Financial Crisis: First Foreclosure, Now Credit Cards?

The next big crisis?

The past year has been a tough one for our economy.  We have seen the companies suffer as the mortgage industry undergoes a huge crisis.  Thousands of foreclosures have happened to people who got into mortgages they couldn’t afford.  Adjustable rate mortgage and interest only loan rates started going up, and people found they couldn’t afford their mortgages anymore.  (One could argue that they never could afford them in the first pace, but that’s an argument for another post)

Yes, that's an axe

Yes, that's an axe
credit: danesparza

Now, according to ABC News there may be another crisis ready to explode. The credit card crisis:

With banks limiting home equity lines, gas and food bills on the rise, and homeowners struggling to make their mortgage payments, some Americans are turning to credit cards to make ends meet. Many, however, are finding their cards more expensive to use as credit card companies increasingly raise interest rates, lower credit limits and cancel inactive accounts.

It’s all happening, some industry watchers say, for a good reason: The companies are trying to avert a crisis.

In the first three months of the year, commercial banks in the U.S. took losses on 4.7 percent of their credit card loans, up from 3.9 percent the year before, according to the Federal Reserve.

In the last two weeks, major credit card players like American Express, Capital One, Citigroup and Bank of America have all reported larger losses from unpaid card bills. American Express saw second-quarter profits from its U.S. credit card business fall a stunning 96 percent from $580 million in the spring of 2007 to $21 million this year. (Overall, the company reported $655 million in second-quarter profits.)

So people are getting behind, they’re having a hard time paying their mortgages, their home equity lines and paying for everyday essentials.  It’s no surprise that they’re using their credit cards more, making balance transfers and then in turn getting behind on those payments as well.

Who is to blame for the looming credit card crisis?

The article argues that the credit card companies are to blame for much of the problem themselves because when the mortgage sector started tanking, they looked to their credit card divisions to bolster their meager earnings.  They upped the credit limits and offered more cards to higher risk buyers.  It only stands to reason that when they offer credit to people with a history of not paying (thus high risk), that they’ll show a higher number of people defaulting on their debts.

Credit card lending became “a bit too aggressive,” said John Ulzheimer, the president of consumer education for Credit.com, a credit card information site. “People were getting credit vehicles maybe they should not have been getting. Those bad issuances of cards are, in many cases, coming home to roost right now.”

Can companies survive this credit crunch?

Now the question is this, will this looming credit crunch be enough to do in some of these struggling credit card and other financial companies?

Analysts agree that credit card troubles alone likely won’t be enough to topple any one bank in the same spectacular fashion that subprime mortgage losses led to the collapse of Bear Stearns.

But Ron Ianieri, the chief market strategist for the investor education company Options University, said that for banks already suffering from other financial woes, more trouble on the credit card front “could be enough to be the straw that breaks the camel’s bank.”

“I don’t think a credit card crisis would be strong enough to collapse a bank under normal conditions, but these aren’t normal conditions,” he said. “These banks are teetering right now as it is. One more push — it doesn’t have to be a big push — and it could knock them off the top.”

So it’s really up in the air. This credit crisis, along with the foreclosure problems that we’ve seen in the past months could be enough to do in some of these companies. It’s hard to feel sorry for really anybody involved in this fiasco.

Banks started lending and giving credit cards to people who had no business getting one. People taking advantage of these offers  really had no business getting into home loans they couldn’t afford, or using credit they couldn’t pay back.  Irresponsibility abounds and plenty of blame is assignable to all parties involved.

In the short term, the credit card companies will probably survive by bumping interest rates up, and lowering credit limits.  That means customers will be paying more in fees, and be even less likely in some cases to make their payments.

If you’re having problems with your debt, I suggest getting into a good financial program, much like Dave Ramsey’s Financial Peace University where you can set up a plan to repay your debts, get rid of your credit cards for good, and find freedom in living without debt.

LINKS:

Credit Cards: The Next Financial Crisis?

Source: biblemoneymatters.com

Can I Fix My Credit in a Week?

If you’re getting ready to apply for a car loan, mortgage or credit card, you may have heard it’s a good idea to check your credit before doing so. But, waiting until the last minute to check your credit before applying may have you surprised — if you find you have low credit scores for any number of reasons, you may be wondering just how quickly you can fix your credit.

“Unfortunately, there are no quick fixes for credit because it took time for this problem to arise and it generally takes much more than a week to resolve it,” John Heath, a credit expert and consumer attorney for Lexington Law, a Credit.com affiliate, said in an email.

Timing Is Everything

Credit scores are based on information in your credit files, which includes new data about how you handle your accounts reported by your creditors every month, according to Jeff Richardson, a spokesperson for VantageScore Solutions.

This monthly reporting date differs from lender to lender and the monthly date your credit scores update also differs depending on the reporting bureau, which is one of many reasons the cycle for fixing your credit may take more than 30 days, Richardson said.

Get Help Now

Privacy Policy

Another example of timing limitations arises when you attempt to fix your credit by disputing errors on your credit reports, according to Heath. These disputes may include a current account, collection, bankruptcy, public record, tax lien or late payment that can’t be substantiated, isn’t yours, is inaccurately reported or is outdated.

“One of the major rules of the Fair Credit Reporting Act grants the credit reporting agencies 30 days to review your challenges to items on the credit report,” Heath said.

According to a 2012 VantageScore report, showing the impact of different positive and negative credit behaviors, you can typically improve your credit scores by 10 to 15 points within a few months with simple credit management techniques such as paying bills on time and paying down debt. For larger score improvements, it can take even longer depending on your specific credit report and account history.

Credit Fixes Accomplished in 30 Days

In general, the negative score impact of running up the balances on your credit cards can usually be corrected by a payoff the next month, according to Richardson.

“Pay down the balance all the way to zero, or at least under 30% of your total available credit, and you may see a credit score bump back up the next month, so long as there are no other negative credit events on your report,” he said.

Again, depending on timing, there might be one way you might improve your credit score in one week, according to Richardson.

“A score increase or decrease will depend upon when the lenders update your file,” Richardson said. “If you can find out when, say, a credit card issuer is reporting to the credit bureaus and reduce your balance significantly beforehand it is possible to see a score increase in a short time period.”

He favors taking a longer view of your credit health and improving your credit before you need to apply for any new credit, if possible.

Heath said you could spend one week reviewing your credit reports thoroughly making sure you recognize all the listings on the report and creating a budget that assures timely payments. Both of these actions, easily completed in one week, go a long way toward improving your credit in the long run.

No matter what steps you take to improve your credit scores — whether it’s to repair errors you discover or simply improve your habits — it’s important to note that these are things you can do on your own. There are also professional credit repair experts who are available to help you, but opting to turn to one for help is not essential.

If you are unsure where your credit currently stands, you can view two of your credit scores for free, updated ever 30 days, on Credit.com.

Image: Rawpixel Ltd

[embedded content]

Source: credit.com

Still Think Credit Card Companies Aren’t Evil? Read This.

News flash – credit card companies are not looking out for your best interests

A common theme that I have on this blog is that credit card companies are never looking out for your best interests, and you need to make sure you always keep a wary eye on them.

Think those rewards cards have no down sides?  Think again.  Think that the credit card company won’t jack up your rates even though you’ve never missed a payment? Think again.

Case in point is this article titled “California: Citibank Stole $14 Million from its Customers” found on consumeraffairs.com:

California Attorney General Edmund G. Brown Jr. today announced that he has reached a settlement with Citibank after a three-year investigation into the company’s use of an illegal “account sweeping” program.

Nationally, the company took more than $14 million from its customers, including $1.6 million from California residents, through the use of a computer program that wrongfully swept positive account balances from credit-card customer accounts into Citibank’s general fund, Brown said.

The company knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps,” Brown said. “When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.”

I guess I can’t exactly say I’m surprised by the credit card companies going this far, I guess I just never thought they’d be that brazen to just actually steal people’s money! The article continues:

Between 1992 and 2003, Citibank employed a computerized “credit sweep” process to automatically remove positive or credit balances from credit-card customer accounts.

An account could show a credit balance if a customer double-paid a bill or returned a purchase for credit. The credit sweeps were done without notifying the customer and without regard for whether the customer had any unpaid balances or other charges owed to Citibank.

The credit sweeps targeted more than 53,000 customers nationwide. All of the affected accounts were in a recovery status, which includes accounts of customers who have died, sought bankruptcy protection, or been the target of litigation or other collection efforts by Citibank.

In July of 2001, a Citibank employee uncovered the practice and brought it to the attention of his superiors. The employee was later fired for discussing the credit sweeps with an internal audit team.

And finally, here is my favorite quote from the article:

In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool, Brown charged.

Wow. Stealing from our customers is a business decision. What can you add to that?

Source: biblemoneymatters.com

What Credit Score Is Needed For Nissan Financing?

Are you thinking about applying for the Nissan financing?

The minimum recommended credit score for this credit card is 660.

How to Increase Your Chances of Getting Approved for Nissan Financing

Getting approved for Nissan Motor Acceptance Corp. requires a little planning. When applying for a car loan it’s important to know what your credit scores are and what’s on your credit reports.

NMAC wants to see a strong credit history, steady income, and low credit utilization. If you’re using too much of your existing revolving credit, it’s a sign that you may not pay them back. It’s also important to make sure that you haven’t applied for too much credit in the recent past. Having too many credit inquiries can lessen your chances of getting approved.

Need help improving your credit score?

One of the best ways to improve your credit scores is by removing negative items from your credit report. Lexington Law can help you dispute (and possibly remove) the following items:

  • late payments
  • collections
  • charge offs
  • foreclosures
  • repossessions
  • judgments
  • liens
  • bankruptcies

They have over 28 years of experience and have removed over 10 million negative items for their clients in 2018 alone. If you’re struggling with bad credit and want to increase the likelihood of getting approved for new credit, call them all them (800) 220-0084 for a free credit consultation.

Tip: The Credit Card Companies Are Not Your Friend, They Just Want Your Money

I’ve noticed lately that the credit card companies are using a new tactic (or at least new to me).  They’re doing things for cardholders that on the surface appear to be helpful in order to make you think that they’re on your side.  They’re you’re friend, and they’re here to help you!

I’ve seen a Discover Card commercial lately where they talk about how we should all use their card because they can help you identify problem spending areas.    By using your credit card, you’re getting a built in easy to do budget and spending tracker!   Budgets are a great idea, but usually are only helpful if you’re the one doing it, and you have a handle on where your money is going.  Most of the time people who are relying on their credit card as their spending tracker are the same ones who have a hard time using a credit card responsibly.

I was opening my mail last night when I found a nice little ad touting the benefits of my Chase Rewards credit card. It was titled:

Here Are 5 Tips To Help You Make The Most Of Every Dollar

(along with a scan of the title):

5tips

5tips

Wow, isn’t that nice of them?  They’re trying to help me make the most of my money, and in fact, they want to give me free money!  The credit card companies care about helping me save (yeah right)!   Here’s how they plan to help me:

  1. Use Your Card Wherever You Go: 1% cash back on all eligible purchases!  No purchase too small! Get cash back on that bag of Doritos you just bought on credit!  Never mind the fact that when you use a credit card you’re very likely to spend more than if you had just paid cash.  There is just something about using cash that hurts more.  Dun and Bradstreet found that on average people end up spending 12-18% more when using a credit card! By way of example, when McDonald’s started taking credit cards for purchases, the average purchase went from $4.50 up to $7.00!  NPR had a  show a while back about why people spend more when using credit. Listen here.
  2. Make Chase Rewards Plus Your Favorite Place To Shop:  Get up to 10% bonus cash when you shop at Chase’s online shopping portal!  Hey you were going to buy that basket of fine wine and cheese anyway, right? You may as well save 10% on it too!  While you’re at it buy that pair of new shoes, and that Wii game!   Are they really trying to save me money, or just buy more stuff that I don’t need?
  3. Pay Bills Using Your Card:  You’re paying everything else on your credit card, right? You may as well start paying your bills on your credit card too!    You don’t want to miss a payment and get your water turned off do you? Budgeting for regular expenses is for suckers when you can just pay it on credit, and save!
  4. Add An Authorized User… At No Extra Cost!:  Adding an authorized user to an account is usually a bad idea (there is reason why they can’t get their own account), and a good way to run up your credit card bills.  Hardly making the most of your every dollar!  This one should be filed under “ways to start going into debt even quicker“.  Shouldn’t adding an authorized user be free anyway?  In fact, they should be paying us to add an authorized user!
  5. Feel Secure With Your Upgraded Benefits:  Here’s where they throw in some nice features like price protection, identity theft insurance, rental car insurance, theft and damage protection, extended warranties, etc.   The problem is that most people, even when they’re aware of the extra coverages, never actually use them!   They’re nice features, but not usually something that you’re going to use.  Often,  when you do want to use the extra coverage, the eligibility is defined very narrowly, and you may not be able to make  a claim anyway.  If you do use these features make sure that you know the fine print in case you do end up needing them.

Out of all of those, the only one that really makes any sense to me is the using the extra warranty coverage or theft coverage, but even those benefits are minimal when you take into account the added risk you’re taking on by using the credit cards.  The rest of the company’s ways to “help you make the most of your money” are actually just ways they’re getting you to spend more money with them.  The more you spend, the more they make in interest!

A lot of people think that they can pull one over on the credit card companies, and get ahead by taking advantage of all the cash back schemes and money back cards.  When it comes down to it, though, most won’t win this way.    Credit card companies aren’t stupid, they do these cash back cards for a reason.  These cards make them more money by encouraging debt, and by encouraging the normalization of the use of credit.  When people use rewards and cash back cards, they end up spending more money, and often these cards have higher interest rates wiping out any gains they might have made.

In the past people wouldn’t even dream of using credit for small purchases.  But today we think nothing of using credit cards for everything from a pack of gum to a flat screen TV.  The more we spend  on the cards, the more the credit card companies make.

So next time you get one of those friendly ads that are telling you how to save money, be wary.  The credit card companies are not your friend, they just want your money.

Source: biblemoneymatters.com

What Credit Score Is Needed For Paypal Credit?

Are you thinking about applying for PayPal Credit?

The minimum recommended credit score for this credit card is 650.

How to Increase Your Chances of Getting Approved for PayPal Credit

Getting approved for PayPal Credit requires a little planning. When applying for new credit it’s important to know what your credit scores are and what’s on your credit reports.

PayPal wants to see a strong credit history, steady income, and low credit utilization. If you’re using too much of your existing revolving credit, it’s a sign that you may not pay them back. It’s also important to make sure that you haven’t applied for too much credit in the recent past. Having too many credit inquiries can lessen your chances of getting approved.

Need help improving your credit score?

One of the best ways to improve your credit scores is by removing negative items from your credit report. Lexington Law can help you dispute (and possibly remove) the following items:

  • late payments
  • collections
  • charge offs
  • foreclosures
  • repossessions
  • judgments
  • liens
  • bankruptcies

They have over 28 years of experience and have removed over 10 million negative items for their clients in 2018 alone. If you’re struggling with bad credit and want to increase the likelihood of getting approved for new credit, call them all them (800) 220-0084 for a free credit consultation.

How To Vacate A Judgment

Having a judgment as part of your public record can be hugely damaging in a number of ways, especially if it’s related to a lawsuit for collections on an unpaid debt.

scales of justice

First, it shows up on your credit report for seven years and impacts your ability to borrow money through loans and credit cards.

Not only that, if a potential employer or landlord runs a credit check, they’ll see the judgment listed. This raises a huge red flag and can affect your ability to get a job or rent an apartment.

Luckily, this stigma doesn’t have to stick with you forever. There are a few ways you can get a judgment vacated. Sound like a good idea? Keep reading to find out exactly how to do it.

What is a judgment?

When you lose a civil lawsuit, you receive a judgment to repair the damage caused by whatever actions you’re accused of. This commonly occurs when you’ve defaulted on a payment and your original creditor sells your outstanding debt to a collection agency.

As part of the collection process, you can be sued for the amount owed, as well as any applicable fees and interest. If you lose the lawsuit or fail to show up and defend yourself, the judge may enter a judgment against you.

You’ll have to pay the amount assessed by the court, otherwise, you’ll face some serious consequences. Interest will accrue, which can eventually double what you owe.

Additionally, the collection agency can forcibly collect through wage garnishment. Both of these scenarios should be avoided at all costs. Still, there are a few things you can do to take control of the situation.

What does it mean to vacate a judgment?

You can essentially get a judgment voided by having it vacated. This can be done in two different ways. The first option is to file an appeal with the goal of having an appeals court void the judgment. You would choose this option if it was a judgment on merits, meaning you defended yourself but lost the lawsuit.

The second option is to fight the original lawsuit by requesting the original court to vacate a default judgment. You would select this choice if you received a default judgment because you didn’t show up in court to fight the charges brought against you.

How to Get a Judgment Vacated

Legal proceedings must follow a number of very specific processes in order to be successful. That basically means there’s a lot of room for error. And if a collection agency doesn’t follow the process perfectly, you have the chance to get your judgment successfully vacated.

Why wouldn’t the judge automatically pick up on any potential infractions? As you can imagine, the legal system is extremely complex, and no singular judge is an expert in every type of law. In fact, a small claims court can see any number different types of trials in just one day.

In addition to debt collection cases, a judge might also rule on cases related to evictions, personal injury, breach of contract, breach of warranty, and intentional harm.

She or he likely won’t have a working knowledge of every single minute detail of the law related to collections and consumer law. But if you make it your job to become that expert, you can use the information to your benefit and get the judgment successfully vacated.

How to Vacate a Default Judgment

Just as the collection agency should have followed specific procedures on their end, it’s vital that you do the same when you file a motion to vacate a default judgment. If you don’t, you could lose your chance to have the judgment dismissed.

Take your time and be thorough the first time around because it’s probably your only shot. Don’t be too worried, though. We’ve pulled together each step you should take in order to have a successful process.

Review Your State Procedures

Before you do anything else, perform a bit of background research on your state’s specific laws regarding civil procedure. This information should tell you exactly how to submit your motion and where the information should be sent. The law might also outline more specific reasons that are valid for getting a judgment dismissed.

If any of them apply to your situation, you’ve got an extremely compelling case. Read the information carefully and use the same type of wording in your motion letter. Again, pay careful attention to any and all relevant details so that your motion isn’t thrown out because of a technicality.

File a Motion to Vacate a Judgment

In order to file a motion and get your judgment dismissed, you must write a letter explicitly stating your case. Here is the basic information you should include. The first thing to state is all of the identifying information associated with your case.

This includes your case name, court reference number, and all of the relevant parties. After that comes the meat and potatoes of the letter: your reasons for requesting a vacated judgment.

No-Show

If there was a good reason you didn’t attend the original hearing and you received a default judgment, let the court know why that happened, especially if circumstances were beyond your control.

If you didn’t receive a summons and complaint, it may not be your fault. Each state law varies on what the appropriate procedure is to have this information delivered, so check on yours.

No Hearing

Another reason for vacating a default judgment is if you responded to the summons and complaint, but a judgment was issued even without a hearing. Remember, it’s your legal right to have a hearing to defend yourself.

If the hearing did take place but you had a valid reason for not attending, you can also state that information here. Maybe you had a family emergency or couldn’t take off work without jeopardizing your job.

Whatever the reason, plead your case — just try not to sound like you’re making frivolous excuses for yourself. After that, you can give a reason as to why the case itself should be dismissed.

Maybe the collection agency never properly validated the debt as you legally requested. Or maybe the interest they charged you was more than the state’s usury limits. If the collection agency overlooked even a small element of the law, make it known here.

Submit Your Motion

The procedure for filing a motion varies depending on where you live, but in most cases, you must go to the courthouse in person.

The important detail here is that it must be done at the courthouse where the original hearing took place. So if you’ve moved, you’ll have to return to the original location to file the motion and attend any subsequent hearings.

Once at the courthouse, bring your motion letter to the court clerk. You’ll pay a small filing fee and fill out some more forms. Don’t be afraid to ask questions; after all, the clerk is there to help.

Shortly afterward, you should receive notice of the newly scheduled court date to plead your case. The plaintiff (the collection agency) can respond to the hearing notice within 35 days. Be sure to clarify with the court whose responsibility it is to notify the plaintiff: theirs or yours.

Settling Outside of Court

If you have compelling documentation that the collection agency did not adhere to the law in their dealings with you, they may offer a settlement to avoid going to court.

This is especially true if you weren’t served a summons properly or if they broke a law in the Fair Debt Collection Practices Act. Before accepting an offer for settlement, get the entire agreement in writing.

Have the collection agency file the paperwork to get the lawsuit dismissed and have them contact the credit bureaus and any third-party collection agencies they’ve hired to update your information.

These steps are crucial so that you can keep your credit intact and avoid being harassed for the same account in the future. Also, get them to forward you copies of any relevant paperwork from the court so you know that all steps have been completed properly.

Attending a Court Hearing

If the plaintiff does not offer to settle outside of court, you must attend your hearing at the scheduled time and place. Oftentimes, a representative from the collection agency won’t show up at all, meaning you win your court case by default. If they do show up, you have the opportunity to state your case.

Depending on your grounds for dismissal, the plaintiff has to prove they followed the legal procedures properly.

Lack of Documentation

If they can’t provide documentation that you were properly served your summons or cannot validate the original debt, then they shouldn’t have a strong case against you. It’s also helpful to bring any of your own documentation that can help your case.

If you do win, the judgment should be dismissed and you should receive a letter from the court stating just that. The collection agency that sued you should forward this information to third-party collectors and the credit bureaus so that your credit information can be updated accurately.

You can also send copies of your court document on your own to ensure that your credit history is updated quickly and accurately.

How else can you get rid of a judgment?

If for some reason you don’t successfully vacate the judgment, there are a few other ways to take care of it. Remember, any unpaid judgment can accrue interest and subject you to wage garnishment, so you should take some type of action.

If you’re able to, you can pay the amount owed in full, which results in a satisfied judgment. This still appears on your credit reports, but it’s better than an outstanding judgment. You can also negotiate a different payment amount with the creditor.

You might offer a lower lump sum or get on a payment plan. This tactic results in a settled judgment. Finally, the most drastic option is filing for bankruptcy to discharge the judgment. Obviously, this is a huge decision and should only be undertaken if you have other serious financial concerns that you can’t overcome.

Final Thoughts

As with any legal or financial matter, the first step is to educate yourself. You’ve already done this by reading through this article. The second step is to enlist professional help to cover all of your bases and fill in any knowledge gaps.

Whether you need a trial lawyer, a bankruptcy lawyer, or a credit repair specialist, explore all of your options and don’t be afraid to get professional legal advice.