Archive for December, 2008
admin on December 23rd, 2008
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Federal regulators has approved an overwhelming reform act on the manner credit cards companies charge and collect its card holders interest and fees. Today’s economic crisis has led many card holders to defaulting status on consumer credit as foreclosure rates have climbed to record levels. With jobless and mortgage default rates climbing, many consumers have all but abandoned paying revolving consumer debt.
The new collection and fee tabulation changes will cost credit card issuers almost $10 billion a year but will not take affect until July 2010. Americans used nearly 700 million major credit cards in 2007. Consumer advocates have charged the collection efforts of credit cards to be unfair to the card holder for decades. The new regulations will also prevent credit card companies from raising interest rates on card holders without a 45 day notice. Additionally, card companies are restricted on raising interest rates on balances incurred when lower rates were in effect. Regulators hope to regain confidence of consumers in financial institutions and level the playing field for creditors and consumers.
admin on December 23rd, 2008
America’s most well known spokesman, Ed McMahon, will avoid foreclosure and remain in his California home. The former “Tonight Show” sidekick to Johnny Carson for over 20 years, encountered his brush with home loss after breaking his neck over a year ago. The 85 year old spokesman was unable to work during his recovery period and fell behind on his financial obligations. Many celebrities stepped forward to aid the television legend when news surfaced that his Countrywide mortgage loan had defaulted. Real estate mogul, Donald Trump was one of the rescuers standing in line to aid McMahon and his wife.
Public records show recent transfers of the home’s title through a variety of corporations as several brokers scrambled to find a suitable fix for the McMahon foreclosure. All involved parties felt comfortable with the new mortgage structure which would allow the McMahon’s to remain in their Hollywood Hills home.
admin on December 20th, 2008
Maryland has joined the ranks of dozens of states stepping to the plate to combat foreclosures within their jurisdictions. Maryland has experienced a 15 percent decrease in foreclosed homes over the last quarter. This applauded statistic is due to the combined efforts of a state legislature mandated moratorium on foreclosures.
In addition, the state’s allotment of over $2 million to aid housing non-profit organizations offering free assistance to homeowners facing a defaulting mortgages and ultimately foreclosure has been a large success. Home Free USA, a non-profit counseling group organized to help financially strained homeowners modify mortgages, has led the charge in Maryland to help homeowners renegotiate their mortgages. The non-profits largest obstacle has been competing with “for-profit” organizations and “scam” artists offering help to homeowners.
HomeFree USA representatives have entered churches and counseling centers to find homeowners unaware of their existence and free services. Maryland expects its numbers of foreclosures to increase as the moratorium is expiring and homeowners will be exposed to the whims of foreclosing lenders again.
admin on December 20th, 2008
Bankruptcy filings have increased by 30% over the last year according to statistics from the US Bankruptcy Courts. As of November, over 1 million people have filed for bankruptcy. Although bankruptcy is not the end of the road for the person or corporation filing, it does represent a near final option for many facing financial distress.
Many of those filing bankruptcy this past year have been a direct result of the worsening US economy. Individuals and corporations file for bankruptcy to seek protection from creditors. Bankruptcy can provide a debtor some breathing room while assets are sold to pay creditors or a reorganization of finances is made to repay debts.
The three most common forms of bankruptcy are Chapters 7, 11 and 13. A Chapter 7 bankruptcy provides the filer with a “fresh start” as all debts are satisfied and limited to what can be obtained from the liquidation of the filer’s personal assets. A Chapter 13 bankruptcy is a filing process that will allow a consumer to re-organize debts to repay creditors and possibly maintain possession of various assets to include a primary residence. The Chapter 11 bankruptcy is used by companies seeking to reorganization finances whether assets are liquated or maintained.
The bankruptcy courts expect the growing trend of bankruptcy filings to continue while the nation’s economy is expected to continue to slide as the federal and state governments scramble to cure the financial markets.
admin on December 18th, 2008
The Eastern District Bankruptcy Court in Detroit is preparing itself for the possible bankruptcy filing of General Motors Corp, Ford Motor and Chrysler Motor companies. The Detroit court is reorganizing to become more attractive to the automakers should they decide to file for bankruptcy protection. The White House states its reviewing every option to bailout the top 3 automakers and employers of 2.5 million people. If a bailout is not implemented soon the automakers will be forced to turn to a bankruptcy led solution to their financial woes.
The Detroit court decision to allow the Chief Judge to decide which judge sits over each case is one of the most noticeable changes in the court. However, Detroit courts are known to be union empathetic and not favored by the automakers concerned with honoring costly union contracts during reorganization. New York and Delaware remain the top choices for corporations to file bankruptcy since these courts handle over 60 percent of corporate Chapter 11 bankruptcy filings and usually conduct relatively fast proceedings. In addition, the two jurisdictions have been known to overrule union contracts for reorganizing companies with union representation.
Detroit is the home or neighboring major city to the top 3 automakers and a proponent of the auto union’s agendas. The automakers have remained steadfast on its desire to not file for bankruptcy, but have contracted bankruptcy law firms to plan for such an event. Corporations filing bankruptcy in an area outside of its headquartered state must have a functioning unit in the state it intends to file for bankruptcy.
