Archive for April, 2016

Credit Card Challenges

Sunday, April 24th, 2016

We’ve all be subject to the retail store that offers a discount if we sign up for the store credit card. We gotten the mail and emails credit cardstalking about promotions like low interest for the first six months, or a low interest rate for transferred balances.

Watch out for the deferred interest they will charge you if you don’t pay off the full balance transfer amount when the promotional period ends.

Watch out for the fees they charge for “late payments, going over your balance, cash advances, balance transfers, membership in “rewards” programs, etc., etc., etc.

*** Fixed for the first month, but after we may change it without notice for: late payments, going over your balance, changes in the prime rate, or just cause we want more of your money.

**** Rate depends on your credit score. (Which we already checked and intend to charge you 19.8% or we wouldn’t bother sending you this great***** offer.)

***** A payment may be late if we just don’t get around to processing it in time no matter when you actually mailed it to us.

****** May not be great in all states.

Yes, folks, “the devil is in the details” and the truth is in the fine print.

While this is obviously an exaggerated and fictitious example I have seen most of these “weasel” clauses in the 100s of credit card offers I receive each year.

Some of these tricks and traps are practiced by local and national merchants with their “store credit cards” and “discount cards”.

I have seen stores and even car dealerships make “no interest for a year” type announcements and advertisements. But when you actually read the contract (and who does that – they count on you to not read the whole thing and you probably won’t understand it without your attorney) you may find that instead of the regular payments you would expect to start at the end of the no interest period, you are required to pay the full purchase price.

If you want to make installment payments, you will be required to pay the payment plus the interest (look for the rate in the fine print) and you may also be required to pay the interest that accrued during your “interest free” period. Gotcha!

Or how about the “no annual fees” bit. Look out for the contract to say “no annual fees FOR THE FIRST YEAR”. Or first two years or that a “membership” fee is required. How that differs from an “annual fee” is beyond me.

Also watch out for the “no annual fees” for the use of the card but “membership fee required” to participate the in frequent flyer miles or cash back points program (which was probably why you chose that card to begin with). Gotcha!

And how about the “fixed” rate? Read the fine print, it will actually say “subject to change without notice”. Is it just me or do I misunderstand the meaning of the word “fixed”?

Also your “fixed” rate may be raised to the “maximum allowable by state law” if you go over your credit limit (including fees that may put you over your limit before you even know it), make a late payment, miss a payment or do not pay the full amount. Gotcha!

And then there is that low “teaser rate”. Yes that’s what it is called in the industry and it is appropriately descriptive. That rate is given out, they aren’t lying about that. But it is only given to the people who have 700 or above credit scores, minimal debt, and a high paying job.

The majority of the people who are sent the ad will not get the lowest rate. But you won’t know your rate until you apply for the card. But by the time they tell you what rate you will be at they have already signed you up and issued your card.

They count on the fact that most people will just accept the rate and go from there. Gotcha!

So how can you avoid these traps?

Rule #1, read ALL of the fine print. If you are not clear on something ask someone else what they think it means. Ask an attorney friend, CPA (certified public accountant), financial planner, banker or other person in the financial industry. Chances are they will have several questions about the fine print, too.

Rule #2, don’t apply for a card unless or until they tell you what your actual rate will be. This is hard because most of them are not set up to tell you. Generally you will need to know your credit scores and have a copy of your credit report handy.

Even then you are unlikely to find someone through their telephone maze that will or can actually answer your question. Try to find a card that gives you a confirmed rate before you apply. A conscientious company will first request a copy of your credit report from one of the credit bureaus before quoting you a rate.

Look on http://www.bankrate.com for current rates offered by various credit card companies and banks. Often smaller banks and companies offer better deals and are not as strict or hard to deal with. Check with your local banks also. At least with a locally issued credit card “you know where they live”.

Rule #3, always mail your payment at least 7 days before it is due. Or try paying through the Internet. Many companies now offer that payment method. It can also save you time and stamps.

Rule #4, check your statement each month to be sure you are still at the interest rate you signed up for. If your rate has been increased, look for a late payment fee, or some other reason for the increase. Call the company and ask them why they increased your rate.

If your rate was unjustly increased (they processed the payment late or credited it to your account late, but it was not received late) then ask them to change your rate back to what it should be.

Even if you did make a late payment, most companies will reduce your rate after six months of on-time payments. But if you don’t ask, they will keep you at the higher rate as long as they can.

In the credit card business it is definitely buyer beware!

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.

Your Spouse and Bankruptcy

Sunday, April 17th, 2016

Refer the bankruptcy Network

Your spouse’s credit will not be affected by filing a bankruptcy unless you owe money jointly with your spouse. Furthermore, if you and your spouse jointly owe a debt that remains current, your spouse’s credit should not be impacted. I will speak specifically about spousal debt, but of course, this article also applies to all joint debtors, whether married or not.

Joint debt?

Often, my clients are unsure whether they have any joint spousal debt. The key is whether both spouses agreed to be liable. A person is liable for a debt only if he signs an obligation such as a revolving credit card application or a financing agreement. With respect to credit cards, spouses often carry the same credit card in their wallet, but that doesn’t mean they are both liable for that card.

My wife and I have a credit card that accumulates reward points, and we try to use that card exclusively. However, I am the only one who signed the credit application, and I requested that the issuer send a card in my wife’s name. That means she is a “permissive user” rather than a “joint obligor.” That also means I am the only one responsible for that credit card balance, regardless of whether my wife makes purchases with the card and signs receipts.

With respect to a house or a car, it can be confusing because there are multiple documents involved. A homebuyer will sign no less than a dozen documents at a typical closing.

The most important of these home-closing documents are the mortgage note, the deed and the mortgage, but there is only one document that determines whether a joint obligation is created. A mortgage note is the obligation to pay, and often only one spouse executes a mortgage note. That spouse is the only person legally obligated to make the house payment.

I often have clients concerned because their spouse signed the mortgage. If a non-obligated spouse is on the deed, he has an ownership interest in the collateral (the home) that secures the loan. The non-obligated spouse signs the mortgage because he is pledging his interest in the house to guarantee the mortgage note. In essence, he’s saying, “To the extent I have an ownership interest in this house, I pledge it to the bank to guarantee my spouse will make all the payments.”  Because he did not sign the promissory note, he is not liable, and the debt will not appear on his credit.

Both the mortgage and the deed are recorded in the official records of the county in which the house is located, and those documents are usually accessible online. The mortgage note is never recorded, and if the buyers misplaced their copy of the closing documents (it happens), it is not easy to determine whether the debt is a joint obligation. In this situation, one clue is the monthly bank statement. The lender or servicer only addresses the monthly statement to the obligor. So, if both spouses are on the bank statement, they are probably both liable for the debt. Of course, a credit report should also reveal whether a spouse is liable on a home loan.

Joint debt that remains current

If a spouse is jointly obligated to pay a debt (a home loan, for instance) with a bankruptcy filer, and that debt is current, is the non-filing spouse negatively impacted on her credit? There is a theoretical answer and a realistic answer.

Theoretically, the non-filing spouse’s credit should not be impacted whatsoever, but that is not always the case. Realistically, the mortgage lender will note in its file that the debt is “in bankruptcy,” and that notation will sometimes carry over onto both credit reports, even if the mortgage note is up-to-date.

It doesn’t seem fair that a creditor would report anything other than “paid as agreed” if the debt is current, but that’s what creditors do.

Both the debtor and her non-filing spouse should contact the three credit reporting agencies and dispute the trade line. We consumers can notate our credit files to ensure that they reflect the most accurate information, including the fact that a mortgage or automobile note remains current.

The possible impact a bankruptcy would have on a joint debtor is one of the many factors in determining the best course of action. An experienced bankruptcy lawyer can analyze the “big picture,” and help guide a debtor through such financial considerations.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.

Payday Loans

Friday, April 8th, 2016

We’ve all driven by the stores – Amscot, check cashing service, Allied Cash, Check Smart, etc. We’ve seen ad on TV promising “up to $500 cash loan with no credit”. The following is from the Bankruptcy Network.

loan

More often than not these days, people who are considering bankruptcy have taken out one or more Payday Loans.

Generally speaking, a Payday Loan (also referred to as a Cash Advance Loan) is a small loan that at least in theory, is paid off by the borrower’s next payday.

The borrower goes to the Payday Lender, gives the lender some proof of actual employment, and then gives the lender a postdated check for the amount they want to borrow plus the fee  for the amount they borrow.  The lender then gives the borrow the money, less the fee and agrees to hold the check until the borrower’s next payday.

When the loan becomes due at the next payday, the lender either deposits the check (often the borrower agrees to permit the lender to automatically withdraw from the borrower’s bank).

So, what happens when payday rolls around and you need the money for something else?

Well, your friendly Payday Lender agrees to hold the check until the next payday, for an additional fee.

Borrowing money this way is expensive.  How expensive?

The Federal Trade Commissions, Bureau of Consumer Protection provides an excellent example, pointing out that if you borrow $100.00 from a Payday Lender with a charge of $15.00 and roll the loan over once for another $15.00 fee and then pay off the loan, you just paid 391% interest to borrow $100.00 for a month.

The reality is that most Payday Loans are for a range of $300.00 to as high as $500.00 with much higher fees.

What can and can’t a Payday Lender do if you don’t pay back the loan?

One Thing They Can’t Do Is Put You In Jail!

At least they probably can’t!

Why can’t they?

Because when the Payday Lender takes a post dated check it knows that the money is not in the bank.

If you go to a store and knowingly write a bad check, that is a crime, and if a District Attorney can prove that you wrote the check knowing that you didn’t have the money in your bank account you will be fined, and even perhaps go to jail.

This is because of what you intended to do when you wrote the check.

The store owner had every reason to believe the check was good, the Payday Lender does not.

The Payday Lender Knows It Is Taking  A Bad Check, and you wrote the check with every intent on paying back the loan.

It is unlikely the a DA will ever accept charges for a bad check under these circumstances.

I should point out that if someone were to write a check to cover a Payday Loan and then immediately close the checking account, that the DA might look at the issue a little more closely.

What Can A Payday Lender Do?

  • They can call you to demand payment.  Repeatedly and relentlessly!
  • They can simply attempt to cash the check, or if they have authority to automatically withdraw the money, they will, with the likely result of overdrawing your checking account.
  • They can sue you, and get the amount owed, court costs interest and attorney’s fees.
  • They can garnish your wages once they have a judgment.
  • They can turn the debt over to a debt collector.

Very rarely does someone go to a Payday Lender as their first borrowing source.  Payday loans are often a sign that an individual is in a bad financial situation.

Payday loans can be discharge in bankruptcy.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.