2006 documentary that exposes the dark side of excessive credit card use and the extraordinarily high cost for a few college students.
2. Spending "Leftover" College Loan Money
If you receive student loans, it's possible to receive more each semester than your actual tuition bill. That "leftover" money can be enticing - a way to buy a few more late-night lattes or finance a spring break trip, right? Remind yourself that the money isn't leftover, and it isn't free - it's a loan that charges interest and that will have to be repaid. (If your loans get too big, you may have to consolidate. Read more about this option in Should You Consolidate Your Student Loans?)
Money-Saving Tips:
Create a loan repayment plan from day one.
Use all remaining funds to begin repaying the loan and save money on interest.
3. Ignoring Your Checkbook
Sure it seems tedious to enter every check, ATM withdrawal, debit card transaction and account fee, but not doing so is a great way to get hit with expensive overdraft fees. If your bank charges $50 per overdraft, one slip-up could set off a cascade of overdraft fees, setting you back hundreds of dollars. (For more on the costs of overdraft, see When Good People Write Bad Checks.)
Money-Saving Tips:
Learn how to balance a checkbook, read a bank statement and reconcile the two.
Review your account's overdraft fees and penalties.
Block off time each week to balance your checkbook.
4. Blowing Through Meal Plan Points
Most colleges let you deposit money into a meal plan that you can access through a debit-type account to pay for food. But today's college students aren't limited to using meal plan money for chicken salad at the cafeteria – now they can use those cards to buy fast food at local off-campus drive-throughs, snacks at local convenience stores, and to order pizza for delivery. But more spending options mean you can go through that money more quickly, leaving you broke (and hungry) before the end of the month.
Money-Saving Tips:
Break down that big meal plan dollar amount to a daily/per-meal basis.
Track your card usage to make sure you don't run out of funds - and food!
5. Lending Money to New Friends
You'll meet a lot of new people in college. Unfortunately, not all of those new friends will be worth keeping, so be wary of any new friend that regularly asks for money.
Money-Saving Tip:
Decide in advance how you will respond to such a request and stick to it.
6. Cosigning for a Loan
While you may want to help a friend in need, taking on any type of financial commitment is a legal agreement. If you go into a loan with a friend, you are guaranteeing that person's debt. If your friend can't repay the loan, the lender is going to come after you, and even your parents! According to the FTC, 75% of all lenders who hold defaulted loans pursue cosigners for repayment. And that's only the beginning. Cosigning could wreck your credit score, diminish your ability to get your own credit in the future and lower the amount of money you can borrow. (For more insight, see The Importance Of Your Credit Rating.)
Money-Saving Tip:
Decide in advance that you will not cosign a loan or credit card agreement if asked and come up with ways to respond to such a request in case it arises.
7. Sharing Personal Information
A 2007 FTC report revealed that 31% of identity-theft victims were between the ages of 18-29. According to CEO Identity Finder Todd Feinman, college students can be at a higher risk for identity theft because they share personal information online and use on-campus public computers or wi-fi systems that may not have particularly high levels of security. In addition, most students living on-campus have a roommate, which means that anytime their room is open their information is available for their roommate (and their roommates' friends) to see.
Source
1. Getting a Credit Card
When the Credit Card Accountability Responsibility and Disclosure Act of 2009 takes full effect in 2010, college-age students will be restricted from applying for credit cards on their own. Until then, this demographic is ground zero for credit card companies' marketing efforts. According to the Department of Education, more than 50% of all college students receive a credit card application on a daily or weekly basis. Credit card companies set up booths on campus and at sporting events, enticing students to sign up for a pre-approved credit card with free T-shirts, concert tickets, water bottles, bobble-head dolls and more - including high fees and interest rates. According to Sallie Mae, 84% of all college students have at least one credit card and the average college student has nearly five cards. And they're using them: the average college students carries a credit card balance of $3,173, and most grads are entering the workforce with a significant amount of high-interest credit card debt. (Find out what you're getting into before signing up. Read How To Read Loan And Credit Card Agreements.)
Money Saving Tips:
If you do sign up for a credit card, either with your parents' help or on your own, ask you parents to help you formulate some guidelines for how much you can charge, and what types of things you can charge for.
Review the bill carefully to monitor your credit usage.
Watch the movie "Maxed Out", a 2006 documentary that exposes the dark side of excessive credit card use and the extraordinarily high cost for a few college students.
2. Spending "Leftover" College Loan Money
If you receive student loans, it's possible to receive more each semester than your actual tuition bill. That "leftover" money can be enticing - a way to buy a few more late-night lattes or finance a spring break trip, right? Remind yourself that the money isn't leftover, and it isn't free - it's a loan that charges interest and that will have to be repaid. (If your loans get too big, you may have to consolidate. Read more about this option in Should You Consolidate Your Student Loans?)
Money-Saving Tips:
Create a loan repayment plan from day one.
Use all remaining funds to begin repaying the loan and save money on interest.
3. Ignoring Your Checkbook
Sure it seems tedious to enter every check, ATM withdrawal, debit card transaction and account fee, but not doing so is a great way to get hit with expensive overdraft fees. If your bank charges $50 per overdraft, one slip-up could set off a cascade of overdraft fees, setting you back hundreds of dollars. (For more on the costs of overdraft, see When Good People Write Bad Checks.)
Money-Saving Tips:
Learn how to balance a checkbook, read a bank statement and reconcile the two.
Review your account's overdraft fees and penalties.
Block off time each week to balance your checkbook.
4. Blowing Through Meal Plan Points
Most colleges let you deposit money into a meal plan that you can access through a debit-type account to pay for food. But today's college students aren't limited to using meal plan money for chicken salad at the cafeteria – now they can use those cards to buy fast food at local off-campus drive-throughs, snacks at local convenience stores, and to order pizza for delivery. But more spending options mean you can go through that money more quickly, leaving you broke (and hungry) before the end of the month.
Money-Saving Tips:
Break down that big meal plan dollar amount to a daily/per-meal basis.
Track your card usage to make sure you don't run out of funds - and food!
5. Lending Money to New Friends
You'll meet a lot of new people in college. Unfortunately, not all of those new friends will be worth keeping, so be wary of any new friend that regularly asks for money.
Money-Saving Tip:
Decide in advance how you will respond to such a request and stick to it.
6. Cosigning for a Loan
While you may want to help a friend in need, taking on any type of financial commitment is a legal agreement. If you go into a loan with a friend, you are guaranteeing that person's debt. If your friend can't repay the loan, the lender is going to come after you, and even your parents! According to the FTC, 75% of all lenders who hold defaulted loans pursue cosigners for repayment. And that's only the beginning. Cosigning could wreck your credit score, diminish your ability to get your own credit in the future and lower the amount of money you can borrow. (For more insight, see The Importance Of Your Credit Rating.)
Money-Saving Tip:
Decide in advance that you will not cosign a loan or credit card agreement if asked and come up with ways to respond to such a request in case it arises.
7. Sharing Personal Information
A 2007 FTC report revealed that 31% of identity-theft victims were between the ages of 18-29. According to CEO Identity Finder Todd Feinman, college students can be at a higher risk for identity theft because they share personal information online and use on-campus public computers or wi-fi systems that may not have particularly high levels of security. In addition, most students living on-campus have a roommate, which means that anytime their room is open their information is available for their roommate (and their roommates' friends) to see.
Source
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