Tuesday, March 16, 2010

The Recession:It Has An End (We Hope)

I recently saw a billboard that read " THE RECESSION: IT HAS AND END". Tell that to the people who have been irreparably damaged by the economic collapse we have just been through and the slow recovery we are in now.

The recession and the increase in foreclosures has actually aided one sector of business. If you watch cable television, especially after 8pm almost any evening you will instantly recognize the verbal headline "STOP FORECLOSURE NOW!" or one of my other favorites "IF YOU OWE AT LEAST $10,000 IN CREDIT CARD DEBT WE CAN HELP WITHOUT BANKRUPTCY". The telephone number to call is the same "CALL 1-800-WE SCAM U"

Jaundiced, cynical view? Just a hard cold look at an industry that preys off of peoples’ misery in these very difficult times. While the pace of NEW consumer credit debt has slowed, it is more because of the fact that card issuers have increased rates to 30% (just before the Feb. 22, 2010 deadline) or because they have cut back credit lines so that there is virtually no available credit on many card-holders cards - they have been MAXED OUT (Read James Scurlock’s book of that name or get the DVD of this award winning documentary on consumer credit in the US)

The Mortgage rescue scam companies are out there in force promising to save your house provided you pay them anywhere from $1,500 to $7,500 up front for their services. The most that nearly all of them can do is to direct you to complete documents for participation in the President’s "MAKING HOME AFFORDABLE" program.

From experience, most lenders, while they do not want to take houses, do not want to have a mortgage loan on the books that is not paying the monthly installment. It is inconceivable that there are these super companies out there in TV world which can work miracles and force a mortgage lender or a mortgage servicer to take less than it is owed. Some will have your mortgage documents audited - reviewed for any irregularities or violations of the laws that govern consumer lending and specifically mortgage transactions. Others will just keep stalling, using your money until the house is foreclosed on, or right until the week before a foreclosure sale and then return some portion to you. They will blame the lenders - You will not have a home!

On the credit card side, there is at least one company that is offering assistance with credit card debt as "...authorized by the President's Stimulus Plan". The Treasury Department’s, FDIC’s TARP’S, the Federal Reserve’s plan all allow debt reduction. BUT, such plans were always allowed. . The promise that for a "reasonable fee" a company can force a creditor to take 50% is absurd. It is especially harmful to those who stop making regular payments because of the promised salvation described in the 60 second "magic pill"commercial

Quick tips :

1. There is no secret to reducing the debt (see earlier posts). If it is a mortgage, you need an attorney or someone from one of the government sponsored programs to help you through the maze of paperwork.

2. Credit Card debt? - Most companies will not even talk to you about a compromise settlement until you are 90 days late. By then, if the company will not accept the "settlement offer" you are so far behind that you will never be able to catch up. There are a few like Consumer Credit Counseling Services of Southern New England (or your location) which will try to negotiate reduced interest rates to lower your payments BEFORE you get too far behind. They change a nominal monthly fees but no up front fee for their service.

3. If you are in danger of losing your home, or of losing your sanity, contact an attorney who works in these fields. You should get objective and non-leading advice. If a bankruptcy is the only way to protect your house, you will be so informed. If you cannot make even minimum monthly payments on your credit cards, a brief consultation, normally free, with an attorney will point that out to you. On the other hand, if there is another way around the problems, a knowledgeable and ethical attorney will be able to show you the way.
In summary - do not fall for the "1 800 we save u" companies. If they were that good, the TV advertising wouldn't be necessary and the Treasury Department would hire them to straighten out the federal budget

Author's Copyright by Richard I Isacoff, Esq, March 2010

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