Credit/Debt Recovery

NY Outlaws universal default

One of my very first posts on this blog was about the evil that is universal default. Back then, nobody had really heard of it, and I can only think of one or two other people who'd discussed it publicly.

Now everyone talks about UD, and NY State has gone so far as to ban universal defaults on credit cards. But it's not making major headlines: here are a couple of stories about the new law.

This puts credit card companies in a bind; they'll have to set a different set of standards for the 7% of their customers whom they are now prohibited from defrauding. The creditors successfully argued in California a few years ago that a law requiring much more disclosure on credit card statements to California consumers was an unfair burden on them. I'd bet they'll try the same thing here. It's nonsense, of course, but it's worked for them before.

And if you don't live in NY, remember that there are good cards that don't have Universal Default clauses. Switching to one of them is the best solution.

Do men have less credit card debt?

Esquire's July issue has a "Survey of the American Man," in which they assert that the average American man carries $3,290 in credit card debt.

Weve seen from other sources that the average credit card debt is $8400 (that includes everyone... it's actually $9200 among those who have credit cards). So what does the Esquire survey tell us? Do women have that much more credit card debt than men? I doubt it, but it is true that women are more likely to seek credit counseling.

Ultimately, it's probably most likely that the survey respondents weren't completely honest about their credit card debt levels.

Good news from DE

Friday, TASC (The Association of Settlement Companies) announced that they had worked to amend the pending implementation of the UDMSA (Uniform Debt Management Services Act) in Deleware.

The UDMSA is bad legislation that a lot of states have implemented or are considering. It would regulate a lot of good consumer services right out of business, and bans any for-profit debt management services. TASC was able to work with some state representatives to amend the bill to allow debt settlement companies to continue to help Deleware consumers.

This is a big win for consumers, and for TASC. When it comes to debt management services, the more options consumers have, the better. The UDMSA limits these options so much that it actually harms more consumers than it helps.

Vantage scores available

The new Vantage Score is now available from Experian. I'm still not sure I like the idea, and unfortunately I've been unable to purchase my Vantage Score online; I'm being held up by the site's privacy protection (even though I answered every question correctly... this is the kind of thing that makes me nervous about the credit bureaus), so if I want my score, I have to send a letter with id confirmation, utility bills and etc. ... and wait six weeks.

My reservations with Vantage Scores have nothing to do with the difficulty I'm having actually obtaining that score, though. With FICO scores, if one creditor rejects you using one report, you may have better luck with a different creditor who relies on a different score. With Vantage Scores, it seems to me, you're either universally accepted or screwed. I prefer the flexibility we've had with FICO.

Equifax loses data

You'll notice that I've piled on Equifax here from time to time; they're widely considered the worst of the three major credit bureaus.

They recently demonstrated the truth of that reputation once again. Earlier this week, they announced that a company laptop had been stolen; it contained data on more than half of the company's employees. (link)

Even though this incident only affects Equifax employees, it begs the question; if they can't protect the data of their own employees, how can we be sure they're protecting ours? All the while, they're one of the major companies pushing to limit credit freeze legislation.

A Strapped Generation?

I'm seeing more and more nonsense about the money problems of our younger generations. "Will this be the first generation in American history to be worse off than their parents?"

Maybe. But our parents didn't blow their money on iPods, personal computers, Xboxes & PlayStations, SUVs, digital cameras, plasma TVs, quadraphonic car stereos, cell phones, satellite radio, etc.

My generation seems to think we can live the same lifestyles our parents achieved, but without taking the time to get there. If you're around 30, are you living the way your folks live now, or the way they did when they were your age? Really think about this: did they have cable TV? How often did they go on vacation, or go out to eat?

Our generation isn't really doing worse than our parents, we're just stupider.

The kernel of truth in this generational discussion of debt is student loans. Yeah, college is closer to mandatory now than it was then, and it costs a lot more. And that's too bad, because college is a waste of time for most people; if only more employers would get that and stop looking for B.A.'s from everyone they hire. As for education costs, they'd come down if only colleges & universities had to compete in the free market like the rest of us.

I just don't have any sympathy for the victim mentality that has overtaken people my age. Life isn't harder for us than it was for our parents; it's demonstrably easier.

My only hope is that this supposedly cash-strapped genX/Y crowd will do a better job instilling financial responsibility in their children than the baby boomer generation did. (And than means not delegating the job to public schools, but raising kids to be financially literate.)

Credit Freeze news

I was out of town for a wedding last week and missed this Bizzyblog post about credit freeze legislation. According to Tom,

...federal legislation limiting credit freezes to only cases of known identity theft appears to be rapidly making its way through the legislative process.

This is not good news. Check out Tom's response at the link above and consider writing a similar letter to your own representative.

Telemarketing "credit counselors" busted

The FTC has settled with a debt management firm that posed as a non-profit in order to refer clients to for-profit entities. They also abused their non-profit status to make unsolicited calls to consumers.

This sounds familiar to me. A few years ago another firm like this in Orange County got busted by the FTC for essentially the same thing. The big difference is that this time, the defendant in the case will pay almost $1,000,000 in fines. (It looks like they're not as good at hiding their money offshore as some folks.)

Read the press release here. This is actually good news, because the good guys (nonprofit and for-profit alike) are allowed to help consumers who won't be preyed on by this kind of fraud.

Also note the FTC director's quote that

when it comes to debt-related problems, a ‘one-size fits all’ solution should raise a red flag... Debt management programs work best when they are tailored to consumers’ particular circumstances.

Could this be the beginning of an acknowledgement that settlements might be right for some consumers? And bankruptcy isn't the only answer? I'm glad to see someone echoing the things I've been saying on this blog for a long time.

Study confirms: credit counseling works

This article confirms a lot of things I've known for a long time: credit counseling works, and it doesn't matter whether that counseling is by phone, internet, or face-to-face. The only "right" choice to make with credit counseling is to choose the method that you are most comfortable with, and to get that counseling from an agency that is committed to consumer education and providing counseling with integrity.

Outrage in CT continues

Yesterday I blogged about how important it is to save one's home. Pay your house payment first, before you address any other debts. It's that important.

A lot of people are losing their homes to something more insidious and unstoppable: eminent domain. Even if you make your house payments in full, on time every month, the government can decide to condemn your property and take it.

The Kelo debacle in New London, CT continues, long after the WORM (worn out reactionary media) has moved on. Bloggers are still talking about it, though: here's Bizzyblog's excellent roundup of the Kelo case.

This is extremely important, and we need to be reminded of it often. The Castle Coalition reminds us that June is National Homeownership Month. But homeownership rings hollow when we only own property at the pleasure of the government. Keep this issue in your mind as you decide with whom to do business, upon whom you will waste your vote, and what organizations you will support.