The rush to refinance with new fed rates and incentives > the new Fed refi

One of the biggest problems in our economy has been the lack of credit.  There simply has not been credit available for anything ranging from credit cards to auto loans, student loans and of course, mortgages. 

Many people have found themselves stuck with mortgages and interest rates they cannot afford.  In a strong economy, most would be able to refinance to a lower rate but for the past year this had not been the case.

However, this week things have changed.  As part of the ever-growing bailout, the government informed us that money would be freed up for credit cards, auto loans, student loans and business loans.  The way this is happening is the Fed is keeping an eye on banks to ensure they loan the money out (the money they gave them) as they should.  This is kind of like big brother keeping and eye on you.

Well, the bailouts haven’t stopped with these loans.  Just today the Fed made a big push to open up refinancing avenues for mortgages.  30 year rates have dropped as low as 5.5%, which is a signficant decrease from the average of about 6.1% last week.

If you are looking to refinance your home, now might be the time.  That is unless you paid twice of what it’s worth, then you should explore other options.  We don’t believe home prices will recover any time soon, primarily due to the fact that unemployment is still too high.  Only when people have jobs can they afford a home and create a competitive real estate market.  Our sources have told us we’re looking at about 9 years before that peak hits again, maybe longer.

If you are considering a refi to open up cash to pay down unsecured debt, think again, this might not be a very good idea.  Instead consider a debt management or debt settlement program that can help you get your finances under control.

Debt consolidation programs have become the way to go as they provide immediate relief without the pain of a Chapter 7 bankruptcy.

Consider your financial options wisely and you’ll benefit when the economy improves.

How to stop collection calls > bankruptcy, credit card debt and the repo-man

Being in debt is stressful for anyone with the situation exacerbated if you have a family who counts on you to pay the bills.  But when times are tough and jobs are drying up, there’s little you can do.  Collection calls will start and given the environment they will start faster and be more aggressive.

This can be a horrible feeling to dread every time the phone rings and wonder if it’s another collection agency. Rarely are they kind on the other end.  This is because the caller is getting paid to collect the debt from you, typically by commission.  Understand that the person on the other end is probably struggling to pay their own bills.  If they don’t collect from you, they don’t get paid.  This is why they can cross the line and often violate the FDPCA or Fair Debt Practices Collections Act.  To better understand what a collection agency can and can’t do, visit the FDPCA directly and read the act.

One of the questions we receive often is how to stop collection calls.  We can tell you that as a consumer/debtor, you can ask them to stop and it won’t matter.  Remember, they get paid to collect from you.  The collection calls will continue so it’s best to acknowledge them.  Never ignore the calls and letters as it will only damage your credit and could force the collection agency to turn your account over to an attorney to file suit.  No one needs that additional stress.

So to stop calls you have a couple of options.  We’ll start with the most costly and potent one, Chapter 7 bankruptcy.  When you file for bankruptcy, which cost between $1500-$2500 for an attorney, collection calls will stop.  If they don’t, you simply need to inform the creditor that you have filed for bankruptcy protection and they will be required to stop contacting you.

Bankruptcy is expensive, extremely damaging to your credit and not as powerful a tool as it used to be.  This is due to legislation passed in 2005 that helps credit card companies collect some portion of what’s due to them.  If you’re considering bankruptcy, research all of your options.  For some, this may be the only option but for others there are alternatives.

Debt consolidation is a powerful tool in that the collection calls can stop in short order so long as you are on a plan and sticking with your obligations.  Debts can typically be paid within 1-4 years with lower interest rates.  A debt settlement can also be accomplished where a figure is agreed upon by both debtor and creditor.

You can try to manage your debts on your own by contacting your creditors to work out a payment plan.  If you’re emotionally tied to the events, too busy with work or don’t understand the process completely it might be best to work with a debt consolidation company.

One of the other top questions we get is about auto repossession.  Laws are different everywhere but we can tell you that a repo-man can’t break into your house/garage to take the car.  Typically they’ll knock on the door and request to take the vehicle because payments have not been received.  If you don’t answer and continually hide, you can plan on the county sheriff paying you a visit to surrender the vehicle.  We strongly suggest that you not let it get to this point.  If you’re struggling with your debts, explore your options and use them.  If you can’t pay for your car, don’t wait for them to send the sheriff.  This can be a scary or embarrassing experience that is often done in broad daylight for all of your neighbors to see.

Remember, debt collection calls can be stopped.  Reposessions can be avoided and credit card debt can be managed.  Contact a specialist to find out how.

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Los Angeles Bankruptcy Attorneys > How and why…

We’ve written quite a bit about bankruptcy and that’s because so many people call and write in to ask about it. Bankruptcy is one of those terms that most people know but probably don’t completely understand.  We’ll talk about Chapter 7 and the basics of how it works along with an attorney.

Chapter 7 bankruptcy basically gives an individual a second chance by wiping out their debts.  Eligible debts do not include student loans or child support for reasons that are obvious but they do include most other debts allowing the debtor to walk away debt free and with a fresh start.

There are hitches though.  First, you can only do this every six years, not something you should strive for. Second, the cost is extremely high, between $1500-$2500, plan on the higher number in Los Angeles.  Last, the bankruptcy laws have changed as of 2005 after credit card companies convinced Congress to not let borrowers completely off the hook.  This part gets complicated so you’ll have to ask your attorney exactly what you’re stuck with.  Last, this is a major “ding” on your credit that is considered a public record and remains for 10 years.  This ding decreases in importance as time goes on but it still hurts.

Speaking of attorneys you’ll need to find one.  There are thousands waiting to take your money and although it may be helpful and comforting to have an attorney, it’s still frustrating to pay money out that you probably don’t have ergo the need for bankruptcy.  In the end though, you want things to be done properly so your interests are protected.  This doesn’t mean the attorney you select will do the job properly so if anything you’re best looking for a referral.

Before going through the process of looking for a bankruptcy attorney in Los Angeles, you might consider your other options, yes you have other options.

You can attempt to work out your debts on your own.  It can be done and has been done.  You need to be comfortable contacting your creditors while also understanding how the process works.  If you’re holding down a full-time job (maybe 2) then this might not be the option for you.

If you’re not comfortable contacting your creditors leave it to someone who’s not emotionally involved, knows how the process works and has the time and resources.  A debt consolidation company can help you manage your debts for a fraction of what a bankruptcy attorney will charge and in the end your credit score (FICO) will not be affected or might even get better.

The typical debt consolidation company will help with debt settlement or debt management.  To learn more fill out the form below:

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Do I need an attorney to file bankruptcy?

Bankruptcy is not to be taken lightly particularly after the laws changed in 2005 with pressure from the credit card companies.

Many people write in and ask us if they need an attorney for their bankruptcy.  It’s a common question so let’s walk through the process.

First, an attorney will charge you between $1500-$2500 depending where you are.  If you’re in Los Angeles plan on paying more and remember that this money will be due up front.

Next, the attorney will have you fill out some forms to get the Chapter 7 filing underway, fairly simple stuff but if done improperly you could find yourself in trouble later.  Part of this paperwork will be to identify your creditors on a list so they receive notification that you’ve filed for bankruptcy protection.  As soon as they receive notice, they can no longer contact you to collect.  If a creditor does call you after filing, you simply need to inform them that you have filed for bankruptcy protection and they are required to leave you alone.

After the paperwork has been submitted by your attorney you’ll receive a hearing date where your creditors will be able to show and contest the bankruptcy.  For the most part your creditors really can’t do anything about your bankruptcy filing but if you have concerns it’s best to ask your attorney for advice and make sure you are forthcoming with information.

Typically the person hearing your case is not really a judge but an attorney sitting in.  He or she will ask you a series of simple questions e.g. Have you filed for bankruptcy in the last 6 years?  After the questions are complete they’ll ask if anyone would like to contest the bankruptcy.  If it is contested it’s best to have an attorney there because handling a contested bankruptcy can be difficult if you don’t know what you’re doing.

Most Chapter 7 filings go rather smoothly and end within a couple of minutes.  Remember, just last month 880,000 people filed for bankruptcy protection, which was more than all the filings in 2007 so you definitely won’t be alone.

After your bankruptcy has been approved it will be filed with the court and a public record will be placed on your credit report and remain there for 10 years.

In the end you will have spent about $2k up front and damaged your credit significantly.  Furthermore, it’s important to know that student loans, child support and some portion of your credit card debt won’t be wiped out completely.  There are other debts that don’t fall under bankruptcy protection either so be sure to check with your attorney.

The damaged caused by a Chapter 7 filing is not irreparable but it’s pretty stiff and lasts a long time.  Bankruptcy may be the only choice for some people but certainly not for all.  A far better option for most cases is to engage a debt relief specialist.  You’ll pay much less, spread out over a period of time.  Your debts can be paid down completely in 1-4 years and your credit can be protected.  Most people just don’t realize there’s another option or how helpful this one is.

If you’re considering a Chapter 7 bankruptcy, contact a debt relief specialist first and see if you can save the $2k on an attorney and your FICO score.  In most instances you can.

Protect yourself from credit card rate increases and fees

As a result of the recent market turmoil credit card companies have taken it on the chin due to delinquencies and bad debts (bankruptcy or noncollectable accounts).  However in credit card company fashion, they’re passing on that pain to the on-time, bill paying consumer.

If you’ve always paid your bills on time but often carry a balance on your credit card get ready for some changes.  Your account can be canceled altogether, have the rate increased or have the credit limit decreased. There are repercussions to this with the most prominent being the impact to your FICO score.

If your card company reduces your credit limit, the result will be a lower credit availability ratio.  With this your FICO score can drop.  Increases in interest rates can be very steep and add up quickly.  Sudden cancellations impact your purchasing power.  Imagine losing your card over the holidays.  If you didn’t have cash saved up, you may be out of luck this year.

The best way to protect yourself is to read your statements thoroughly when they arrive and check for changes.  It’s typically in the fine print so look closely.

If your card has been canceled, call the company and request that it be re-instated.  There’s a good chance they will.  If your interest rate has changed you can call for this as well and request that the rate be reduced OR you can opt-out.

Opting-out means you want to pay the current balance at the old interest rate.  If you choose this option be sure to send your company a certified letter so you have proof that it was sent.

Chances are more likely than not that your credit card will be affected.  Be sure to read the fine print on your statements and exercise your options.

Holiday Spending Predictions

Holiday spending will be down significantly this year and it doesn’t look like the new stimulus checks will go out in time to save retailers or consumers.

There is no official plan for a stimulus package yet and there likely won’t be until the first quarter of 2009.  It’s important to not be dependent on a stimulus check that might never come.  Instead start saving now and purchase your gifts with cash.

Statistically this year we’re looking at the following:

-an overall spending decline of 2-5%

-a ratio of 5-1 say they will be spending less this year

-55% of those surveyed say they’ll spend less this holiday season while only 9% say they will spend more.

Frankly, we think the results are off quite a bit.  When the real numbers pull in they’ll likely be even lower.  It’s impossible for people to spend cash they do not have and credit that has been reduced, canceled or maxed out, which leads to our next point.

If you’re already behind on credit card payments, now is not the time to charge more.  Use cash only and in the meantime contact a debt consolidation company to help you with your payments while also protecting your credit.

President-elect and the new economic team > What it means to YOU!

The market and economy are in absolute turmoil with violent 500 point swings in the DOW, increased foreclosures, lost jobs and an ever-growing line of private industry to tap into the recently passed $700 Billion bailout money.

Obviously most Americans are hurting financially and are looking for relief from wherever it may come.  

Today, President-elect Obama announced his economic team:  Timothy Geithner as treasury secretary; Christina Romer as chair of the Council of Economic Advisers; Lawrence Summers as National Economic Council director; and Melody Barnes as Domestic Policy Council director.

We won’t know for many months what the impact of this new economic team will be.  Regardless of who the economic team is, they will not have an immediate impact on your bank account.  However, the fastest relief might come in the form of a new economic stimulus package.  

We receive e-mails daily requesting more information on this package.  All we can do now is speculate.  It seems highly unlikely that a new stimulus package would pass before the holidays, although that would be nice for everyone!  The IRS is a huge government machine so getting a holiday stimulus check out in time for the holidays would be like turning a battleship.  If a new stimulus does pass, as we believe it will, look for it at the beginning of 2009, maybe just in time to pay off any holiday presents you purchased on credit.

It’s also been predicted that the economy will recover in about 18 months by APEC.  This could be shorter or longer but now is the time to prepare.  When this recession does end we’ll see growth again in jobs, business and personal wealth.  If you prepare now, you’ll be in a very good position when the economy improves.

Pay down your debt as much as possible and protect your credit rating.  If you’re struggling to make unsecured debt payments contact a debt relief specialist for help.  The worst thing you can do is ignore letters and collection calls, this will only make a difficult situation worse.  A debt consolidation company can help preserve or even improve your FICO score and also help you to pay off your debts completely within a few years.  The cost is minimal and the alternative (chapter 7 bankruptcy) is not a good one as it will damage your credit for 10 years.

Economic improvement is on the way (about 18 months).  In the grand scheme of things that’s a very short period of time, so plan now and be ready!

Bankruptcy, repo-man, no house..The L.A. story

How did the economy get into this mess in the first place?  It’s the question that the pundits will debate ad nauseam, but is it really that complicated?  I don’t think so, allow me to explain how we got into this mess and what you can do so you don’t become collateral damage.

How we got here

It’s my neighbor’s fault, plain and simple.  They single-handedly destroyed the economy.  It all started about 2 years ago when we first met.  They were part of some vacation sales deal where they basically didn’t sell vacations at all, but rather, a buy-in for others to be involved in this “ever growing” business.  The fliers all had people standing in front of big homes with big cars or on Hawaiian vacations, living the good life.  They actually pitched this to me at the beginning.  Anyone with a speck of sense knows it’s a scam.  Pardon me for being a conservative guy but my education has taught me that to make money you have to sell a product or a service.  Maybe this is over-simplified but I still didn’t see what it was they were offering or how they were contributing to our economy.

But they must have been making money, right?  They drove a new Mercedes and an Infiniti truck, while living in a 3500 sq. ft. home in a very well-to-do neighborhood.  They had parties every weekend celebrating their success and inviting more people to sign-up for this once-in-a-lifetime opportunity, and that they did for many months but things started to change.

The first sign was suddenly parking both vehicles in the garage when they had never done this before.  I told my wife at the time that something was up and to get ready for the repo-man but he didn’t come, maybe I was wrong.

The next sign was a bit more direct.  The neighbor told me that they had lost 2 other homes in the same neighborhood to foreclosure but they were holding on to the one they are living in.  3 homes?  Why the need for 3 homes?

Well, it turns out they aren’t paying on the one they live in either and haven’t paid for 18 months.  The house has already been foreclosed on months ago but somehow they continue to live due to some legal loophole.  I’d love to read that one.

Enter Repo-Man

Not really the repo-man but rather, the county sheriff.  It took about 30 minutes for the sheriff to get the mercedes taped and on the flat-bed truck.  Away they went, much like the infiniti truck did several weeks later.  They now own a more reasonable used Honda, which I’m sure was purchased with cash.  Credit isn’t available for cars and if it was they wouldn’t get it.  Plus, it wouldn’t be too  hard to save up that cash when you don’t need to pay rent or a mortgage.

So let’s start to add up some of this impact a single family and their decisions can have.  They defaulted on 3 homes with loans totalling $2.4 million, cars at roughly $130,000, continue to live rent-free, which is impacting the bank who owns the property and for some reason can’t get it sold yet.  My numbers don’t include the 3 mortgage offices he shut down and didn’t pay the rent or the other smaller debts.  When it’s all said and done we’re probably looking at losses of around $3 million for one person!

This is amazing but it’s also what caused this crisis.  Don’t let the pundits fool you with credit swaps and other jargon no one understands.  The $3 million my neighbor lost affects everyone who was connected to it from the bank and its employees to the car company that had to pay the sheriff to reposess, truly a trickle-down recession.

So now you’re the collateral damage from people who made these monstrous mistakes.  You work hard and have always paid your bills but recently you lost your job, maybe you were working for the bank that provided the loans to my neighbor!  People who have made good decisions but are now being damaged by a bad economy, high unemployment and zero retail sales need a solution.  Some choose bankruptcy but an easier, more cost effective solution is to work with a debt consolidation company.  Typically, your debts can be paid off within a few years and your FICO score can be preserved or even get better.

Don’t become part of this story, be part of the solution.  When the economy improves your credit will bring you what you need like a home, car or business loan.  If your unsecured debt is more than $10,000, which is lower than the national average, know that it can be managed or settled for you.  Enter your information in the form to the right and a debt relief specialist will contact you.

2008 Holiday Stimulus Check > Your piece of the pie?

There’s $700 Billion that has been approved by Congress as part of a very large bailout.  It seems like everyone is lining up to get some money from Uncle Sam.

Today the auto Big 3 are in congressional hearings, essentially to beg for money to keep them afloat but others have been lining up for weeks from a variety of industries.  Even Amex wanted about $4 billion of the bailout!

Taxpayers aren’t happy about the bailouts of these companies and there has been a growing movement asking “what about us, where’s our stimulus?”

The first stimulus that was passed earlier this year provided minimal relief as most used the extra check to cover excessive fuel and food costs.  Couples received $600 then an additional $300 per child, which didn’t go far when gas was over $4/gallon.

A new stimulus package has been bouncing around Congress now for weeks.  Unfortunately, due to the transfer of power it is not likely that a stimulus check will happen (if at all) until this transfer happens.  This is much to the dismay of retailers who have been hammered by the economic downturn.  People just aren’t spending, so a holiday check would have been a welcome relief for many.

Keep checking back with debt consolidation post for up-to-date information on the 2008 stimulus.

These famous people filed bankruptcy

Bankruptcy is a way to get a fresh start when you’re absolutely buried in debt.  The top two reasons for bankruptcy in current day are divorce and medical bills though many have had to file as a result of starting a new business or other poor financial decisions.

If you’re considering bankruptcy it’s important to know that you’re not alone.  Just last month over 880,000 people filed for bankruptcy protection, which is greater than all those who filed in 2007, definitely a sign of the economic times.

Here are just a few names you might know who for all intents and purposes, went bankrupt somewhere in their career.

-Abraham Lincoln

Obviously there were no bankruptcy laws then but Lincoln did find himself in a financial mess after attempting to run a store.  He eventually lost his horse and surveying equipment.

-Henry Ford

Unfortunately Ford is in trouble again along with all of the other auto manufacturers but at the beginning Henry Ford found himself in a mess before the company became a wild success.

-Walt Disney

It’s hard to imagine Disney being bankrupt at any time with the current state of the business but when he got started he was just a struggling film maker who apparently was cheated out of money and could no longer cover his overhead.

-Burt Reynolds

It’s amazing how much wealth one can have and lose it all (except for one of his multi-million dollar mansions).  Burt got buried in his divorce and the ensuing reduction in cash flow that crippled his finances.

Many people have had to file bankruptcy and emerged just fine.  However, bankruptcy laws have changed signficantly since 2005 making it more difficult to eliminate all of your debt.  It’s recommended that you speak with an attorney if you’re considering bankruptcy or try debt consolidation first.

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