Bankruptcy Questions Answered

Study: We’re Using Our Credit Cards Less

A study conducted last year by the Javelin group reportedly found that, as a nation, we’re cutting back on our credit card usage. The study apparently found that, while 87 percent of consumers polled in 2007 said they’d used a credit card in the last month, only 56 percent answered yes in 2009.

And, according to sources, the researchers think that number will fall again in this year’s survey.

Potential Benefits of Lowered Credit Card Use

While the finding itself suggests that Americans are responding to the weak economy by shifting their primary payment techniques, the larger potential effects of our changing behavior are interesting as well.

• More attractive cards: One potential side effect of decreased use of credit cards would be that credit card issuers could start trying to lure customers back with more enticing card offers, which could include rewards programs, low interest rates, versatility or a number of other options. This is by no means a guarantee, but it’s something to watch out for it you’re in the market for a new credit card.
• Less personal debt: A move toward debit cards and prepaid cards could lead us to lower levels of personal debt. While this would have to be a broad and fairly long-term shift in order to significantly reduce debt, such a shift could even affect the number of personal bankruptcy filings.

Credit Cards and Bankruptcy: The Connections

It’s important to understand the connection between bankruptcy and credit cards in any examination of our nation’s credit habits, especially during a recession, when more Americans might be pushed to seek bankruptcy protection. Here’s a look at some key links:

• Credit card debt in bankruptcy: Many bankruptcy filers have significant credit card debt when they file their bankruptcy petition. And, because credit card debt is not very high-ranking among debt types in the eyes of the court, a significant portion of those who enter bankruptcy with such a burden find some or all of their debt discharged.
• Credit cards after bankruptcy: Because high credit card bills lead many bankruptcy filers to financial distress, some are skittish about applying for credit cards after they exit bankruptcy. But credit cards, when used well, can actually help strengthen your credit rating and thus help you “prove” to potential lenders that you’ve adopted healthy financial habits.

Is Your Credit Card Use Healthy or Risky?

If you’re worried about your credit card bills or if you’ve found yourself depending more and more on your credit card to make ends meet, you may be heading toward financial upset. And, in many cases, taking action sooner rather than later can make the process of financial reform much smoother.

To get an objective opinion about your overall debt levels, consider consulting with a bankruptcy attorney, who may be able to help you get on the path to healthy finances once and for all.

Posted in Credit Cards, Credit and Bankruptcy, consumer debt, trends | Comments Off

A New Unexpected Cause of Foreclosure Examined

A recent report from National Public Radio describes a shocking and troubling occurrence happening in certain neighborhoods in the United States. Apparently, some homeowners are finding their houses foreclosed on—but not because they fell behind on mortgage payments.

It seems that failure to pay homeowners association (HOA) dues constitutes legal ground for the HOA to foreclose on and resell a property.

A Devastating Oversight

The case detailed in the NPR story involves a deployed Captain serving in Iraq and his wife: they had, according to reports, paid for their home in full but missed two HOA payments—and their house was foreclosed on, sold for the amount of the overdue dues plus legal costs, and sold again for a profit.

Here’s what you need to know in order to protect yourself and your family from facing such an unfortunate fate:

• In the U.S., 33 states have laws that permit HOAs to place liens on homes for which dues are not paid and collect on those liens (i.e. foreclose on the home) without putting the case before a judge.
• In some states, processing a foreclosure takes less than a month—meaning that families have little time to take action to protect their property.
• Because of the tough economy, it seems more families than ever are missing payments and don’t believe it when they’re told they could lose their home for failure to pay a couple hundred dollars’ worth of fees or dues.

The truth of the matter, though, is that you can lose your home in many states simply for missing payments to your HOA. If you’re pressed for cash and worried about making such payments, contact your HOA and explain the situation.

The most important thing to do is to attack the problem head on rather than waiting until it’s too late—if you can’t afford the dues now, you definitely can’t afford to make alternate housing arrangements, but that could be the position you’re in if you miss too many checks.

And, while it may be the least appealing thing you can think of if you’re falling behind on various financial obligations, be sure to open mail as soon as you receive it, as it could contain important and time-sensitive information about some of all of your debts. Remember: avoiding debt doesn’t make it go away, and in this economy it’s important to take any and all warning signs of personal economic turmoil seriously.

Posted in Foreclosure, Mortgage, Mortgage Foreclosure, trends | Comments Off