Debt Collectors Now Using MySpace and Facebook

In the most audacious move yet, collections firms are now using MySpace and other social media sites as a way to track down debtors and even posting messages on MySpace asking the user in some instances to 'contact our office immediately so we can discuss the peaceful recovery' of the collateral. Consider one Michigan debtor who fell behind in her car payments and suffered repeated, harassing phone calls from three companies -- including 15 calls on one Saturday and claims that phone calls were "concerning a 'family emergency' ". The debtor was told that if she did not pay up, her car would be reported stolen, and she would be arrested and the collector threatened the debtor that they would even camp out in front of her house. As if all this weren’t enough, the fact there were overdue payments for her 2005 Chevy Impala was broadcast on her MySpace account. The key word here is "broadcast". Messages posted on MySpace, Facebook and other social networks are not private and any information posted by debt collectors on a public forum is obviously intended to embarras and humilate a person rather than recover the debt. Be careful who you "friend"

Check out the story.

Overview of New Credit Card Legislation

The following are some of the major changes coming to credit card consumers as a result of legislation passed this week in Congress. The law will go into effect nine months from the date of enactment. I'm struck with how we have to legislate fair treatment and honesty.

WHAT CONSUMERS NEED TO KNOW ABOUT THE NEW CREDIT CARD LAWS:
• Creditors cannot increase the annual percentage rate (APR) during the first 12 months of opening up an account.
• Creditors are required to provide consumers with a 45-day advance notice of changes in rates and significant contract changes. Rates that change due to a change in the index that the rate is based on are excluded from this 45-day notice requirement.
• Promotional rates need to be in effect for at least six months from the beginning date of that promotion.
• Creditors need to provide a 30-day advance notice of an account closure.
• With certain exceptions, credit card issuers are prohibited from charging a finance charge based on the double billing cycle method.
• Creditors are prohibited from charging a fee on an outstanding credit card balance at the end of the billing period if the fee is attributed to the interest accrued on an outstanding balance that was fully repaid during that preceding billing period.
• Consumers have the right to reject a new credit card after the creditor notifies a consumer reporting agency of its corresponding account.
• Creditors are required to remove information provided to a consumer reporting agency about newly established credit card accounts if the consumer has not used or activated the account and and if the consumer contacts the creditor within 45 days of its establishment to close it.
• If two or more different APRs apply to different portions of an outstanding balance, the amount of any payment above the required minimum payment needs to be applied to the balance with the highest APR first and then to lower APR balances.
• Creditors are required to provide a grace period for payments even if the cardholder takes advantage of a promotional rate balance or deferred interest rate balance.
• Creditors are required to send credit card statements at least 21 days before the due date of the outstanding balance.
• Creditors are prohibited from providing credit to consumers under age 18 (unless they are emancipated under state law, or the consumer's parent or legal guardian is designated as the primary account holder).
• For college students who do not have a co-signer, the maximum amount of credit extended will be limited to the greater of 20 percent of the student's annual gross income or $500 dollars. The aggregate amount of credit extended from all of their credit cards will be limited to 30 percent of the student's annual gross income (for the recently completed calendar year).
• Creditors are prohibited from opening a credit card account for any college student who does not have any verifiable annual gross income or already maintains a credit card account with that creditor, or any of its affiliates.
• Creditors are prohibited from charging a fee to make telephone and web-based payments. However, a fee may be charged for expedited telephone payments made on the due date or the day before the due date.
• Creditors are required to post their written credit card agreements on the internet.

If you need to buy a gun with a credit card....

I remember when Obama told the country it wouldn't be politics as usual in the United States. I am disappointed in myself for buying into Obama's insincerity.

clipped from www.nytimes.com Advocates of Gun Rights Are Poised for a Victory WASHINGTON — Advocates of gun rights are poised to win a Congressional victory that eluded them under a Republican president. To the frustration and discouragement of many Democrats, House and Senate lawmakers and aides say it now appears likely that President Obama will this week sign into law a provision allowing visitors to national parks and refuges to carry loaded and concealed weapons. The White House is lukewarm at best on the gun provision, which was added to a popular measure imposing new rules on credit card companies. But the Democrats who now control both Congress and the White House appear ready to allow it to survive rather than derail a consumer-friendly credit card measure that Mr. Obama is eager to sign as Congress heads off for a Memorial Day recess.

Pigs Are Flying

Every day I have to confront Alabama's meager homestead exemption (Ala Code Sec. 6-10-2). Homestead exemptions across the country differ per state if the state has opted out of the federal exemptions. Mississippi's homestead exemption is $75,000 and there are some states where the homestead exemption is unlimited. Alabama, however, has a meager $5,000 exemption to protect your home. This means that is you own your home and get behind on your bills, if the equity in your house exceeds $5,000 you would lose your house if you file a Ch. 7 bankrutpcy petition or would be forced to file a Ch. 13 repayment bankruptcy in order to protect your home from creditors. The more equity you have in your house the more money you have to pay in a repayment plan, regardless of whether you can afford the payment or not. How does that help the consumer? It doesn't.

Thankfully, now with the help of Alabama Appleseed, a bill has been proposed to the state legislature which would increase the homestead exemption in Alabama to $10,000. I know, not a tremendous increase but it is a start. The sponsor of the bill, Jeff McLaughlin, is at least making an attempt to protect people's property in the midst of one of the most disastrous economic era ever.

Eighteen months ago, approximately 2 million foreclosures were predicted across the country. Now economists are predicting an additional 8-10 million foreclosures over the next four years. It is painfully obvious that the housing crisis is fueling the downturn in the economy and just as obvious is the Bush administration's refusal to address the problem in a swift an meaningful manner. Finally, legislation has been introduced which will alleviate the problem. The "Helping Families Save Their Homes in Bankruptcy Act of 2009" was introduced in both House and Senate yesterday and seeks to modify the bankruptcy code to allow homeowners to modify their mortgages in a bankruptcy case. Some interesting facts about the bill:

• The bill, if enacted, will be effective on the date of the enactment. Previous changes to the bankrupty code provided a 6 month waiting period.
  
• The bill would allow mortgages to be modified in several ways including fixing interest rates on adjustable rate mortgages at reasonable rate and modifying loan terms.
• The bill would not only apply to new debtors filing Chapter 13 but also to existing Chapter 13 debtors.
• The bill also deals with servicer abuses as well such as improper fees and penalties which, in my experience, can put a homeowner in foreclosure just as quickly as missing payments.

All in all the legislation is encouraging and is the best way to turn the economy around. Keeping people in their homes while at the same time providing lenders and servicers to deal fairly with homeowners sends a message of hope to those struggling in these tough times.

Senator Bunning Not Snowed By Fed

In an alarming exhibition of honesty and courage rarely seen in elected officials, Senator Jim Bunning (R-KY) blasted Fed Chairman Ben Bernanke, who was testifying before the Senate Banking, Housing and Urban Affairs Committee for asking for more powers to fix what the Senator called "the mess we are in today". Calling the Fed the problem and not the solution, Bunning is a breath of fresh air in government. Below is an excerpt from the speech which apparently is available on the Senator's website, however, it appears the website is down at the moment.

clipped from www.creditwritedowns.com Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed. Instead, we should give them less to do so they can do it right, either by taking away their monetary policy responsibility or by requiring them to focus only on inflation.

Federal Reserve Board Amends Regulation Z

In an attempt to convince homeowners that the Federal Reserve is indignant about shady loan practices, the Federal Reserve Board today declared they would be approving a rule which would prohibit unfair, abusive or deceptive home mortgage lending practices. This is the same board that allowed these practices to become so prevalent in the home mortgage market to begin with. Had the Federal Reserve stepped in sooner, like say 1998, the U.S. economy would still be strong, our homes would still be safe and we wouldn't be wondering which bank is going to fail next. Below are some of the provisions of the new rule. Take a look at the new rules below and see if it doesn't boggle your mind that these practices were not addressed sooner. This half-hearted attempt at seeming concerned knowing that for the past 10 years they sat on their assets and refused to look out for the consumer is too little, too late.

clipped from federalreserve.gov Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice." Require creditors to verify the income and assets they rely upon to determine repayment ability. Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed. Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.