Nov 21, 2008

Debt Information

    • Debt Help USA No matter what your financial problems, there are methods, means, and if required, Certified Credit Counselors available to provide you with a fresh, stress-free beginning.
    • Debt Comparison According to the Federal Reserve, 43% of American families spend more than they earn.
    • Debt to Income Ratio Your debt to income ratio is another indicator of your current level of indebtedness and the potential you may have for future debt problems
    • Debt Management Debt management runs the gamut from creating a budget to filing for bankruptcy but in every case you must begin with an honest look at your debt problem.
    • Debt Management Budget A budget will provide you with a cold, hard look at your financial situation and is recognized as the first step in effective debt management.
    • Debt Warning Signs In addition to your debt to income ratio, there are several warning signs that it may be time to seek professional help.
    • Debt Consolidation When you consolidate debt, you usually combine several high-interest debts into one debt management plan payment at lowered interest rates
    • Credit After Debt Consolidation Pay your bills on time. The credit scoring system first considers your payment history
    • Recently, Bank of America purchased credit card firm MBNA and Citibank began gobbling up retail store cards. Only the future will tell how this will affect consumers
    • Consumer Debt Some consumer debt statistics published on the Internet are misleading.
    • Credit Card Debt Almost half of the citizens of the United States of America suffer with credit card debt.
    • The Federal Reserve System If you're wondering why you pay such high credit card interest rages, read up on Interest Rates and the Federal Reserve.
    • Loan Shark or Loan Officer In my humble opinion there is very little difference between the despicable loan shark and my friendly loan officer at the neighborhood bank.
    • Credit Counseling & Banktuptcy Individuals who wish to file a bankruptcy petition are now required to undergo credit counseling.
    • Credit Counseling Services Certified credit counselors assist you in getting your debt under control. They provide you with the information needed to manage your finances into the future, to build wealth, and to create and maintain personal financial independence.
    • Credit Counselor Requirements Last year, the House of Representatives and the Senate each passed a different bankruptcy reform bill containing wide-ranging changes in the bankruptcy laws applicable to individuals.
    • Debt Repayment Plans Nonprofit credit counseling services offer a variety of services that may include counseling, debt repayment plans, and education.
    • How Do Credit Counseling Services Operate? The organizations receive funds from creditors in the form of a negotiated percentage fee based on payments transmitted to the creditors through clients' debt repayment plans.
    • Standards for Approval The United States Trustee Program develops standards for approval of credit counseling services throughout the country.
    • Free Credit Report You are now able to obtain a free annual credit report from each of the nation wide consumer reporting companies.
    • Free Credit Rating Report Everyone has seen it on the Web. Get your “Free Credit Report! Instantly!” And with a click of a mouse you get sucked in and scammed by one of the many credit report “impostors” that have infested cyberspace.
    • Your Access to Free Credit Reports The Federal Trade Commission’s position on your Access to Free Credit Reports
    • Bankruptcy Some can’t get past the stigma, others see bankruptcy as a tool but the majority of people filing for bankruptcy are decent folk like you or me.
    • Bankruptcy Facts In the year 2003, one in every 73 American households filed for bankruptcy.
    • Famous Bankrupts “You're fired!” That’s right the Donald himself fell pray to the bankruptcy courts!
    • Bankruptcy Court The objective of a bankruptcy court is to give an honest debtor a "fresh start" by relieving them of the majority of their debt
    • Bankruptcy Documents These are the documents that you need to start your bankruptcy.
    • Bankruptcy Law The new bankruptcy law will affect all people filing for bankruptcy
    • Credit Counseling Requirement Individuals who wish to file a bankruptcy petition are now required to undergo credit counseling through an approved credit counseling service within 90 days before filing the bankruptcy petition.
    • Chapter 7 Bankruptcy The court liquidates all of your assets and dispenses them amongst your creditors in exchange for erasing your debt.
    • Chapter 11 Bankruptcy A Federal Bankruptcy Act where a business debtor can maintain control of its business and operations, under court supervision, as long as current debts remain paid.
    • Chapter 13 Bankruptcy In a Chapter 13 agreement, the court enforces a debt repayment plan that allows you to keep your property.
    • Filing for Bankruptcy: All the rules have changed as of the April 20, 2005
    • Involuntary Bankruptcy There are occasions where your creditors may petition for an involuntary bankruptcy against you.
    • United States Trustee Program The United States Trustee Program is the component of the Department of Justice that protects the integrity of the nation's bankruptcy system.
    • The Federal Reserve System There is much confusion regarding the Federal Reserve System. The Federal Reserve System operates like a private corporation.
    • Fed Boosts Rates Again August 9, 2005: The Federal Reserve raised the target for a key short-term interest rate by a quarter of a percentage point for the 10th consecutive time Tuesday. The move was widely expected on Wall Street, as several recent economic reports have indicated that the economy remains relatively strong.
    • Fed hikes rates, says Katrina impact appears temporary Federal Reserve policymakers lifted their base rate by a quarter-point to 3.75 percent, saying that Hurricane Katrina is likely to have only a temporary impact on the US economy. It was the 11th consecutive rate hike by the central bank's Federal Open Market Committee, which devoted much of its statement to Katrina's impact.
    • Loan Shark or Loan Officer A loan shark is a person (usually mob connected) that loans money at interest rates exceeding the interest rate allowed in a given state. These amoral, unethical gentlemen make their own rules and levy late penalties as they wish without concern for the debtors' health or well-being. These ‘businessmen’ are guilty of the crime of usury; a moral and ethical crime that targets the new middleclass, the working poor.
    • U.S. Interest Rates by State The maximum legal interest rates, by state. Where, exactly, are the headquarters of the major credit-card companies? Hmmmm …

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Interest Rates


Fall 2005
Debthelp-USA

Just Who Sets Interest Rates Anyway?

“With mortgage rates at an all time low, why are my credit card interest rates at an all time high?”

Answer: The Federal Reserve sets short term interest rates. These are the rates that banks are charged when borrowing money from the Fed or each other. About every 3 months in 2005, the Fed raised the short term interest rate which in turn has raised the prime rate for business and consumer loans. It is expected that the short term interest rate will continue to move a quarter percentage upward until the ‘neutral level’ of 4% is reached which means the increase in the short term rate is expected to continue into 2006.

Credit Card Interest Rates:

Many of you may be wondering if the bank’s prime rate is low, then why are we paying such exorbitant interest rates on our credit card bills? The answer is, because the banks and credit card companies can get away with it! Loansharks vs. Loan Officers

The fact is the Fed has no say in the matter. In an effort to charge the highest of interest rates, credit card companies moved their head offices to states with no usury laws on the interest charged on your credit card purchases. The banks then lobbied government to allow them the luxury of charging whatever their home state allowed in any state of the union regardless of a particular state’s constitution preventing this abuse from happening.

Their excuse for these elevated rates is that credit card debt is unsecured, meaning that the lender has no collateral to collect should the debt go into default. To protect themselves, the banks and credit card companies charge interest rates that were considered to be usury in many states. There is little that we can do as citizens (other than not using credit cards) than contacting our Congressperson and expressing our contempt for the obscene rates charged on credit card purchases. Find your senator's contact information

Mortgage Rates:

As short term interest rates have steadily increased, mortgage rates have surprisingly done just the opposite, falling to their lowest level in more than a year. Add to this historically low mortgage interest rate the new phenomenon of ‘no down payment’ or ‘interest only’ mortgages and you have what is considered to be a real estate boom.

A full 22% of the economy’s growth in the last quarter was directly attributed to housing. This is beginning to be a concern to the Fed as some real estate markets are reaching the point of unsustainability. The Fed’s short term interest rate increases have little direct influence on today’s mortgage rates. It will take a series of increases over time for the Fed to have any appreciable effect on mortgage rates. When this occurs it will affect those homeowners that fell prey to the popular ‘teaser’ mortgages of the day.

Mortgage rates are controlled by the global bond market not the Fed. The bond market dictates long term interest rates just the way stock markets arrive at stock prices, by a high or low bid. The Treasury sells bonds every 3 months. The more demand for a Treasury bond the higher the price. Recently, bond investors were reassured by the Fed’s tough stance on inflation resulting in higher bids. Higher bids means the Treasury pays less interest to sell them. Because the global bond market is so huge, other long term interest rates, like mortgages, will follow suit. When mortgage rates climb higher is unknown but be assured that they will increase and many homeowners will find themselves in dire straits.

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