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Posted by on Oct 2, 2009 in TIMES OF TOO LITTLE MONEY | 0 comments

How to deal with those aggressive debt collectors

On the Money From the  October 2, 2009 print edition The United States doesn’t have a debtors’ prison. But in the midst of a recession, repeated calls and threats from debt collectors may make consumers feel psychologically trapped. The economic downturn caused many consumers last year to fall behind on bills and other obligations. As a result of the poor economy, debt collectors become more aggressive in their tactics. For individuals, this usually means they can’t make their minimum payments on credit cards. In financial circles, monthly payments are called “debt service.” When debt isn’t serviced, creditors are less than thrilled. Here are some tips, insights and suggestions for successfully handling creditors and collectors: Don’t take it personally. Remember that a collection call, no matter how unpleasant, is a business transaction – not an assault on your personal character. However, collectors may attempt to intimidate and scare you. Remember that many collectors are paid based upon what they collect. Therefore, keep all conversations to the point, professional and focused on the...

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Posted by on Dec 7, 2007 in TIMES OF TOO LITTLE MONEY | 0 comments

Crunch leads to renewed scrutiny of credit scores

On the Money From the December 7, 2007 print edition The mortgage credit crunch not only is affecting interest rates quoted to home buyers, but also is triggering changes in less-visible areas, such as minimum credit scores — specifically, the ubiquitous FICO score. FICO scores are the product of the Fair Isaac Corp. (founded in 1956 by engineer Bill Fair and mathematician Earl Isaac). The three major credit-reporting agencies supply them. Though there are other scores available, the majority of lenders still rely on the FICO. FICO scores range between 300 and 850. In the past, traditional ratings were as follows: excellent, more than 750; very good, 720 or more; acceptable, 660 to 720; uncertain, 620 to 660; and risky, less than 620. The “Classic FICO” risk scores rank consumers according to the likelihood their credit obligations will be met. However, any model used to predict the future has only one source of information — the past. Credit performance by consumers is no different. In other words, given that the...

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Posted by on Jul 6, 2007 in TIMES OF TOO LITTLE MONEY | 0 comments

Afraid of foreclosure? Here’s what really happens

On the Money From the July 6, 2007 print edition Rating company Standard & Poor’s recently pointed to a sharp rise in late payments and defaults on “Alt-A” home-mortgage loans, a category between prime and sub-prime. S&P found that 4.21 percent of Alt-A loans bundled into mortgage-backed securities last year were 90 or more days overdue after 14 months. That was up sharply from 1.59 percent for loans from 2005 and 0.91 percent for loans from 2004. More borrowers are distressed, facing foreclosure, and could possibly lose their homes. Many may be wondering what that means, how long they have and what they can do. In other words, “How long before we have to get a U-Haul?” Here’s a closer look at the foreclosure process in Colorado, including the timing of major events. Delinquency and default — Technically, a loan is delinquent one day after a payment is due. When no payment has been received for more than 30 days, the loan is in default. However, foreclosure can’t be initiated against...

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Posted by on May 6, 2005 in TIMES OF TOO LITTLE MONEY | 0 comments

The new way to survive a personal bankruptcy

On the Money From the May 6, 2005 print edition President George W. Bush recently signed the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005,(“BAPCOP”). The new law takes effect October 17, 2005. “By restoring integrity to the bankruptcy process, this law will make our financial system stronger and better,” Bush said in a news conference. That sounds reassuring. However, everything in today’s financial and economic systems are intertwined, and no one action provides a complete path toward improvement. The following explores some of the history and implications relating to bankruptcy and the new regulations. The first official laws concerning bankruptcy were passed by England in 1542, under Henry VIII. A bankrupt individual was considered a criminal, subject to criminal punishment. Potential penalties ranged from incarceration to death. U. S. bankruptcy laws for the protection of debtors were first enacted in 1800. However, the foundation of modern bankruptcy law and practices in the United States began with the Bankruptcy Act of 1898. The economic turmoil of the late...

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Posted by on Oct 1, 2004 in TIMES OF TOO LITTLE MONEY | 0 comments

Who ‘slips out the back’ when bankruptcy arrives at the door

On the Money From the October 1, 2004 print edition In the 1975 song “50 Ways To Leave Your Lover,” Paul Simon sang, “Just slip out the back, Jack, Make a new plan, Stan; You don’t need to be coy, Roy; Just get yourself free; Hop on the bus, Gus; You don’t need to discuss much; Just drop off the key, Lee; And get yourself free.” The financial equivalent of those lyrics is the US Bankruptcy Code, specifically Title 11 of the U.S. Code.. For example, “Slip out the back, Jack” could mean Chapter 7 liquidation, “Make a new plan, Stan” might be Chapter 11 reorganization. Here’s a closer look at the corporate bankruptcy process. Federal bankruptcy laws govern how companies shut down or recover from crippling debt. The company that’s in trouble-the “Debtor,”–might use Chapter 11 of the Bankruptcy Code to “reorganize” its business and try to become profitable again. Management continues business operations but all major business decisions must be approved by a bankruptcy court. Under Chapter 7,...

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Posted by on Nov 1, 2002 in TIMES OF TOO LITTLE MONEY | 0 comments

A few do’s and don’ts for dealing with a cash crunch

On the Money From the November 1, 2002 print edition According to the Cambridge Dictionary of American English, “crunch” is defined as: a difficult situation which forces you to make a decision or act. Crunch time is a point at which something difficult must be done. For example, He plays fine without pressure, but can he produce at crunch time? When there isn’t enough cash to pay current obligations, it’s polite to say “We’re having a cash crunch.” That is, we’re in a difficult situation requiring hard decisions about how to disperse the cash that is available. In order to make survivable decisions during a cash crunch, various factors must be considered: legal, operating requirements, staff retention, and public relations to name just a few. Some of these factors are lofty and rather strategic in nature; others just plain survivorship. In fact, if you are contemplating the mixture of spending between inventory and sales activities, some may say “you don’t know what a genuine cash crunch is.” The crunch is really on...

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