Debt Management & Frugal Living by David Giller Esq.

VIDEO: Getting Out of Debt

2012-02-26T08:41:00.000-08:00

Looking to get out of debt?

Watch this video regarding paying down debt, saving money and improving your credit score, from TransUnion.

What is the "Fair Credit Reporting Act"?

2012-02-26T07:34:00.000-08:00

The Fair Credit Reporting Act (FCRA) is an American federal law (codified at 15 U.S.C. § 1681 et seq.) that regulates the collection, dissemination, and use of consumer credit information. It, along with the Fair Debt Collection Practices Act (FDCPA), forms the base of consumer credit rights in the United States.

Fighting Foreclosures: "Produce the Note"

2012-02-26T07:32:00.000-08:00

One of the most common strategies to fight a foreclosure case is by asking the lender to produce the note.

This clip from CNN highlights the issues involved when homeowners pursue this strategy, and the ultimate goals that are often achieved through it:

What is the "Truth in Lending Act" (TILA)?

2012-02-26T07:25:00.000-08:00

Wikipedia actually does a good job explaining the Truth in Lending Act. For your convenience, the definition is provided below:

The Truth in Lending Act (TILA) of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.

TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires uniform or standardized disclosure of costs and charges so that consumers can shop. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and certain higher-cost mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.

What is the "Equal Credit Opportunity Act" (ECOA)?

2012-02-26T07:24:00.000-08:00

Credit is used by millions of consumers to finance an education or a house, remodel a home, or get a small business loan.

The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This doesn’t mean all consumers who apply for credit get it: Factors such as income, expenses, debt, and credit history are considerations for creditworthiness. Also requires lenders to consider ANY information provided by the consumer that reflects his or her creditworthiness.

The law protects you when you deal with any creditor who regularly extends credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Anyone involved in granting credit, such as real estate brokers who arrange financing, is covered by the law. Businesses applying for credit also are protected by the law.

The Equal Credit Opportunity Act, and the Federal Reserve Board’s implementing Regulation B, prohibit discrimination in any aspect of a credit transaction on the basis of:
· Race
· Color
· Religion
· National origin
· Sex
· Marital status
· Age (provided that the applicant has the capacity to enter into a binding contract)
· Receipt of income from a public assistance program
· The good faith exercise of any right under the Consumer Credit Protection Act

What is "Truth in Savings"?

2012-02-26T07:21:00.000-08:00

The Truth in Savings Act (TISA) and the Federal Reserve Board’s implementing Regulation DD require the clear and uniform disclosure of the rates of interest, annual percentage yields, fees, and other account terms for deposit accounts offered by depository institutions. These disclosures assist consumers in meaningful comparisons between the competing claims of depository institutions with regard to deposit accounts. All fees must be disclosed and an account cannot be advertised as a free checking account if there are hidden fees or a minimum balance requirement.

Why Would A Lawyer Turn Away A Particular Client?

2012-02-24T06:07:00.000-08:00

As a second year law student, over 20 years ago, I'll never forget our professor for Ethics & Professional Responsibility who kept repeating the phrase "A lawyer is not a bus."

He spent a considerable amount of time (if not the entire semester), explaining to us that while a lawyer's job is certainly to zealously represent his clients, it is also imperative for the lawyer to ensure that logic, reason, rational judgment, and certainly the law, are not ignored or given less consideration in all decision-making, due to persuasion or fees coming from the client.

The phrase "A lawyer is not a bus" means that just because someone walks into your office with a check, does not necessarily mean that you are obligated to accept that fee and represent the client, while ignoring ethics, rules for professional responsibility, and logical judgment.

I have been in many situations where potential clients approached me with unreasonable expectations, an unrealistic understanding of what options are available to them to negotiate their credit card debts, defend them in a foreclosure case, or pursue a mortgage modification on their behalf.

Clients often feel that since they are providing the fees, then the lawyer must represent them.

I recently received a newsletter from CNA, a professional liability insurance carrier for attorneys, which highlights some key reasons why attorneys should decline representation of particular clients.

Below is are some key takeaways:

Clients with unrealistic expectations

Example: Clients who have not made a mortgage payment in two years, whose only source of income is unemployment benefits, with no money in the bank, yet these clients are interested in pursuing a mortgage modification, so that their current mortgage payment of $3,500 per month is more affordable.

When doing some financial analysis of this client, I determine that their current monthly cash-flow only leaves them with $50 per month towards a mortgage payment.

Sorry, but that's not going to fly.

Dishonest clients

Example #1: After our initial conversation, I ask clients to provide me with information regarding current household income, asking for paystubs and proof of all other income for the past 6 months. Client says "no income."

We proceed to prepare the client's bankruptcy petition. Before filing it, I reach out to the client in order to confirm that they truly have no income.

"How do you buy groceries?"

"How do you put gasoline in your car?"

Client responds with: "Oh, I earn $____ per week and my husband earns $____ per week."

At this point, I remind the client that I asked them repeatedly regarding all household income. I provided them with a written intake sheet inquiring about household income, and I provided them with a folder, clearly marked with a section to insert their paystubs. All prior information indicated that there was no income.

I told this client that until they provide me with paystubs for all sources of income for the last 6 months, I will not respond to their phone calls or emails.

Example #2: I ask clients about all real estate that they own. Client informs me that he does not own any real estate. I do a public records search only to reveal that the client has several pieces of property, which he rents out.

Within several hours, I packed up the client's file, wrote out a refund check, and informed the client that (a) I will no longer represent him and (b) considering the amount of real estate that he owns, and the amount of his rental income, he no longer qualifies for bankruptcy.

Uncooperative or argumentative clients

Example #1: Prior to filing any bankruptcy petition, I review all of my clients income, expenses, debts and assets - which include not only real estate but other personal property that they own, including the contents of their home. I have my clients complete a thorough intake form which asks for these details, I verbally ask for confirmation, and after I prepare their bankruptcy petitions with this information, I have my clients review and acknowledge the truth and accuracy on each page.

Both husband and wife assure me that aside from regular household furnishings, their home has nothing but "junk" in it.

Prior to the Meeting of the Creditors, where the Bankruptcy Trustee will review my client's petition with them, asking them to validate the truth and accuracy of the contents, I meet with my clients to (once again) review their bankruptcy petition, and I even provide them with the script of questions that the Bankruptcy Trustee was trained with, so that they can anticipate exactly what questions will arise.

When we sit before the bankruptcy Trustee, who asks them about the contents of their home, my client says:

"Oh, we have collections of art - including drawings, paintings and photography."

The Trustee responds with: "Are there any other collectibles that you might have at home?"

My client says: "Yes, we have many books that are autographed by the author."

The Trustee informs me that he will have to hire an appraiser to visit my client's home in order to assess the value of these items, to which I respond: "By all means!"

Later that day, I asked my client why her response to me was different than the response to the Trustee. She informed me that since I asked her to be completely truthful and honest in answering all questions, she felt that she had no choice but to respond in the manner that she did.

I asked her: "Why, on earth, were you not as forthcoming with me, when we prepared your bankruptcy petition, when I had you review and sign your bankruptcy petition, or when we prepped for this meeting before we ever sat in front of the Trustee?!"

Needless to say that the Trustee DID send an appraiser to my client's home, the appraiser confirmed that my client was simply a hoarder of worthless junk, and in spite of my client's self destructive behavior, I was able to successfully get them through the bankruptcy process and they did not have to surrender any of the junk that they were storing in their home.

As a side note, in this particular case, I actually encouraged the Trustee to arrange for a moving company come to my client's home, and collect their collection of junk and put it straight in the dumpster, as he would probably be doing my client's a major favor in the process. He decided to pass.

Example #2: At one point I represented a woman who called me in a panic because she had just found out that her house was going to be sold within a few days at a Sheriff's Sale.

I said: "If your house is going to be sold in a few days at a Sheriff's Auction, then that means your home was in foreclosure for the past year or two, and you probably didn't make mortgage payments for about a year prior to that."

She said: "Yes, apparently that is exactly the case, but I didn't know anything about it until now, because my husband was confiscating all of the mail, and he hid this from me for the past few years. I didn't know that he wasn't generating any income and he was borrowing money from all over the place and living off of credit cards this whole time. Please help me!"

I made it clear to her that her options were limited, but I would due happy to help to the extent possible.

Unfortunately, because the house was jointly owned, I was now representing both husband and wife.

I convinced the attorneys for the lender to work with me, to help delay the Sheriff's Sale while my client explored the possibility of one of her family members coming up with the cash to pay the entire arrears within a few days.

Of course, shortly thereafter, the husband entered the picture and he insisted on meeting with me and talking to me on the phone several times a day, trying to convince me that he has the entire situation under control, and he has several hair-brained schemes to resolve the situation within a few days.

Unfortunately, the husband kept insisting that he knew the law, and the "inner working of the mortgage industry" far better than I did.

I was receiving repeated phone calls from the wife crying about trying to save her house, and then calls from the husband insisting that I not communicate with the attorneys for the lenders whatsoever.

In the end, I had to terminate my relationship with these clients and get out of their way so that they can self-destruct on their own.

The un-winnable case

Example: Several times a week I receive phone calls from clients who are earning minimal income, they are in foreclosure, and they believe that they are entitled to a mortgage modification based on radio ads, or some snippet they saw on the news regarding HAMP and vague statements made by President Obama.

I point out to these clients that while mortgage modification is entirely voluntary, there are no laws or other requirements forcing any lender to provide a mortgage modification - outside of bankruptcy.

When I discuss the client's overall income and debt situation it becomes clear that their foreclosure is only a small snippet of their debt issues, as they have anywhere from $20,000 - $250,000 of additional debt.

I point out to them that if they were earning more income a Chapter 13 bankruptcy would allow them to create a viable payment plan which would make their foreclosure case disappear and provide them with the option to keep their home, while possibly eliminating their second mortgage entirely.

However, due to their limited income, Chapter 13 bankruptcy is not an option, and only Chapter 7 bankruptcy would work, by eliminating all of their unsecured debt and perhaps allow them to focus all of their income towards their mortgage.

Typically these clients don't want to consider bankruptcy, and only want an attorney to get them a mortgage modification.

Based on those fact patterns, this is clearly an un-winnable case.

What Does It Mean To Do A "Cramdown" In A Bankruptcy Case?

2012-02-22T21:10:00.000-08:00

In the context of a bankruptcy case, a cramdown is a legal term, used to describe a scenario when the Bankruptcy Court reduces the outstanding amount owed on a particular debt to match the current fair market value of the collateral associated with that debt.

One example of a cramdown is where a debtor owns an investment property, which currently has a mortgage of $400,000, but the current fair market value for that same property is $100,000.

In a chapter 13 bankruptcy, we can cram down the outstanding debt to the current fair market value, so long as the debtor can repay the cram down amount through the 5 year repayment plan.

What Is "Conversion" In A Bankruptcy Case?

2012-02-22T21:00:00.000-08:00

Conversion in a bankruptcy case is when a bankruptcy case starts off as a bankruptcy case seeking protection under one chapter of the bankruptcy code (ex. chapter 7) but then later converts to seek protection under a different bankruptcy code (ex. chapter 13). This is outlined in the US Bankruptcy Code, 11 U.S.C. Section 706.

Why would this happen?

Suppose someone files a chapter 13 bankruptcy, expecting that their current household income is sufficient to pay off their secured debts and arrears on their secured debts over a 5 year period. The chapter 13 bankruptcy case is progressing along appropriately until the debtor suddenly loses his job, and as a result, his income drops significantly during the 5 year repayment period.

At this point, the debtor is unable to continue making his monthly payments, and will likely want to convert his chapter 13 bankruptcy case into a chapter 7 bankruptcy case, whereby he would not be required to make any further payments as previously expected in the chapter 13 bankruptcy case.

VIDEO: Frugal Living: Live Without Buying Anything New

2012-02-22T07:41:00.000-08:00

Could you imagine living a year without buying anything new?

That means either:
- holding off on purchasing an item altogether,
- finding another alternative,
- buying the same item - USED,
- repairing a similar item that you already own.

I know, many people would consider this to be a crazy concept. …However, didn't most of our parents and grandparents consider this the norm?

What Does It Mean To File A Bankruptcy Case In "Bad Faith"?

2012-02-21T21:20:00.000-08:00

Filing a bankruptcy case in "bad faith" means that the person who filed the bankruptcy case is simply trying to exploit the bankruptcy process, the court system and some of the laws that are meant to help people for whom the bankruptcy laws were designed.

An example of a bad faith filing is when someone files a Chapter 13 bankruptcy case, yet they don't have the stable monthly income in order to allow them to reasonably pay the expected monthly payments as indicated in the bankruptcy petition.

Another example of a bad faith filing would be if someone filed an incomplete Chapter 7 bankruptcy case simply to thwart a pending Sheriff's Sale on their foreclosed home, or to stall some other collection lawsuit or wage garnishment.

In each of these scenarios, if the debtor is unable to file a complete, accurate and thorough bankruptcy petition, while substantiating their income, assets, debts and monthly expenses as dictated by law - then the bankruptcy case will inevitably get dismissed and the collection efforts by the creditors (including lawsuits, wage garnishment, levies, etc.) will continue as they had before.

If any creditor can convince the bankruptcy judge that the bankruptcy petition truly was filed in bad faith, there is a possibility of the debtor, as well as their attorney, getting sanctioned by the court with additional fines and penalties for abusing the legal system.

VIDEO: 60 Minutes Spotlight on Unemployment in 2012

2012-02-20T18:33:00.000-08:00

Over this past weekend, I had a chance to spend some time with a fellow attorney who happens to be a close friend for the past 18 years.

He mentioned to me that he is currently responsible for handling foreclosure cases for his firm, representing lenders who need his assistance in situations where homeowners have not paid their mortgage for an extended period of time.

Considering that I represent those homeowners who are facing eviction on their homes in the foreclosure crisis, I asked him if he is able to prove that his clients actually have the assignments, the notes and the mortgages proving that they have the right to sue the homeowners.

He said: "Give me a break. The homeowner hasn't paid their mortgage in a year or two. If they haven't paid their mortgage, they simply need to pay up."

I said: "Wait a minute. I'm not claiming that these homeowners have truly been sending in mortgage payments, but the lender is somehow misplacing them. I'll agree that my clients, due to unemployment, illness, job loss, downsizing, have fallen behind in their payments. Let's assume that they haven't paid their mortgage in a year or two. As far as they are concerned, they owe their mortgage payments to Bank of America, JP Morgan Chase, Wells Fargo. All of a sudden they are getting sued by some trust they've never heard of. Are you able to prove that your clients have the legal right to sue this homeowner on this house, for this mortgage? Are you able to prove that the mortgage and the note were properly transferred over to your client, who wants to foreclose on these clients?"

He said: "That's irrelevant! These people have to pay up."

I responded: "These clients are typically ready to give back their homes because they don't have money for groceries. They can't afford their utility bills. They can't even afford the property taxes. How do we know that they should be surrendering the home to your client, versus transferring it over to me? Maybe Wells Fargo really transferred the mortgage to me and not your client?!"

He said: "My client doesn't want the house. They just want the money."

Apparently, my close friend and I were talking in circles, as he was clearly focused on representing his clients in foreclosure regardless of whether or not they could prove proper standing to sue. While I tried to get him to understand these fundamental and basic issues, while also explaining that these clients did not have any money to pay the arrears on the mortgage, these were concepts that were too foreign for him to grasp.

Instead of further belaboring this point with my friend, I decided to change the topic of conversation, while concluding that hopefully opposing counsel and hopefully judges will quickly enlighten him on these concepts.

I bring up this issue because I believe that one of the many concepts that arose during our conversation was the simple idea, which is difficult for stable, full-time, employed professionals to grasp is….unemployment and the dire financial crisis in our country…in our communities…in our local towns…is serious. It is real.

I would like to share with you this recent segment from 60 Minutes, because I believe that it will help enlighten others as to the background, mindset and circumstances surrounding those individuals who have not been able to make a credit card or auto loan payment in 2 years, who have not been able to make a mortgage payment in 3 years, and are struggling to get by and manage on a day to day basis. These are not people who are trying to scam any system. These are highly intelligent, well educated professionals, who have fallen into deep financial troubles due to unemployment…often coupled with family illnesses and depression.

What Is An "Automatic Stay" In Bankruptcy?

2012-02-20T16:07:00.000-08:00

The Automatic Stay is an injunction which automatically stops all lawsuits, foreclosures, garnishments, and all collection activity against the debtor (the person who files for bankruptcy) the moment that the bankruptcy petition is filed.

What Does It Mean To "Amortize" A Debt, Or To Make "Amortized" Payments?

2012-02-20T16:03:00.000-08:00

To amortize means to pay off a debt in installments, made over a period of time.

What Is An "Affirmation"?

2012-02-20T16:02:00.000-08:00

An affirmation is a declaration, oath or a promise made by a person.

What Is An "Affidavit"?

2012-02-20T16:00:00.000-08:00

An affidavit is a written statement of facts that are confirmed by the oath of the individual making it.

What Is An "Adversary Proceeding" In A Bankruptcy Case?

2012-02-20T12:56:00.000-08:00

An adversary proceeding is essentially any lawsuit that is initiated as part of a bankruptcy case.

What does that mean?

When someone files a bankruptcy case, one of the creditors (credit card company, mortgage company, of even the Trustee) might raise particular issues disputing the position assumed by the debtor (the person who filed the bankruptcy case).

A mortgage company might dispute the income and assets of the debtor.

A mortgage company might dispute the assessed value of the debtor's property.

Any creditor might dispute whether or not the debtor should be entitled to bankruptcy protection altogether.

In order to initiate these types of disputes, one would have to start an adversary proceeding in the bankruptcy court.

What Is "Abandonment" In Bankruptcy?

2012-02-20T12:43:00.000-08:00

In our day-to-day lives, "abandonment" is considered a negative concept.

In bankruptcy, the concept of "abandonment" is a good thing for the debtor (the person who filed for bankruptcy).

Why?

When the Trustee abandons their interest in your property, it means that the Trustee does not consider your property (house, car, bank accounts) to have enough equity (if any) in order to liquidate that property to distribute the funds to your creditors.

For example, if your house has a fair market value of $200,000, but your mortgage balance is $300,000, then the Trustee will not get any money by taking possession of your house and selling it. There is no equity in this property.

In situations like this, the Trustee typically "abandons" the property, meaning the Trustee will not attempt to sell the house.

If you recently received a "Notice of Abandonment" - you should breathe a sigh of relief. You are one step closer to completing your bankruptcy process.

Recent articles of interest

2012-02-20T06:57:00.000-08:00

Afraid Of An IRS Audit? It's Not As Bad As You Think - by Selena Maranjian, The Motley Fool

What To Do If You're Facing Eviction - by Jessiva Hickok - Fox Business

How To Negotiate With Pawn Shops - by John Ulzheimer - Mint.com

Credit Card Debt On The Rise, Again - by Blake Ellis - CNN Money

The Other Foreclosure Settlement: Millions of Homeowners Eligible - by Les Christie - CNN Money

5 Important Lessons About Credit That Most People Learn The Hard Way - by Kris Bickell - Moolanomy

VIDEO: Talking Money with Elmo (NYTimes)

2012-02-19T07:47:00.000-08:00

This video was posted on the NYTimes website, showing how Elmo and the rest of the Sesame Street gang teaches children about money.

To read the accompanying article, click here.

VIDEO: Financial Literacy for Kids

2012-02-19T07:36:00.000-08:00

This video was posted on Bankrate.com:

Most everyone has a money lesson or two they've learned throughout their life. Whether you did chores as a child, had to make good grades or start a savings account ... your parents probably tried to steer you in the right financial direction.

Why You Should Avoid Payday Loans

2012-02-19T07:32:00.000-08:00

This information is provided form the Federal Trade Commission, and available online at: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm

Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives

“I just need enough cash to tide me over until payday.”
“GET CASH UNTIL PAYDAY! . . . $100 OR MORE . . . FAST.”

The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans, cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans. The Federal Trade Commission, the nation’s consumer protection agency, says that regardless of their name, these small, short-term, high-rate loans by check cashers, finance companies and others all come at a very high price.
Here’s how they work: A borrower writes a personal check payable to the lender for the amount the person wants to borrow, plus the fee they must pay for borrowing. The company gives the borrower the amount of the check less the fee, and agrees to hold the check until the loan is due, usually the borrower’s next payday. Or, with the borrower’s permission, the company deposits the amount borrowed — less the fee — into the borrower’s checking account electronically. The loan amount is due to be debited the next payday. The fees on these loans can be a percentage of the face value of the check — or they can be based on increments of money borrowed: say, a fee for every $50 or $100 borrowed. The borrower is charged new fees each time the same loan is extended or “rolled over.”
The federal Truth in Lending Act treats payday loans like other types of credit: the lenders must disclose the cost of the loan. Payday lenders must give you the finance charge (a dollar amount) and the annual percentage rate (APR — the cost of credit on a yearly basis) in writing before you sign for the loan. The APR is based on several things, including the amount you borrow, the interest rate and credit costs you’re being charged, and the length of your loan.
A payday loan — that is, a cash advance secured by a personal check or paid by electronic transfer is very expensive credit. How expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115, with $15 the fee to borrow the money. The check casher or payday lender agrees to hold your check until your next payday. When that day comes around, either the lender deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend the financing for 14 more days. If you agree to electronic payments instead of a check, here’s what would happen on your next payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an additional $15. The cost of the initial $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.
Alternatives to Payday Loans
Before you decide to take out a payday loan, consider some alternatives.

Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people. A cash advance on a credit card also may be possible, but it may have a higher interest rate than other sources of funds: find out the terms before you decide. In any case, shop first and compare all available offers.
Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR. Military personnel have special protections against super-high fees or rates, and all consumers in some states and the District of Columbia have some protections dealing with limits on rates. Even with these protections, payday loans can be expensive, particularly if you roll-over the loan and are responsible for paying additional fees. Other credit offers may come with lower rates and costs.
Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service — a late charge, an additional finance charge, or a higher interest rate.
Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.
Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan — however modest — can help you avoid borrowing for emergencies. Saving the fee on a $300 payday loan for six months, for example, can help you create a buffer against financial emergencies.
Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems. Find out the terms of the overdraft protection available to you — both what it costs and what it covers. Some banks offer “bounce protection,” which may cover individual overdrafts from checks or electronic withdrawals, generally for a fee. It can be costly, and may not guarantee that the bank automatically will pay the overdraft.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

Q&A: I Can't Pay My Credit Card Bill. What Should I Do?

2012-02-19T07:24:00.000-08:00

Q: I'm overwhelmed. I just received my latest American Express bill, and I simply can't come up with the funds to pay it off. What should I do?

A: First - you need to relax, without completely ignoring the situation. Yes, you absolutely must take action, but don't let this situation destroy your life by following these simple steps:

1. Don't panic.

2. Unload clutter from your life and from your house that you simply don't need.

3. Call your bank. Tell them what's going on. Ask for a payment plan. Ask for a reduction in your interest rate. It's as simple as calling the toll free number on the back of your card.

4. Avoid payday loans.

Read this information posted by the Federal Trade Commission on Payday Loans: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm

5. Ask for help. Ask family and friends if they can help you out. However, before you ever ask them for help, you must first cut up those credit cards in order to avoid piling on the debt even AFTER they help out!

Recent Articles of Interest

2012-02-14T13:51:00.000-08:00

Can Debt Collectors Contact You via Social Media? - by US News & World Report

NJ Lawmakers Announce Bill to Address Foreclosure & Housing Crisis - by NYToday.net

Debt Collectors Stoop to New Low: Credit Cards in Exchange for Expired Debt - by National Bankruptcy Forum

Harassment Goes Too Far in Debt Collection Efforts - by Bankruptcy Home

MSNBC VIDEO: Will You Benefit From the $25 Billion Foreclosure Settlement?

2012-02-09T19:50:00.000-08:00

Will you benefit from the latest $25 billion foreclosure settlement?

Watch this video from MSNBC to learn more:

Visit msnbc.com for breaking news, world news, and news about the economy