November 30, 2005


Credit Card Rates Likely to Continue Rising

Average credit card rates rose for the eighth straight week, and more increases are expected, according to the weekly Credit Card Monitor.

"Top-level" consumer credit cards averaged a 9.97% Annual Percentage Rate (APR), up from 9.91% last week and 9.51% eight weeks ago. uses "top-level" to describe Platinum or similarly designated credit cards that generally offer the lowest interest rates to eligible cardholders.

Consumer reward credit cards offered an average 11.27% APR, up from 11.23% last week and 10.75% eight weeks ago.

Average student credit card rates crossed the 15% line, to 15.03%, up from 14.98% last week and 14.72% eight weeks ago.

"This is not the end," says Justin McHenry, Research Director for "The Federal Reserve is likely to raise interest rates at their December 13th meeting, so holders of variable-rate credit cards can expect another quarter-point increase before the year is out."

Variable-rate credit cards offer interest rates based on a formula that includes a base rate plus a percentage tied to federal lending rates. When federal rates move up, credit card rates follow.

Recent rate increases have been kinder to businesses. Business credit card rates held steady for the second straight week, at an average 9.99% APR for top-level business cards and an average 11.74% for business reward cards.

"In the current environment, small business people using personal credit cards for business expenses might want to make a switch," says McHenry. "Many business credit cards have fixed rates and are less likely to increase in the short term, even when the Fed raises rates."

McHenry stresses that these rate averages are based on the best rates published by credit card issuers, and are often available only to customers with exceptional credit scores. Consumers and small business people with average credit should expect rates about 2% higher than those quoted here.

Financial institutions represented in the survey include Advanta, American Express, Bank of America, Capital One, Chase, Citi, Discover, MBNA, National City, Providian, Pulaski Bank, U.S. Bank, Wachovia, Wells Fargo and more.

November 29, 2005


Beating the Bill Collector, Series 1

You’re in debt up to your eyeballs. The bill collector is hounding you everywhere you go. What do you do?

When you are in debt and don’t see any options, then what do you do?

Hard questions?

They were for me when I was deeply in debt.

And when you are down what happens? The bill collectors start kicking you. They hound you and your family and even your neighbors. They call you at work. They call your boss. Sure you owe the money. You know that; they know that. It isn’t usually a matter of not WANTING to pay but the inability to pay. Why can’t they see that?

The truth be told, the collection agency doesn’t care. They have heard all the sob stories before. To them, you are just irresponsible and trying to welch on your debts. “Thems” the hard, cold facts.

So how do you beat the bill collector?

First of all, grow a backbone. It surprises me the number of people that get intimidated by collection agencies. The agencies scream “We are gonna sue ya!” and lil ol’consumer shivers like she is Scooby Doo, and then pays up somehow, someway. But if you just grew a backbone and stood your ground you’ll see that all they are is small dog with a very large bark. Hell, 90% of all their threats are just hot air.

On Thanksgiving Day I was watching TV during one of those rare moments when I wasn’t working and I saw one those People’s Court type shows with a twist. I think the show was called an “Eye for and Eye”.

Out comes the judge carrying of all things a baseball bat with “justice” printed on it in block letters.

What makes this show remarkable was the case. Normally I hate these shows because all they are is a bunch of stupid trailer trash yelling at each other saying “he did that; she did that”. Bunk. Shut up, people! Jeesh!

The case in this instance was of a Collection Agency rep named Tony suing some woman that had co-signed on a loan with her ex-boyfriend to get some tires and rims. The boyfriend had defaulted on the loan and skipped town, leaving this woman holding the bag. Of course, she didn’t see it this way. Her idea was that it was the boyfriend’s debt and he should be made to pay it and not her. This created the situation for the suit.

I really enjoyed this episode because it really showcased the collection agency industry and the tactics that they use.

The woman brought a witness that testified that Tony said that the debt could be forgiven if she was willing to sleep with a friend of his. The woman also brought to the case a tape recording of Tony threatening her, telling her that he would ruin her credit for the rest of her life, and on, and on, and on.

Tony won the case (as he should have) but…He didn’t win the way he wanted to win.

The judge ruled in favor of Tony, yes…and the woman was ordered to pay the debt. But judge was smart in this case. He ordered that another collection agency collect the debt, and he ordered Tony to be publicly humiliated if he was not able to answer correctly questions concerning the Fair Debt Collection Practices Act, which he so obviously violated in trying to collect this debt.

So what happened? Well…Tony never showed up for his sentence. The court tried to three times but was never able to get Tony to appear. So they sent cops to Tony’s work. However, the court was again foiled…sort of. Tony’s boss had hidden Tony so that he couldn’t be found and would not divulge his whereabouts. The boss had figured that he had won. WRONG! The court ordered the boss to stand in Tony’s place.

This is what I found truly fascinating. The boss was not able to answer even the most basic questions about the FDCPA. For which a pie was thrown in his face. He was asked if a collection agency could call a consumer at 7 am in the morning. Guess what the boss said? That’s right…he said that they could. That couldn’t be more wrong. That was just one of the questions he couldn’t answer correctly.

So what can we learn from this?

*Stand up to the collection agency. Don’t be afraid. They are usually violating the law any way.
*Record all your conservations with collection agencies. Either in writing or on tape. Have witnesses if you can.
*Know the Fair Debt Collection Practices Act.
*Be responsible for your debt, even if you only co-signed. And try to work out some sort of real agreement.

So what did the woman do wrong?

*She didn’t seek out real legal representation. If she had she may have countered sued and received a $1000 for every instance that Tony violated the law, plus attorney fees.

*She wasn’t being responsible for the debt. She co-signed but figured it was the boyfriend’s problem and not hers so she ignored it. That is debts deadliest disease. Do Not Ignore the debts because they’ll come back to bite you on the ass.

I hope that this has given you some perspective on debts and helped figure out a way to beat the bill collector. If you need help then feel free to call me for a free consultation at 323-953-0704 or email me at I also offer one on one coaching at a very reasonable fee.

November 23, 2005


Help! I have fallen in debt and can't get out!

Is this the new battle cry of the American financially strapped?

It certainly seems that the powers that be want us in debt and for the longest period of time as well.

I have come to the conclusion that banks have two agenda for us consumers:

*Find every way possible to put us in debt
*And, find every way possible to keep us in debt.

Could it really be that simple? I believe so.

Lets take a look at this more closely. Over the last two years bankruptcies have been going up in record numbers. By survey almost 70% of people with credit card debt admit that debt is ruining their lives and a major source of pain. Once we are in debt there doesn't seem to be a real way of getting out of debt unless involves it punishment of one sort or another. But should it be any other way?

In 2004 the bankruptcies that were done were surveyed and it was found that half of the bankruptcies at that time were due to unforeseen medical situations and the high cost of medical care. These were upstanding middle class Americans earning a good wage. This is the un-thrifty spendaholics that the banks have disseminated to the politicians.

Using that mentality the banks and more specifically MBNA lobbied (bribed) congress to enact the bankruptcy laws with hundreds of million dollars. Was the law to protect and help the consumer from their unfortunate circumstances? Hell no! The law was created to line the pockets of the banks. Period!

Most consumer advocate groups agree that these new laws will hurt the consumer and the American economy in the long run, but not after the banks have milked the American consumer of billions – BILLIONS – of dollars. Our only hope is that we get a Democratic government this new election that is not in the pockets of the banks. Guess that leaves out Hilary Clinton (was that too catty?)

Banks/Credit Cards are now targeting high school and college students for their financial drug cards. Get this unsuspecting and uneducated students addicted to spending with plastic even before they are even making any money. These actions sound very similar to the corner drug peddler. And of course once hooked there is no escape.

Of course the banks offer consumer credit counseling as the one stop shopping solutions to all Americas debt ills. Yes, it is beneficial for certain consumers no doubt, but it by far the best solution for everyone. There are many solutions to get rid of debt. Well per the second agenda those options have been severely narrowed. Bankruptcy is harder and more expensive. Debt settlement companies are being legislated out of existence state by state. So what is left?

Well there is credit counseling the banks love. By why do they love it? Because credit counseling does not have the purpose of getting you out of debt. Its intended goal is to collect the money for the banks before you go bankrupt. You could always go to an attorney that will charge you huge hourly fees, and then there is....Well there is nothing else.

So what happens when credit counseling is not right for you and will not help? Or attorneys are far too expensive to hire? What do you do then. the banks would love to have grin and bare it and pay up...for the rest of your lives.

But is there a third option? Yes. You can settle your accounts on your own. That is if you can tolerate a little harassment every now and then. But you and I know that you can't stand that confrontation, because if you could then you wouldn't be so bothered by collection agencies now would you.

But the solution does not lie and the end of the problem, but rather at the beginning. The solution to getting out of debt is to never be in debt. Use cash only when making purchases. Save your money up. Learn about about money and budgets. That is how you get out of debt.

But I can't armchair quarterback any more than you can. So if you are in debt, the best thing to do is get the advice of someone that knows the industry and recommend the right solution for you based on your particular situation, and one that won't give you the same “solution” every time. Everybody has a different situation and so therefore needs their own solution. You need to find someone that can give you that advice that doesn't have a vested interest in any particular “solution”.

I have worked in the debt relief field for some time now and have consulted with thousands of clients about their debts. I know what it is like to have debts as well. My debt s caused me to lose everything that I held dear. But you can avoid that if you act now.

If you are interested in getting out of debt for real, and are just tire kicking, give me a call at 323-953-0704 and leave a message, or email me at If you even need it I can coach you through your own debt management program based on your unique situation. I would love to hear from you.

November 22, 2005


What Collection Agencies Really Think of You!

I found these comments made by these various collection agency terminals. I think it highlights what these collection agencies really think of people that have debt. I have highlighted some of the grossest statements. Apparently these guys have absolutlely no clue what is happening with Americans out there. They have the general feeling you are all out there trying to stiff them.

I just want to start by saying that I think it was very irresponsible for the Post to run that sory.

Yes, unfortunately there are other companies out there who are similar to CAMCO, but there are far more companies out there who follow the rules and regulations set forth. As far as "embarrassing calls at work" goes, if the consumer would have paid their bills then they wouldn't be getting calls at work. If they would just answer their home phone then we wouldn't have to call them at work. I love the people that think we are wrong for calling people on the weekends and at work. I guess they feel we should just call only when they are at work so they can dodge our calls the way they dodge their bills.

Of course consumer complaints have risen. Did the Post bother to look at the number of bankruptcy filings or the record number of people not paying their bills? Do they, like every other consumer, think that since their account got charged off that the lending industry just should ignore it and eat the loss? You can't lump all debt buyers into the same category.

I would love to know what the Post does with their customers who don't pay their subscription bills. Would they consider selling their debts if it meant they would profit from it? Of course they would. Why don't we tell the Post to run a story about how great it would be for the American economy if people would just pay their bills? We all wouldn't see the high credit card interest rates. We wouldn't see expensive insurance rates or high interest car rates.

Run an article explaining that people shouldn't look for advice on how to avoid your bills and sit out the statute of limitations. It's no wonder the credit counseling industry is being exposed. It shows how ignorant the average human being is when it comes to their bills.

-National Accounts ManagerEast coast collection agency

First of all the debt buying industry exists because of the failure to pay a legitimate debt. This is an increasing phenomenon. We are because someone didn't!

The Post article is correct in it's statistics regarding growth. Those of us who have been in the business since 96-97 are impacted in many ways by the growth we are experiencing. Every part of the business has shown increases, from cost of inventory to cost of labor. The primary impact on cost however is the increase in responding to the negative PR that is amplified through the use of rapid E-technology. From compliance, training and required responses we have expanding budgets in the cost centers of our company. From online consumer web-pages setting out how to file useless disputes to government agency complaint forms on-line, consumers have greater access to technology. We are just catching up with the true cost impact of the new technology available to all consumers today.

What percentage of the increase in complaints were filed on-line and how many were generated because a consumer web-page told them to do so as a punitive response?

Are there companies that turn a blind eye to the laws regulating our industry? You bet!

Are we actively looking for them and reporting them to our associations? You bet!

In the 1980's, consolidation hit the Banking and Savings & Loan Industry predominately in the Southwest. When that occurred wildcat bank charters practicing dangerous business policies were closed by the Fed. Today banking is a compact industry. The recent expansion of debt buying is rapidly approaching the same fate. Whereas 5 years ago debt buyers were exempt from many government agencies because of their unique definitions, today they have been defined by the IRS, FTC and several others. This leads me to believe we will see the agencies and the competition close those companies who have come into it purely for the ROI of a hot new business.

-SVP/Recovery ManagerTexas collection agency

I think the article by Caroline Mayer captured a very interesting mood that's slowly growing in Washington right now. The collection industry has changed quite dramatically over the last decade. There are two things driving these changes. The first is that the banking industry is now less regulated than it's ever been. Banks are now entirely free to charge any interest rates or fees that seem appropriate to them. This in turn has lead to the second driver, which is the explosion of subprime debt in both the revolving credit and mortgage markets.

All in all this has been a very healthy set of changes for America. But there is a growing concern among some economists that the seeds of a major economic downturn are being laid. This concern is now a kind of quiet undercurrent in many private conversations within the capital.

Politics are like a giant pendulum and things have swung very heavily towards the direction of deregulation and free markets. But at the same time this has left workers with little job security and free to make mistakes of all sorts in how they use their credit. It's only a matter of time before the political pendulum begins to swing the other way and some enterprising politician finds a way to milk this insecurity and public sense of "being taken advantage of".

If you read Caroline's article carefully you'll see this undertone of awe and wonder (that such large changes have taken place so quickly) mixed with equal parts of worry and concern for the future.

-Government agency researcher

Using CAMCO paints the entire industry with a negative, undeserved brush. Also, it should be noted that most complaints are coming from people who have violated their obligations to pay their debts and try to use various governmental agencies to avoid those legitimate obligations.

-Alan BeshanyDirector of AnalyticsInsightAmerica

As a collection attorney and a sometimes debt buyer, I found little objectionable to the Washington Post article. In today's market, bad debt offerings are at least fully priced, subjecting investors to significant pressures for prompt collection of receivable accounts.

The article suggests that collection efforts directed on out-of-statute accounts is a problem -- and the article may precipitate additional legislation to protect uneducated debtors. The pressure for such legislation will grow after October of this year, when the new bankruptcy laws go into effect.

-East coast collection attorney


Fed Eyes New Rules to Avoid Mortgage Shocks

Federal Reserve Board staff are eyeing ways to improve the disclosures on new adjustable-rate mortgage (ARM) products so that consumers are better informed about the payment shocks associated with interest-only and option ARMs.

Fed counsel Kathleen Ryan told a Mortgage Bankers Association's compliance conference recently that the Fed's consumer and community affairs staff are not sure the current Truth in Lending Act (TILA) disclosures are doing an adequate job.

"Staff is wrestling with better ways to disclose payment shock," she said, particularly when there is a cap on negative amortization.

She indicated that the staff might seek approval later this year to start a project that updates the ARM disclosures, which means lenders probably won't see any significant changes to the TILA disclosure for another 18 to 24 months.

Separately, the proliferation of interest-only and option ARMs has prompted federal banking regulators to draft guidance on sound underwriting and risk management practices.

An interagency task force, led by the Office of the Comptroller of the Currency, had been working on guidance all summer. OCC assistant director Steven Van Metter told the MBA conference that issuance of the guidance may be six weeks away. But he said that estimate might be "optimistic."

Source: Origination News

November 18, 2005


4 Ways to Stop Harassing Creditor Calls…NOW!

If you are or ever have been late making those credit card minimum payments then you know how rude creditors can get. If the debts have not been paid for three or more months you can be endlessly bombarded with creditor calls harassing you and threatening you with everything from a lawsuit to wage garnishments. There are even reports of threats against ones life and family’s life.

I have been working in the debt settlement industry for some time now and have consulted thousands of clients in how to relieve themselves of overwhelming debt. One of the major comments I hear is “how do I stop harassing creditor calls?” I have had grown men and women call me up crying; looking for any advice or help they can get to stop these calls.

Is this happening to you?

I really hope not. It has happened to me when I was in debt. Because of their calls I lost my job; my wife and the life that I have known for over fifteen years.

Debt is embarrassing to have if it is overwhelming. People do not like to feel like a failure. If they could pay the debts they would. But banks and collection agencies seem to rejoice in kicking us when we are down. Maybe they feel they’ll get more money that way.

When it comes right down to it – the banks only want money and they don’t care about us.

Is it any wonder that Credit Cards are the number industry complained about with the FTC and BBB?

So how can we stop these creditors from calling us night and day so that we can actually not have the stress and be able to think straight so that we can get the money to pay the debts back?

The Simple Methods

Cease and Desist letter. Per the Fair Debt Collection Practices Act you have the right to not have creditors call you. You simply write what is called a “Cease and Desist” letter and send it your creditor(s) giving you trouble.

There are drawbacks with this however. If you send out one of these letters to your creditors, it usually only serves to annoy them. When a creditor receives one of these letters they frequently just turn this over to a lawyer to start legal proceedings against you. It does shut them up, but it can blast back on you so be careful and only use this method when the creditors are being especially nasty.

Change your phone number. Creditors number one pet peeve is that they cannot find you. If they cannot find you then they have to go through a lot of extra expense in locating you. They call this “skip tracing” and a lot of money is spent by creditors and collection agencies every year on this. Their programs are elaborate and effective.

Many people may feel this is a bit unethical. I kind of agree with them. It is a bit underhanded. You have the debt and now you are skipping out on them without paying the debt is the idea the creditors get. This method is very frustrating for them when it occurs, but very effective.

I don’t necessarily recommend this option. I only mention it because it is an option.

Get a privacy manger installed on your phone. Unlike changing your number, I am very in favor of this method. You will need to have Caller ID already on your phone line to make this work.

Basically, you call up your phone service provider and ask them to connect you up to a privacy manger (or privacy guard as it is sometimes called). This system will basically block out all unwanted phone calls.

Most creditors and collections agencies use a computer to dial up your number, well, privacy manager won’t even allow these calls get to you. The only way that a call can get to you is if a real live person calls and jumps through the hoops that this system has in place. With some managers, computer generated calls are fooled into thinking that that number has been disconnected which it is then dropped from the callers list. And some even put the number on the national “Do Not Call” list for telemarketers. This is very handy indeed.

Get a Telezapper. This is a simple device that you can buy at Wal-Mart or RadioShak or stores like that. It costs about $30-$40 and is just attached to your phone. There is no monthly fees like there is with the privacy manager so it is cost effective.

Just attach it to your phone and watch is zap all those unwanted computer generated calls. Badda Bing, Badda Boom.

So, there you go. Four simple ways to stop harassing creditor calls right now. Of course don’t use these methods to cheat or sneak your way out of your obligations, but there is no reason you need to have to put yourself through unneeded stress either.

I hope that this helped you in some way. If you would like a free consultation then please give me a call at 323-953-0704 or write to me I also offer one-on-one consultation for eliminating your debts through settlement. Maybe I’ll hear from you.

November 16, 2005


The New Bankruptcy Law "Means Test" Explained in Plain English

With the new bankruptcy law in effect as of October 17, 2005, there is a lot of confusion with regard to the new "means test" requirement. The means test will be used by the courts to determine eligibility for Chapter 7 or Chapter 13 bankruptcy. The purpose of this article is to explain in plain language how the means test works, so that consumers can get a better idea of how they will be affected under the new rules.

When most people think of bankruptcy, they think in terms of Chapter 7, where the unsecured debts are normally discharged in full. Bankruptcy of any variety is a difficult ordeal at best, but at least with Chapter 7, a debtor can wipe out the debts in full and get a fresh start. Chapter 13, however, is another story, since the debtor must pay back a significant portion of the debt over a 3-5 year period, with 5 years being the standard under the new law.

Prior to the advent of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” the most common reason for someone to file under Chapter 13 was to avoid the loss of equity in their home or other property. And while equity protection will continue to be a big reason for people to choose Chapter 13 over Chapter 7, the new rules will force many people to file under Chapter 13 even if they have NO equity. That's because the means test will take into account the debtor's income level.

To apply the means test, the courts will look at the debtor's average income for the 6 months prior to filing and compare it to the median income for that state. For example, the median annual income for a single wage-earner in California is $42,012. If the income is below the median, then Chapter 7 remains open as an option. If the income exceeds the median, the remaining parts of the means test will be applied.

This is where it gets a little bit trickier. The next step in the calculation takes income less living expenses (excluding payments on the debts included in the bankruptcy), and multiplies that figure times 60. This represents the amount of income available over a 5-year period for repayment of the debt obligations.

If the income available for debt repayment over that 5-year period is $10,000 or more, then Chapter 13 will be required. In other words, anyone earning above the state median, and with at least $166.67 per month of available income, will automatically be denied Chapter 7. So for example, if the court determines that you have $200 per month income above living expenses, $200 times 60 is $12,000. Since $12,000 is above $10,000, you're stuck with Chapter 13.

What happens if you are above the median income but do NOT have at least $166.67 per month to pay toward your debts? Then the final part of the means test is applied. If the available income is less than $100 per month, then Chapter 7 again becomes an option. If the available income is between $100 and $166.66, then it is measured against the debt as a percentage, with 25% being the benchmark.

In other words, let's say your income is above the median, your debt is $50,000, and you only have $125 of available monthly income. We take $125 times 60 months (5 years), which equals $7,500 total. Since $7,500 is less than 25% of your $50,000 debt, Chapter 7 is still a possible option for you. If your debt was only $25,000, then your $7,500 of available income would exceed 25% of your debt and you would be required to file under Chapter 13.

To sum up, first figure out whether you are above or below the median income for your state (median income figures are available at Be sure to account for your spouse's income if you are a two-income family. Next, deduct your average monthly living expenses from your monthly income and multiply by 60. If the result is above $10,000, you're stuck with Chapter 13. If the result is below $6,000, you may still be able to file Chapter 7. If the result is between $6,000 and $10,000, compare it to 25% of your debt. Above 25%, you're looking at Chapter 13 for sure.

Now, in these examples, I have ignored a very important aspect of the new bankruptcy law. As stated above, the amount of monthly income available toward debt repayment is determined by subtracting living expenses from income. However, the figures used by the court for living expenses are NOT your actual documented living expenses, but rather the schedules used by the IRS in the collection of taxes. A big problem here for most consumers is that their household budgets will not reflect the harsh reality of the IRS approved numbers. So even if you think you are "safe," and will be able to file Chapter 7 because you don't have $100 per month to spare, the court may rule otherwise and still force you into Chapter 13. Some of your actual expenses may be disallowed. What remains to be seen is how the courts will handle cases where the cost of mortgages or home rentals are inflated well above the government schedules. Will debtors be expected to move into cheaper housing to meet the court's required schedule for living expenses? No one has any answers to these questions yet. It will be up to the courts to interpret the new law in practice as cases proceed through the system.

Charles J. Phelan has been helping people become debt-free without bankruptcy since 1997. A former executive in the debt settlement industry, he teaches the do-it-yourself method of debt negotiation. Audio-CD material plus expert personal coaching helps consumers achieve professional results at a fraction of the cost.

November 14, 2005


Credit Cards "Treacherous" For Consumers

More Americans are carrying increasingly large credit card balances, and a leading consumer journal says it's become much harder to get out of the jaws of credit card debt.

An investigation by Consumer Reports, appearing in the November 2005 issue of the magazine, says "cozy relationships" among lawmakers, federal regulators, and credit card issuers have made credit cards "more treacherous" for consumers.

The investigation reveals that credit card issuers have imposed interest rates in excess of 30 percent on consumers whose only offense might be a late payment to another creditor. The report also exposes other practices by issuers of credit cards that pose hazards for consumers, including:

• Battered card holders with fees and penalties that now often hit $39.
• Reduced grace periods when new purchases are free of interest.
• Lobbied successfully to weaken protections for cardholders.
• Increased fees for tardiness and for going over the credit limit.
• Reduced minimum payments, thereby increasing the debt.

Unfortunately for consumers, there have been no limits on interest rates for years, so a temptingly low 1.9 percent APR can morph into double-digit territory at the whim of the credit card company. Or worse, it can climb beyond 30 percent when a consumer does nothing more than sign up for a new credit card, inquire about a car loan, or make a single late payment to any creditor.

"Consumers are sometimes offered a 0 percent introductory rate, but they may not realize that it only applies to transferred balances," says Marlys Harris, finance editor at Consumer Reports. "Then they pile up purchases which accrue interest at, say, 18 percent a year."

Even consumers among the 45 percent of cardholders who pay balances in full each month are not off the hook either. As interest rates rise, issuers of credit cards are seeking ways to eke out income from them by charging additional fees for services or penalties for dormancy -- in other words, a few for not using the card.

Unfortunately, there is little help for consumers. About 45 percent of credit card issuers force customers to submit disputes to arbitration. Regulators aren't likely to be of much help either. The majority of credit card issuers are overseen by a government agency funded by the industry.

What to Do

For now, the report says, the greatest power that consumers have is their own hands. In addition to supporting consumer-friendly issuers, Consumer Reports suggests the following:

• Choose carefully. Start by reading the table of the 10 most consumer-friendly credit cards in the November 2005 issue of Consumer Reports.
• Examine the offers. Scan the Schumer box, named for Sen. Charles Schumer, D-NY, who sponsored a law mandating disclosure of all rates in a type size that consumers can read.
• Negotiate better terms. If the credit card imposes a late fee or a rate hike, ask for a waiver.
• Pay on time. Mail payments as soon as the bill arrives.
• Complain. Register a complaint with your state attorney general.

November 8, 2005


Counsumer Credit Counseling services are not for everybody

Counsumer Credit Counseling services are great for some poeple, but lets be honest - they are not for everybody.

The biggest complaint that people have with CCCs are that they sign people up that really have no business being on them. Currently the IRS is doing a huge overall on consumer credit counseling services due to the new bankruptcy laws.

This new legislation dictates that that people that wish to go bankrupt must first do an IRS approved CCC educational course six months prior to filing for the bankruptcy.Personally, I am very much in favor of this educational approach. What I do not favor, however, is that it must be through a consumer credit counseling agency.

The IRS has only approved about 40 companies nationwide to be non-profit CCCs and that can deliver this education. That means that there are thousands of CCCs that were not really non-profit and only out for the buck.

Cambridge Credit Counseling is just like one of those companies and they were recently fined 4.2 million dollars by the federal governement due to unethical practices.

In my research CCCs have the most number of complaints against them than any other debt relief program, including debt settlement and bankruptcy. Now that says something.

MBNA paid for this new bankruptcy bill that has been effected which dictates the use of consumer credit counseling companies, that has to say something about who benefits from people using CCCs. Hint: it is not the consumer!!

So, if you are thinking of using a CCC make sure that you really need the use of one, and that the company truly is responsible.Jae


CCCS - An Insider's View

I held a day job with Consumer Credit Counseling Services/Money Management International, the largest non-profit credit-counseling agency in the U.S. Their corporate office is in Houston at 9009 West Loop South, Suite 700 in the Aramco building off 610.

During my two years of employment with the company I noticed things that the public may be interested in. The main situation, which troubles me, regards a supervisor of the intake phone-counseling department at the corporate office here in Houston. Company policy and the policies of The National Federation of Consumer Counseling (which CCS is a member of) require that the $35.00 monthly contribution be waved to any client who can't afford to pay it.

At CCCS/MMI only the Team Mangers have authority to waive the contribution. Despite these requirements, the Team Manger, Jabbar Johnson, never waved a fee in the two years, which I worked there. He lowered it on occasion, but rarely even though client’s budgets often reflected the need for the contribution to be waived or lowered.

Many clients of CCCS/MMI have total incomes of less than $300.00 per month as many are on Disability and Social Security. CCCS/MMI is a non-profit company and it operates off money from the $35.00 monthly contributions of clients and the fair share contributions of creditors. This Team Manger, Jabbar, who would not waive a contribution, did however utilize the company to aid his brother.

On several occasions, he took all 15 employees on his team, who are each paid hourly, off the phones and to a meeting that had nothing to do with CCS/MMI. These mandatory meetings were for Jabbar's brother, Deon, to pitch his physical fitness business, "Fitness Solutions.”

A formal complaint was made to Jabbar’s manger and the company's response was that even though the meetings were mandatory it was not mandatory that the employees hire Deon as their physical fitness trainer. The company stood by the use of company funds to help Jabbar's brother pitch his fitness business. In fact, after the complaint was made, Deon, who is not an employee CCCS/MMI, conducted other sale pitches on company time.

November 3, 2005


Credit Cards Victimize Working Families

A new survey finds that low- and middle-income families are acquiring credit card debt to pay for essentials at the same time that business practices in the credit card industry are making this debt more costly and harder to manage.

This survey from Demos and the Center for Responsible Lending comes just five days before the new bankruptcy bill becomes effective and undermines consumers' ability to recover from heavy debt. Research shows that credit card debt in America has almost tripled since 1989 and now stands at $800 billion.

In addition, owing largely to job instability and medical costs, bankruptcies rose from 616,000 in 1989 to over 1.8 million in 2004.

"American families are facing financial hardship not experienced for generations, and we commissioned this survey to tell us precisely why they are turning to credit cards so often" says Tamara Draut, Director of the Economic Opportunity Program at Demos and co-author of the report.

"The results are clear: wages have stagnated while medical and housing costs have skyrocketed, and if confronted with a layoff or health emergency there are few, if any, personal or public safety nets adequate enough to help in a crisis. Households are turning to high-cost credit cards to keep afloat."

The bankruptcy bill was passed, in part, based on a stereotype that credit card debt results from extravagant and irresponsible use. The Demos/CRL survey contradicts that widespread belief, showing that lower-income families, by and large, are using credit cards judiciously and trying to pay them down responsibly.

Among the findings in the survey:

• Seven out of 10 low- and middle-income households reported using their credit cards as a safety net — relying on credit to pay for car repairs, basic living expenses, medical expenses or house repairs.
• Households that reported a recent job loss or unemployment, and those without health insurance, were almost twice as likely to use credit cards for basic living expenses.
• Households that used home equity to pay off credit card debt did not gain net benefits. Respondents who reported paying off some credit card debt by refinancing their mortgages reduced their home equity, on average, by $12,000 while retaining average credit card debt of $14,000 — 18% more debt than homeowners in the survey who had refinanced without paying down credit card debt.
• $8,650 is the average credit card debt of a low- and middle-income indebted household in America.

The study also reports that, as Americans are increasingly relying on credit cards to pay for essentials that wages no longer cover, reliance on credit cards is having a multiplying effect that is creating millions of "debt-stressed" families:

• 47 percent of households had been called by a bill collector.
• Almost half missed or were late with a payment in the last year, with nearly a quarter of households reporting paying a late fee at least one or two times in the past year.

In addition to charging late fees ranging from $30 and $39, most issuers also penalize cardholders for late payments by increasing the interest rate on the account two- or three-fold, often after only one late payment. A household with the average amount of credit card debt in our survey ($8,650) would pay an additional $1,100 in costs each year if their card’s interest rate was increased from the typical 12 percent to the average 25 percent “default rate” for one late payment.

"Americans families are losing the fight against an economy and lending practices that are working against them," said Mark Pearce, President of the Center for Responsible Lending. "It’s time for Washington to address this crisis head-on and create policy that protects, and promotes economic vitality for, all American households."

The report, titled "The Plastic Safety Net: The Reality of Household Debt in America," details current business practices in the credit card industry that make it difficult for lower-income families to manage their finances and stay out of debt, including issuers' ability to change the interest rate and other terms of credit any time and for any reason, and based on transactions unrelated to the account.


Among the report’s key policy recommendations:

• Promote increased savings, not increased debt, to help families meet unexpected financial emergencies.
• Improve wages for working families.
• Improve access to affordable health insurance for all Americans.
• Strengthen unemployment insurance coverage and benefit levels.
• Reform "penalty pricing" that saddles financially-vulnerable consumers with thousands of dollars in extra fees and interest costs.
• Require changes in credit card rates and fees to be related to the original contract and limited to future activity on the consumer’s account.
• Clearly disclose to consumers the long-term costs of making only minimum payments.
• Ban binding mandatory arbitration clauses that prevent consumers from pursuing complaints in a court of law.
Require meaningful underwriting standards to ensure credit limits do not exceed a consumer’s ability to repay their credit card debt.

The full report is availabler at and


Proof that Banks want you in Debt...Forever

We all know that there is now a new bankruptcy law that makes using bankruptcy to relieve your debt burden almost impossible and extremely more expensive, but now the individual states are passing laws that garuantee that you stay in debt the financial gain of the banks.

Since the new bankruptcy law has gone into effect there as been a slew of state measures that prevent people using anything but attorneys or consumer credit counseling to get out of debt. Currently ten states have approved of this new law.

Credit Counseling can be good for certain people to get out of debt under certain circumstances, but it is not for everybody. So where can they go to get out of debt? Usually where people went to get themselves out of debt were debt settlement companies, then to bankruptcy. Well...bankruptcy is out. And debt settlement is going the way of the dinosaur as well because of these new laws. That leaves only Credit Counseling, or an attorney that will charge hefty fees by the hour.

So who wins?

The banks do of course, and the politicians that approved the measures that were paid off (lobbied) by the banks to approve thelaw. Or they (the politicians)are so heavily invested in the companies themselves to make it financially rewarding to themselves..

The 10 States...

So...many of you are wondering which states have approved of these new laws. Well if you live in any of these states then you can garuantee debt slavery for a very long time. They are: Utah, Kansas,North Carolina, New York, Texas, Wisconsin, New Jersey, Georgia,Michigan, and either Mississippi or Missouri.

If you live in either of these states, you financial future isdoomed, and resign yourself to staying in debt for a very long timeand paying out more than you should in interest and other fees.

Thank you congress!!!!!

What can you do?

Good question.

Well laws can be changed or cancelled.

Predominately Democrats view these types of laws in a bad light. So you can vote into seat more Democrats. But if you can't wait that long, then write to your congressman or woman, and other state legislators and tell them what you think of this new guideline.

Complain until your face turns blue. If you belong to any professional groups use their clout to boycott or picket those that voted in the laws.

Get as much negative publicity for that cause as you can. Scream it from the rooftops. Just you don’t resign yourself to silent refusal which doesn't do any good at all.

Hope that helps. Maybe even angers you a bit so that you dosomething. Best to you and your future.

Jae Burnham

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