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Claims of Fraud by Debt Relief Companies Soaring

Steve Rhode — Fri, 29 Jan 2010 20:28:40 +0000

Attorney General Bill McCollum announced this month that his office is investigating the unregulated debt relief industry. Until he can persuade lawmakers to impose rules, McCollum hopes lawsuits his office has filed and its investigations “send a message to this industry that preying on consumers in financial distress will not be tolerated,” according to an Oct. 15 statement.

The Attorney General’s Office has filed five lawsuits and is reviewing or investigating more than 30 others, including one involving Outreach Housing LLC, a Broward County company that does business in Palm Beach County.

More than 100 of the 600 homeowners who filed complaints said Outreach Housing told them to make a partial mortgage payment of 60 percent to the company, which would work with lenders to reduce their mortgage debts. The company failed to do so, according to the Attorney General’s Office.

That scheme is typical of debt relief fraud. The solicitations come in the mail, appear in newspapers and on the Internet, at bus stops and, most frequently, in telephone calls to a debtor’s home. The company offers to reduce interest rates, modify loans, set up reduced payment plans or settle debts for pennies on the dollar.

Clients are charged hefty upfront and monthly fees and told to stop making payments to creditors and instead send the payment to the debt relief company. Few or no payments or negotiations occur and clients are left with more debt, damaged credit and, often, higher tax bills.

Claims of debt fraud soaring Palm Beach Post, United States - 2 hours ago As for her credit card debt , the company "made a couple of calls" and came back to her with a proposal to make a reduced, lump-sum payment of $5000 – an …

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Source: Claims of debt fraud soaring – Palm Beach Post

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Bailout Plan Wants to Push More Credit On Overloaded Consumers

Steve Rhode — Thu, 28 Jan 2010 22:39:16 +0000

From How to Get Out of Debt

The average client who seeks help at the Consumer Credit Counseling Service of Central New York has $47,000 in credit card debt and makes $37,000 a year.

Not surprising, considering that living expenses are going up while wages aren’t rising to match.

“Living expenses have jumped significantly, and people’s income hasn’t kept up,” said Karyn Dettbarn, the credit counseling company’s Albany branch manager. “People are using their credit cards to pay for their expenses.”

Federal Reserve Chairman Ben Bernanke suggested on Monday that a new economic stimulus package should include increased access to credit for consumers, home buyers and other borrowers.

So we already have consumers that are overloaded with credit and the governments answer to the economic crisis is to make it easier for consumers to get more credit?

Bailout plan to perpetuate our house of cards Times Herald-Record, NY - 56 minutes ago By Christian Livermore The average client who seeks help at the Consumer Credit Counseling Service of Central New York has $47000 in credit card debt and …

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Source: Bailout plan to perpetuate our house of cards – Times Herald-Record

Is The Government’s Financial Bailout Going To Help You Get Out Of … – WebWire

Steve Rhode — Fri, 22 Jan 2010 22:39:39 +0000

From How to Get Out of Debt

Blaine, Washington – Unless you’ve been hiding under a rock or stranded on a deserted island for the last month, you’ve no doubt been hearing all the talk about the big financial bailout that the US Government is giving to the banking system and …

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Source: Is The Government’s Financial Bailout Going To Help You Get Out Of … – WebWire

Expect Tidal Wave Of Limit Reductions and Credit Card Closures to Hit Before Christmas

Steve Rhode — Mon, 03 Nov 2008 17:50:42 +0000

From How to Get Out of Debt

Yesterday I wrote about a little old hardware store that had noticed an increase in card purchases over cash. That’s not a good sign if people are using plastic more for routine things and especially in this environment of credit card issuers reducing credit limits, raising interest rates and closing cards.

You see, the credit card issuers are getting freaked out that more people are going to start using the cards when they can’t afford it. Shocking! I guess that’s okay when you can limp along and make the monthly minimum payments but otherwise it is a bad thing.

The credit card message has been “use the card, use the card, use the card” but that pendulum is swinging to “don’t use the card, don’t use the card, we’ll take that card”.

Apparently this trend is not limited to just the United States or just hardware stores. A story in India noted:

Usage of plastic money is increasing with times but at the same times it is also increasing the worries of credit card companies. In September 2008, the transactions done through credit cards went up by nearly 20% against the previous month. Normally this would be a reason to cheer for the card companies but presently it has become a cause of concern.

The credit card companies are worrying because they think that rising usage of credit card may also result in higher number of defaults among these users.

If all of this is true, which it is, retailers are going to be hating life this holiday season as credit card issuers start closing cards to avoid even higher losses. Without available cash or loose credit, consumers won’t be able to go overboard on holiday spending.

I’m thinking we need a joust between banks and retailers. Wouldn’t that be fun to watch?

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Living (too) Large?

Steve Rhode — Sun, 26 Oct 2008 05:22:13 +0000

From How to Get Out of Debt

A study by the Homeownership Preservation Foundation found that 43 percent of American households spend more than what they earn annually.

Living (too) large? Lancaster Newspapers, PA - 2 hours ago The average American household carries a credit card debt of more than $8000. According to The New York Times, as household debt has mounted, incomes have …

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Source: Living (too) large? – Lancaster Newspapers