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Debt relief scams: Part 1

Scams can happen in a variety of ways. According to the Federal Trade Commission (FTC), debt relief scams are currently trending. Debt relief scams occur when someone claims to assist consumers with paying off debt. According to the FTC, with the most current debt relief scam, scammers are claiming to be affiliated with the government.

The FTC states consumers should be aware of the following to protect themselves against scammers:

  • Federal government agencies do not ask consumers to send money for unpaid loans.
  • The IRS usually contacts people about unpaid taxes via mail, not by phone.
  • Federal government agencies do not ask consumers to wire money or use a prepaid debit card to pay for anything.
  • Consumers should not rely on caller ID because scammers know how to rig phone numbers to show the wrong information (aka spoofing).
  • Scammers might have personal information about you before they call, so do not provide any information.
  • If you are not sure whether you are dealing with the government, look up the official phone number of the agency and call the agency directly.

It is important for consumers to be aware of scams as they can sometimes seem real. Scammers are always looking for new ways to take advantage of consumers and with the above tips, consumers can stay one step ahead.

Scams occur in various realms. According to Michigan State University Extension educator Vivian Washington, another scam that is occurring regularly is work-from-home scams. Although there are legitimate work-from-home jobs, it is important to be aware of the fake ones.

Learn more about scams at MI Money Health. If you have fallen victim to a scam or wish to sign up for email scam alerts, you can contact the FTC.

Other articles in this series:

  • Charity scams: Part 2

This article was published by Michigan State University Extension. For more information, visit http://www.msue.msu.edu. To have a digest of information delivered straight to your email inbox, visit http://bit.ly/MSUENews. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).

What If Everyone Went to College?

According to the Institute of Education Science, more than 21 million people trudged through S-A-T’s, A-C-T’s and entrance exams to enroll in college in 2011. 60 percent of those will end up paying an average of $30,000 over the course of their lifetime to pay for college. The trillion dollars in total outstanding student loan debt in the US would balloon if everyone went to college, leaving graduates in massive debt.

“Youd end up with people that are over-trained and somewhat inflexible on the jobs that they can take,” said William Delwiche, investment strategist at Baird. “I kind of feel like it would be a negative for the economy. Youd have more people in debt and people not able to be as free to take risks because theyd be burdened by that debt.”

And with more graduates, finding a job would get even more competitive, forcing those with middling GPA’s to take fast-food jobs just to pay off their crippling student loan debt.

“I think if everyone has a bachelor’s degree, its suddenly not impressive. It becomes the new high school diploma,” said Stacey Einhorn, an independent educational consultant from Einhorn-Wrubel Educational Consultants. “Grad school would be the new expectation.”

And with grad school comes even more debt. The average grad student in 2012 owed close to $58,000 in loans, according to the New America Foundation. Of the 12 million students with college loans, about 30 percent will eventually drop out according to the Institute for Higher Education Policy. And of those dropouts, about 26 percent will eventually default on their loans, compared to the 16 percent of college grads, that won’t meet their loan obligations. The number of dropouts would surely swell if everyone went to college.

“A lot of people would fail out of college,” said Mike Petrilli, president of the Thomas B. Fordham Institute. “Today, a lot of people get to college unprepared and end up in remedial courses and almost never get past those courses.”

In order to stay out of massive debt, prospective students may have to acquire their college and master’s degrees online.

“If they take the courses online and move some of their majors online, I think that would be a great solution,” said Einhorn. “It would keep costs down and it would allow for an immediate approach to enrolling a large number of students.”

Right now, about 53 percent of Americans, between the ages of 25 and 34, hold a college degree. But President Obama is pushing for a 60 percent graduation rate by the year 2020.

“If we were able to maintain standards and we were amazingly able to get everybody by the age of 18 prepared for college that would be an incredible accomplishment,” said Petrilli. “We would have done something that no country in the history of the world has ever done, which is to not only have universal public education, but universal high quality public education. And that would be a great success story.”

Host: Dan Kloeffler
Producer, DP: David Fazekas
Associate Producer: Stefan Doyno
Editor: Maurice Abbate

Feds call for shutdown of bogus debt relief and credit repair scheme

Your view: Jubilee debt relief could save the nation

To the editor:

Following the Lehman banking debacle of 2008, the government-sponsored bailout of the banking sector to boost the economy created an illusion of recovery by means of phantom wealth. Wall Street banks used special privileges with the Federal Reserve to borrow money to speculate in credit derivatives, currencies, and leveraged buyouts. Yet savers that need interest income to survive are punished by low interest rates causing many to take severe investment risks searching for higher yields.

The US economy is crashing as major retail chains close thousands of stores because 70 percent of the economy is consumer driven. The decline in consumer spending is due to the permanent loss of jobs resulting from the collapse of the housing bubble with many mortgages still underwater. Underemployment is now the norm as full-time white collar job opportunities never fully recovered after the recession. We are witnessing the impact of student loan debt on the economy as college graduates cannot find jobs, even as many manufacturing jobs requiring skills remain unfilled.

We are a Christian nation with Judeo roots and God has a solution for our economic dilemma. The Jubilee law described in Leviticus 25 provides a national cancellation of private debts every 50 years. This will ensure that no one would ever become forever trapped in debt and poverty. Providing immediate and future Jubilee debt relief for mortgage, student loan, and credit card debt will be a start to save our nation.

R. Robert Dauist

Orange, California

Lending Company Forced to Provide Debt Relief to Military Families

Fort Carson officials are weighing in on an investigation involving a lending company.

The company operated across the country and here in Colorado. It went by several names including Rome Finance, Colfax Capital and Culver Capital.

According to the Colorado attorney generals office, the company set up near military bases and offered instant financing with no money down.

However, investigators say the company did not accurately disclose charges and interest rates.

The lending company must now provide $92 million in debt relief to 17,000 service members across the country, including 740 in Colorado.

11 News reached out to Fort Carson about the investigation. The following is the statement that Fort Carson officials released:

High interest rate lenders target Soldiers who are financially inexperienced and have poor credit or no credit. These lenders lure Soldiers into signing contracts by promising to help build their credit. ACS teaches Soldiers that these promises are, for the large part, empty, as being unable to pay on a high-interest contract will actually be detrimental to their credit score. Also, ACS highlights the importance of price comparing, as these lenders frequently add on charges that result in items being two or three times more expensive if purchased elsewhere. ACS Financial Readiness counselors and command financial counselors (non-commissioned officers assigned to units at the battalion level) offer to review any contract a
Soldier is interested in before they sign and the contract becomes a legal document.

Army Community Service Financial Readiness Counselors are available to educate and provide tools to Soldiers and Family Members in managing their money and becoming debt free. If a Soldier visits with a Financial Readiness counselor, having already signed a high-interest contract, the counselor will help the Soldier examine his or her finances and look for ways to cut expenses and increase income. Methods include ensuring Soldiers have checked
the right number of tax exemptions, helping Soldiers build a budget and, if theyre married to a non-working spouse, exploring options for the spouse to bring income into the household. Financial Readiness Counselors will assist Soldiers in how to prioritize paying off their high-interest debt and provide strategies on how to become debt free. Also, Financial Readiness
Counselors are well-versed in the Fair Debt Collection Act, which governs when and who debt collectors can call and help educate Soldiers about their rights in that regard.

All Soldiers who arrive on Fort Carson attend day one/first term training as a part of in-processing that includes information about high interest rate lenders. Army Community Services also offers several voluntary financial classes daily and weekly that are geared toward educating Soldiers on personal finances. Soldiers can also go to the on-post legal office for contract review and assistance in getting out of contracts.

If you think you have been defrauded by a Colorado business or nonprofit, you can report it to the Colorado attorney generals office by calling 1-800-222-4444.

Rural housing loan at concessional rate from Sundaram BNP Paribas Home

Sundaram BNP Paribas Home Finance has launched a new scheme for funding rural houses at a concessional rate of interest.

This comes in the wake of the decision of National Housing Bank (NHB) to offer refinance to housing finance companies (HFCs) at a special rate of interest to promote the growth of rural housing.

Under this scheme, loans to scheduled castes/scheduled tribes/specified minority communities and for properties held in the name of women (either as owner or co-owner) will be entitled to a concessional rate of 9.60 per cent. This concessional rate is fixed for 7 years, and will be converted to floating rate of interest thereafter.

Under the scheme, the upper cap of the loan amount has been placed at Rs. 15 lakhs for acquisition/construction of residential dwelling units. The loans for home improvement and extension under this scheme should not exceed Rs. 5 lakhs. The relevant property should be located in an area conforming to the definition of rural area under the NHB norms, a release says. 

Considering the thrust the new government is placing on housing for all, we feel that the need for mortgage credit would also increase. Our ‘close to the customer’ strategy with focus on expanding our reach to Tier-2 and -3 towns across India will drive our disbursement growth in rural housing segment, a release quoted Srinivas Acharya, managing director, as saying. 

Sundaram BNP Paribas Home Finance is a joint venture between Sundaram Finance (50.1 per cent) and BNP Paribas (49.9 per cent).

Crackdown on credit card companies has paid off big for consumers

The biggest thing the CARD Act did is level the playing field for consumers, said Kathy Virgallito, national manager of community affairs for Apprisen Financial Advocates.

Kevin Myeroff, CEO of NCA Financial Planners in Mayfield Heights, said the CARD Act has been one of the best protections that consumers could have ever hoped for. People dont face as many surprise fees and the cards and the rules are much more transparent, he said.

Some of the practices that banks used to engage in were egregious. Theyd cut your credit limit, allow you to go over it and then charge a penalty.

Or if you didnt carry a balance last month and therefore owed nothing in finances charges, some banks would charge interest based on your average daily balance over the last two months. That meant you were essentially paying interest twice on some purchases. The practice, called two-cycle billing, was banned under the CARD Act.

One of the changes with the biggest impact, Virgallito said, is the disclosure on everyones statement every month that spells out how much interest the consumer would pay over 20 or 30 years if she makes just the minimum payment on just the existing balance. The box also indicates how much the consumer would have to pay every month to pay off the existing balance in three years and how much would be saved in finance charges.

This has made things much clearer, Virgallito said. It has really impacted people. They come in to talk to the counselors and they say that made the light bulb go off that they need help digging out of debt.

This disclosure box could be one of the reasons that outstanding credit card debt has remained flat the last few years after several years of turbo-growth.

Citing data from the Federal Reserve, economist Ken Mayland of ClearView Economics in Pepper Pike noted that outstanding credit card balances had been on an upward trend in 2010 and 2011 after the economy started recovering a bit. But that changed in 2011 and balances have been flat ever since.

That growth has come to a standstill, Mayland said. Something has changed (that is) affecting the behavior of consumers regarding the use of credit cards.

While consumers have definitely become more conservative about spending in general, Mayland speculated that consumers today are better informed about credit card debt. Their guard is up that this is very expensive debt, he said.

The costs of credit card debt have come down in many ways. Before the law, credit card companies could charge a late fee if your payment didnt arrive by 7 or 8 am Now, payments must be considered on time with no penalties if theyre received by 5 pm on the due date.

Speaking of due dates, companies used to switch around the due date every month: Itd be the 15th one month, the 18th the next month and then the 12th the month after that. Now, the due date must be the same every month — say the 15th — and if thats not a day the bank accepts payments, then it must accept payments on the next business day and count them as on time.

Penalty fees alone — such as late-payment or over-limit fees — used to cost consumers $20 billion a year. Now such fees have dropped in half.

Overall, the cost of interest and fees combined has dropped by 2 percentage points, according to the Consumer Financial Protection Bureau, which oversees credit card issuers.

Some banks say the law had little impact on their operations. At Chase Bank, for example, most of the provisions of the CARD Act were already in place long before the law took effect, said spokesman Jeff Lyttle. For example, the bank never charged inactivity fees or marketed to college students.

The law also hasnt kept some banks from entering the credit card business. Locally, KeyBank and Huntington Bank both started offering their own credit cards and servicing in the last two years.

Another big change prohibits issuers from arbitrarily raising interest rates on existing balances.

Before the CARD Act, the interest rate on your balance could be changed in the blink of an eye. On a $9,000 balance with a 10 percent interest rate, youd pay $75 a month in finance charges. If that rate jumped to 29 percent, your monthly finance charge would skyrocket to $217 a month.

Now, rates can be increased on new purchases. And rates can be raised on existing balances if theyre tied to an index. So if the prime rate goes up by 0.5 percent, then a bank can raise its rate for existing balances by 0.5 percent. Banks can also raise a rate to a default late on accounts that are 60 days past due.

Before the CARD Act, 15 percent of accounts were re-priced each year, according to regulators. Now its 2 percent.

Further, if your bank proposes any changes to your account that you dont like, you can close the account and pay off the balance over five years under the existing terms and interest rate.

Many opponents of the CARD Act had predicted consumers would be unable to get new credit cards and that banks would shut down accounts. That happened somewhat as banks pulled back on risky lending following the 2008 financial crisis.

The total of all credit lines for credit cards dropped by $200 billion from early 2010 through the beginning of 2013, according to the CFPB. Its believed much of the decline occurred when banks stopped issuing cards to teen-agers with no jobs and to people with poor credit ratings.

The restriction on new accounts for adults under 21 is one of the other key aspects of the new law, Virgallito said. The law says credit card companies cant market on college campuses and cant approve cards for those under 21 if they dont have income or a co-signer.

That has helped that age group avoid early hole of debt, she said.

One of the unexpected benefits of the CARD Act is that many banks have actually enhanced their rewards programs.

Because some fees have become standardized (eliminating one way to gain a competitive advantage,) card issuers are finding new ways to compete with one another to gain customers, said KeyCorp spokeswoman Kimberly Kowalksi. One such way is new and enhanced credit card rewards programs. Banks are credit card companies are now competing to give customers more rewards.

Myeroff, the Mayfield Heights certified financial planner, noted that the CARD Act doesnt regulate some problems that need addressed, such as deferred interest or same-as-cash accounts often opened when someone buys furniture or appliances. The law also doesnt cover cards that charge excessive up-front fees or offer expensive add-on products like identity theft protection or credit score monitoring.

But overall, the law has dramatically helped consumers avoid unfair practices and helped them be better stewards of their money, he said.

This is really a good consumer protection law, Myeroff said. Its the way it should have been all along.

Reforms to dominate Greek talks in Paris, debt relief talks later-source

ATHENS, Sept 2 (Reuters) – Greece hopes to assuage concerns
it is slipping up on reforms during talks with European and IMF
inspectors in Paris this week, with debt relief talks unlikely
to start until October, a senior Greek government official told
Reuters.

European Union/International Monetary Fund lenders bailing
out Greece begin their latest review of the countrys progress
on its obligations this month, but in a break from the past, the
initial phase of talks starting Tuesday is being held in the
French capital instead of Athens.

That has prompted speculation that the talks could yield a
broad-based agreement on major issues including further debt
relief and additional funding needs for Greece as the
twice-bailed out nation emerges from a six-year recession.

But the senior official cautioned that the effort to meet
outside Athens was mainly to avoid a lengthy inspection similar
to last years fall review that dragged on for seven months and
that the talks would focus on reforms achieved to date.

It will be a preliminary discussion on the state of play,
the official told Reuters. We want to show that reforms are on
target, soothe those who worry that reforms are not being met.

Athens has come in for criticism in recent months from some
– including former EU economics commissioner Olli Rehn – that it
has slowed down the pace of reforms since European elections in
May won by the leftist opposition, anti-bailout Syriza party.

The Greek official added that widely-expected debt relief
negotiations were unlikely to begin until after the latest
bailout review is over and results of European Central Bank
stress tests are announced in mid-October.

Debt relief is not on the agenda, the official said,
referring to the Paris talks. It is something that we might see
after mid-October, probably after the bank stress tests.

Greece has staged a sharp turnaround on its finances since
nearly going bankrupt two years ago at the peak of its debt
crisis but is still expected to require additional concessions
from lenders before its debt mountain is considered manageable.

Debt is expected to hit a peak of 177.2 percent of GDP this
year before starting to decline next year.

The country also still faces record unemployment of over 27
percent but has begun to post budget surpluses before interest
payments and successfully returned to bond markets twice this
year after a four-year exile.

The talks in Paris start later on Tuesday and end Thursday,
with the EU/IMF bailout review set to continue in the Greek
capital later this month.

The periodic bailout reviews by EU/IMF inspectors in Athens
– and the threat of additional austerity demanded by them – are
often blamed by retailers for depressing consumer sentiment,
while unions use the visits to stage angry protests.

(Editing by Jeremy Gaunt)

Sundaram BNP Paribas Home Finance offering the home loans at lower rates

In order to improve the home ownership in the rural areas, a private home financing Company Sundaram BNP Paribas Home Finance, has decided to offer the home loans on exclusive rates to women and Schedule caste and schedule tribe people. The company will be offering the home loans at the rate of 9.60%.

The rate of interest will be fixed for the period of 7 years and after that floating rate will be applicable. For the purchasing or construction of the house the bank will be offering a maximum of Rs 15 lakh, and for the renovation and extension Rs 5 lakh will be provided.

MD of the company stated that soon they will try to reach the people in the urban areas as well. At present the company is focusing on extending its help in the rural areas.

Credit Card Debt Relief: Only a Few Steps Away

Credit: Flickr user Morgan.

If youre feeling crushed by credit card debt, it may seem as if youre alone in your struggle and it will be nearly impossible to get on solid ground again. If so, youre wrong on both counts. Youre far from alone, and you can get credit card debt relief relatively quickly.

When it comes to how much debt the average American carries, estimates vary widely. But they dont vary in showing that many people are in debt to the tune of many thousands of dollars. According to one study, the average American household with credit card debt owes more than $7,000, while many households are burdened with tens of thousands of dollars of debt. The good news, though, is that credit card debt relief is within your reach. Many folks have successfully paid off a lot of debt — sometimes more than $100,000 of it!

Paths to credit card debt relief

There is a range of strategies for eliminating credit card debt. For starters, youll need money with which to pay off your debt. There are many ways to accumulate what you need. Ceasing to use your credit cards is a fine first step. Perhaps stash your cards somewhere so that youre not tempted to use them but can access them in emergencies. Studies have shown that people paying with cash tend to spend less than those paying with plastic. Another tip: Remove your stored login and credit card information from online retailers websites to reduce the convenience of spending money on them.

Next, draft a detailed budget. List your expected income during the coming months or year, as well as all your expected expenses. Allocate as much money as possible to reducing your debt and make those payments pronto. See where you can cut back in your spending in order to funnel more money to credit card debt relief. The examples of cutting out daily coffees or packs of cigarettes are trotted out frequently, but only because theyre so powerful. Eliminating a $5 expense each day will net you close to $2,000 per year!

There are other ways to save that you might not have thought of. For example, you can switch from cable TV service to a cheap streaming service. You can also find plenty of free music and movies at a public library. Cancel the delivery of catalogs to your home to avoid temptation and help prevent impulse-buying.

If necessary, think of ways to bring in extra money, such as working a second job, taking in a boarder for a while or selling a newer car for a more affordable one.Your tax refund, as well as any bonus you get at work, should go toward debt repayment if at all possible.

Another good strategy for those targeting credit card debt relief is transferring your balance(s) from high-interest-rate cards to a card with a low balance. Dont just rely on that, though. Follow through with aggressive payments. Note, too, that opening a new credit account can cause your credit score to take a hit for a while, so it could hurt you if youre planning to borrow money in the near future.

Of course, when it comes to achieving credit card debt relief, the bottom line is that youll simply have to mail in checks over time to pay off your debt. But if you have a lot of debt on lots of cards, you might not know where to start. There are several schools of thought on this. Some recommend paying off your smallest-balance debts first in order to reduce your number of accounts in the red. This makes sense, as youll soon end up focused on your biggest debts. The most cost-efficient approach, though, is paying off your highest-interest-rate debts first to minimize your overall interest payments.

Credit card debt relief via credit counseling

Another strategy to consider is credit counseling, which can lead to signing up for a debt-management program that collects a single monthly payment from you and puts it toward all your debt. It can be best to try tackling your debt on your own first, though, because if you enroll in a debt-management program, that can appear on your credit report as a red flag suggesting that you had trouble managing your credit. It also doesnt seem to work for roughly half of those who try it, per a Bankrate.com article. On the other hand, it does work for many people and often includes lower negotiated interest rates and payments. If you take this route to credit card debt relief, shop around for a nonprofit credit counseling firm and compare various firms fees and offerings.

Whatever you do, be aggressive in your efforts to pay down debt. The sooner you get out of debt, the sooner you can put your improved money management skills to work saving and investing for retirement and a less stressful life.

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