Credit/Debt Recovery

A Television Review?

I'm always looking for more helpful items to offer consumers, to balance out the industry-centric content of this blog.

So it was with great interest that I recorded and watched "Good Deal with Dave Lieberman" on the Food Network last week.

The premise is a good one: a cooking show where the chef keeps his viewers' budget in mind when he teaches you a recipe. I think the time has come for a show like that, and it's not redundant of anything else on Food network. I was really hoping this show would have something to offer the kind of people who read my book, who need all the good deals they can get if they're going to conquer their debt.

Unfortunately, I'm unimpressed so far. It seems Dave Lieberman is another good looking young chef who wanted a show, and the "Good Deal" part is nowhere to be seen.

It’s probably unfair to be judging the show like this so soon, and I’ll give it a few more chances before I give up altogether. But just looking at the first episode I watched, there were a lot of ingredients that aren’t available at my local grocer, and if I could find them, they’d be more expensive than I would consider a “good deal.”

And besides just the cost of the ingredients, there’s the time and complexity of the menus. People who are struggling to stay above water with their debt don’t have time to concoct elaborate meals, and they resort too often to quick but unhealthy (and costly) fast food alternatives. It’s a sad fact in this country that the less money you have, the more likely you are to be overweight. Eating a nutritious meal on a tight budget and with a busy schedule is very difficult in our society. I’m looking for help with that from this TV show, but it hasn’t delivered the goods yet.

Check out his recipes at the show’s web site and see if you think his meals are good deals.

Update: I finally re-visited this show and had a much better opinion of it the second time around. See the follow-up post Here.

Washington follows California's lead re: credit cards on campus

The upside of all of the heated discourse surrounding the bankruptcy reform bill is that more people are hearing the facts about how evil the credit card companies can be.

Washington State is now set to follow California's lead and restrict the marketing of credit cards on campus. Their bill 5506, which the Western Front Online covers here, is similar to California's AB521, which let to the founding of CASDRAP ( the California Student Debt Resource and Awareness Project) on which I was proud to be a participant.

A friend of mine is a dean of students at a college in Missouri, and I understand they've limited credit card marketing on that campus already. I imagine a lot of campuses have taken that initiative without waiting for state legislatures to address the issue. Like in the Western Front article: Western not only already limits credit card marketing, they limit cell phone and internet service plans, too.

All of this may be something of a counter-balance on the credit card companies' billions of mail solicitations and offers that are responsible for all the world's problems.

Taxes and Bankruptcy

Excellent post from Todd Zywicki on taxes and bankruptcy.

I agree with Todd's suggestion that more bankruptcy filings are caused by tax liabilities than by medical expenses, but these are just educated guesses, since no one's done a study on the subject. Maybe the Libertarian party could do it; then we could have an über-biased study to match Harvard's medical expenses study.

(I'm a lower-taxes kind of guy, if you hadn't guessed, but I don't want to get into that argument here.)

Also, courtesy of Todd and the Volokh Conspiracy, here's the median income for 4-person families, by state, according to the census bureau. So in my home state, you'd have to make more than 64,128 for a family of four before you'd be subjected to means testing. That's good money around these parts. In California, the amount is $67,814, and I can tell you from experience that's not such good money for a family of four. (In my experience, housing costs were the biggest driver of this discrepancy. In MO, you get a lot more house for your money than in CA.)

Bankrutpcy Reform... /sigh

It looks like I'll be talking about bankruptcy reform forever. Ugh. Tom Blumer posted a comment this weekend that people should see, as well as my response.

The nature of the debate was whether it's "Harder" to file bankruptcy under the new law. I say no, Tom says yes. And we're both right.

Tom says it's harder because it's so much more expensive. That's indisputably true. It will be harder to pay for bankruptcy in six months. But I wasn't talking about that; I was talking about whether or not it will be "Harder" to qualify for bankruptcy. I'm not convinced that even 10% of BK filers will have a problem. This was probably my fault for not being clear enough in what I was talking about.

Of course, we're already seeing the beginnings of a bankruptcy boom. Anyone who is even considering filing bankruptcy is being urged to do so now to avoid having to deal with the new law. Most people in the industry expect the bankruptcy courts to be jam-packed for the next six months.

So in October, when the new law takes effect, and bankruptcy filings drop precipitously, the press will cackle "It's because bankruptcy is too hard to get now!" But really, it'll just be the end of the glut, and all the people who need bankruptcy will have filed already. And we won't really know for a while if bankruptcy is proving to be harder to get, because the media will have scared all of the debtors into filing before then.

It may turn out that bankruptcy will be harder to access, not necessarily because of the courts, but because bankruptcy attorneys will have to be selective in choosing clients to represent. And that may stymie a few folks. We'll see this winter.

Good Advice

Lately the blog has gotten very much into the subject of the industry, which is, I suppose, the stated subject of the blog. But I'm conscious of the fact that regular folks stopping by may be finding little of interest here.

Yesterday the Journal Gazette and Times-Courier of Central Illinois ran a great article with some clear, helpful advice about beating debt. Kudos go to CCCS of Central Illinois for contributing to the piece. This is something everybody could benefit from reading, even those of us who are old hats at this; it's always nice to have a refresher on smart money management.

Cambridge Credit Counseling Sued

The Attorney General of Illinois has sued Cambridge Credit Counseling, according to this article.

It seems the most significant impetus for the lawsuit is Cambridge's relationship with for-profits Brighton Credit and Brighton Debt. This is similar to the NCC situation we've been discussing in the comment areas, but not exactly the same. It seems Cambridge paid the for-profits to service the debt, rather than being paid by the for-profits to direct business their way.

Also at issue is the fee structure; Cambridge was charging a one-time startup fee that equaled the client's regular monthly payment, similar to Ameridebt. Illinois law limits startup fees to $50.

This may turn out to be big news; Cambridge is the heavy hitter in the industry; I'm guessing they have 50 to 100 thousand active clients (they claim 160,000). If other states pile on and start suing them, who knows what could happen.

Personally, I've never dealt with Cambridge. My only beef with them is that they don't have any third-party accountability. They're not COA accredited, and they don't seem to belong to any trade organizations. Unlike NFCC counselors who have a rigorous third-party counselor accreditation program, Cambridge has their own "Cambridge Credit Family of Companies Employee Certification Program," which, on paper, smells funny to me.

Cambridge is ISO:9000 accredited, but I'm not convinced that ISO:9000 is a good standard for credit counseling. I suppose that's debatable. At any rate, the Illinois AG isn't impressed.

Bush signs Bankruptcy Bill in to Law

President Bush has signed the bankruptcy reform act into law.

I'm not linking to a news article about it, because I can't find one (I've looked at over 238 articles now) that doesn't approach the news with a clear bias. All of them use phrases like "...making it harder for debt-ridden Americans to get relief..." etc. Journalism as it was taught to me is dead. I'm not saying there aren't big, legitimate gripes against the new law, but a responsible journalist would just find an opponent of the bill (not a hard thing to find) and quote them. No reason for the narrative of the story to be taking sides. Clearly everyone's using the original AP wire story, which was obviously written by a BK reform opponent.

Now that the thing is officially passed (and will go into effect on October 20), it's time for all of us to shake down the creditors. We kept hearing how each of us pays an extra $400 per year to cover bankruptcy fraud, so the question we should all have for the creditors is--"Where's my $400 refund?"

Follow-up on Junk Debt Buyers

First of all, April is Financial Literacy Month. I really should have done something in honor of that before now, but a lot of other things have captured my attention so far this month. Check out what the ICFE has for the event.

And while I'm at Paul Richard's site, I wanted to point people toward his excellent Consumer Alert and Fact Sheet on Collection Agencies and Junk Debt Buyers. He's got a great list there of junk debt buyers to beware of, and a fact sheet giving clear advice on what to do if you are contacted by someone trying to collect an alleged old debt.

Non-Profits acting like for-profits

And no, I'm not going to pound on scam artists today. I'm talking about the United Way.

A couple of weeks ago, I heard this story on PRI's Marketplace.

The story talks about how charitable giving is up across the board, but down to the United Way. UW had to recognize that they need to change the way they operate to maximize their donation revenues.

From the story:

"What these standards recognize is that the donor is an investor, and the donor is our customer.... The number one driver of a donor trusting a charitable organization is if they know how their money is spent. If you can show me that my money has made a difference in people's lives, my trust and confidence in your work is going to go up."

-United Way President and CEO Brian Gallagher

Where I'm going with all of this is non-proft credit counseling, of course. The industry has been blasted for being "creditor controlled" for a long time now. But the creditors donate most of the money that keeps cc agencies going. Do they have the same right as United Way donors to know how their money is being spent when they give? Right now, that money is seen by outsiders as a payment from creditors to one of their collection agencies. Credit counselors don't see it that way; it's a donation to keep the agency going.

This is one of those things people with different opinions will disagree on no matter what I say. But a reputable credit counselor doesn't service a creditor any differently based on whether they make fair share contributions or not. Everybody gets the same service, creditor and client alike.

Read more about the United Way's "Standards of Excellence" here, and consider how this high-profile charity's new attitude towards donations is not so different from credit counseling's age-old Fair Share model.

Bruce Schneier on Identity Theft

Bruce Scheier posted an excellent idea on his blog today regarding identity theft; make the banks accept responsibility.

You'll have to read the entire essay for yourselves, but this is a great idea.

In my most recent experience with identity theft, someone used my information to purchase an e-book from a shady website. (I contend the thief was the guy running that site... why would someone steal my ID just to download an e-book?) I reported that site to the Better Business Bureau, and I reported the payment verification service that was used. (It wasn't paypal, but a low-rent competitor of theirs.) They called me when they saw the BBB complaint and were totally flabbergasted. They hadn't commited the fraud, after all. They're just a credit card verification service. But I would not retract the complaint, because they had made it far too easy for a thief to steal my identity. What verification had they actually done?

This is the concept Schneier is working on; hold the banks accountable when they make it too easy for identity theft to happen. I vote yea.