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The Latest on the Foreclosure Crisis

Since the housing boom of the early 2000s, the housing picture in the U.S. has changed dramatically, as anyone struggling to make mortgage payments each month already knows. But exactly what is the state of mortgages and foreclosures right now in the country? Here’s a look at some indicators that say a lot.

Lowest Homeownership Rate In More than a Decade

Recent data released by the Census Bureau (and reported at Credit.com) show that home ownership in the United States has dipped to its lowest level since 1998:

• In the fourth quarter of 2010, 66.5 percent of Americans reported owning their own home.
• In 2009, 67.2 percent of the nation claimed homeowner status; the drop reflects the continued effects of the recession on income and ability to make mortgage payments.
• At its peak in 2004, as many as 69.2 percent of Americans reported owning a home.

Just as subprime loans were found to disproportionately affect non-white home buyers, it seems that foreclosure rates are currently higher among that segment of the population: in 2007, the number of African Americans that owned a home was reported at 48 percent; a year later, the number had already fallen to 44.8 percent. Similarly, among Hispanic families, 50 percent reported homeownership in 2007, but only 46.8 percent did in the last quarter of 2010.

Perhaps the most troubling aspect of these numbers is their apparent explanation: while the first wave of foreclosures resulted largely from the resetting of subprime loans, this wave seems to be more a result of long-term job loss hindering homeowners’ ability to make their (otherwise affordable) mortgage payments.

Homeowners on their Own to Fight Foreclosure?

In a related story, The New York Times recently reported that, more and more, Americans are having to fight the foreclosure of their homes without legal representation or outside help. According to the article, areas of the country with high foreclosure rates are holding how-to workshops for individuals and couples interested in contesting foreclosure in the courts.

New reports apparently show that foreclosure is shifting its face in the court system: what was once a process that involved mostly paperwork now, it seems, involves more and more people actually visiting the court to make their case for keeping their homes.

How Can I Fight Foreclosure?

Whether you’re struggling from job loss, job reduction or an unaffordable mortgage loan, you may be able to fight foreclosure with the help of a Chapter 13 bankruptcy filing. Thanks to its three- to five-year repayment plan, Chapter 13 helps many homeowners catch up on their mortgage payments by rearranging the amount and type of debt they’re responsible for paying each month.

Posted in Bankruptcy and the Economy, Foreclosure, Mortgage Foreclosure, recession, stop foreclosure, unemployment | Comments Off

Lawsuit Challenges Legality of Pre-Employment Credit Checks

The U.S. Equal Employment Opportunity Commission (EEOC) has filed a lawsuit alleging that the practice of conducting pre-hiring credit checks by Kaplan Higher Education Corporation, a company that provides test-preparation and post-secondary services, discriminates against certain classes of Americans and is therefore unlawful.

And, in case that’s a little too much legal information for your comfort level, here’s what that means and why it’s good news if you’re struggling with debt and/or recovering from bankruptcy.

So What’s the Deal with Pre-Hiring Credit Checks?

Here’s a look at the basics of employer-conducted credit checks.

• What they are: As part of the hiring process, many employers (as many as 60 percent, according to some polls) have begun running credit checks on job applicants (in addition to conducting criminal background checks). In theory, these credit checks are valuable to employers because they divulge information about an applicant’s overall capabilities.
• Why they’re controversial: While few people oppose the practice of running credit checks for applicants to positions that involve finance, many consumer advocates have spoken out against credit checks for applicants in non-financial fields. After all, if the current recession has taught us anything, it’s that poor credit can have little to do with a person’s responsibility, intelligence and job worthiness. Further, a few states have already made pre-employment credit checks illegal for non-finance jobs.
• The current lawsuit: The EEOC’s charges against Kaplan include allegations that Kaplan’s practice of conducting credit checks before making hiring decisions constitutes to discrimination, because black and Latino Americans reportedly have statistically lower credit scores than white Americans.
• The legal reasoning: According to a Credit.com piece on the issue, the case has teeth because it applies legal reasoning the EEOC used to show that criminal background checks also disproportionately affected black job applicants because blacks are more likely to be arrested than whites.
• The reason it’s important: If the court rules that pre-employment credit checks lead to discriminatory hiring decisions, such credit checks could be outlawed in more states, potentially making employment easier to find for people who have struggled with debt problems.

Potential Outcomes of the Case

While the lawsuit is still in its early stages at this juncture, it has the potential to change the current state of pre-employment credit checks in the U.S. The court could, depending on the evidence presented, rule that pre-employment credit checks amount to discrimination in the hiring process.

This could be good news for people recovering from a bankruptcy filing or otherwise fighting debt burdens, because being denied employment for credit-related reasons can lead to a frustrating and debilitating debt cycle.

In the mean time, you may want to consult with a bankruptcy lawyer if you have been denied employment because of something in your credit report.

Posted in Consumer Protection, Credit, Credit and Bankruptcy, Financial Literacy, Legal Info, unemployment | Comments Off

Poverty Rate Rose in U.S. Last Year

Recent reports from the Census Bureau show that the number of American families living at or below the poverty line increased in 2009 to a fifteen-year high of about 44 million, or one in seven Americans. So what does that mean for individual finances, including foreclosure , eviction, bankruptcy filings and more?

Here’s a look at what the rising poverty rate in the U.S. might look like.

Poverty and Bankruptcy

Many insiders have estimated that as many as 1.6 million Americans will file for bankruptcy by the end of 2010, up from even 2009’s 1.3 million. Even though that number represents an increase from prior years, some economists conjecture that more Americans would be in need of bankruptcy protection if not for:

• Shared housing: More and more extended families, it seems, are opting to live in single residencies in order to save money on bills. For some people, living with loved ones may have been the result of losing a home to foreclosure or a landlord’s loss of property to foreclosure.
• Extended unemployment benefits: Congress has extended traditional unemployment benefits more than once since the Great Recession began, and many individual states, too, are offering their out-of-work residents more support than usual.
• Food banks and soup kitchens: Various charity-funded food organizations have apparently seen a significant increase in needy Americans. Reports suggest that more and more U.S. citizens are being forced to choose between paying the rent and buying food supplies.
• Food stamp distribution: Sources note that the number of Americans receiving food stamps has risen to 41 million, from 39 million at the beginning of the year.

Unemployment and Bankruptcy

According to the New York Times, one likely culprit of the rising poverty rate is the unemployment rate, which has been stuck at just below 10 percent for months now and shows no signs of dipping.

Some analysts have reportedly noted that it generally takes some time for poverty rates to decrease once unemployment numbers begin to normalize, and the experts are still not saying when that’s likely to happen.

Here’s a look at who, according to sources, has been hit hardest by decreasing wealth levels:

• 9.4 percent of white Americans are now in poverty;
• 25.8 percent of black Americans live at or below the poverty line;
• 25.3 percent of Hispanic Americans find themselves in poverty; and
• 12.5 percent of Asians are in poverty.

All of the above groups except Asians have seen increases in poverty in the last two years. Additionally, sources note that young adults without college educations are especially hard hit across racial lines. Many predict that poverty will continue to rise for the duration of 2010.

Posted in Bankruptcy Filing, Bankruptcy and the Economy, poverty rate, unemployment | Comments Off

Jobless Numbers Rise Unexpectedly in Early August

The Department of Labor reported last week that initial unemployment claims for the week ending August 7 rose 2,000 from the previous week, to 484,000. This rise was apparently unexpected, and marks the highest rate since February of this year.

The news sent stock markets tumbling earlier this week as job growth remains frigid.

Here’s a closer look at the latest numbers from the Labor Department and what they mean:

• Initial claims rose to 484,000 from 482,000, meaning the unemployment rate will likely hold steady at 9.5 percent.
• The four-week floating average, which includes more data and so offers a check for highly volatile fluctuations, also rose to 473,500 – an increase of 14,250.
• The average year-to-date number of insured unemployed people in the United States was 5.018 million.

And, while extended unemployment benefits were available to people in many states, some analysts are reportedly growing nervous about the implications of such persistently high job loss numbers. In fact, some seem to be worried that the country is locked into a self-perpetuating cycle of unemployment and a weak economy:

• Many business owners and those responsible for hiring new employees are reluctant to do so because of fears that the recession isn’t over yet: They’re reluctant to commit to increased spending because they’re worried that they won’t be able to pull in enough revenue to justify long-term hires.
• Many individuals, worried about losing their jobs or dealing with reduced hours, are also “hunkering down” by spending less money, taking out fewer loans and focusing on saving more.
• Without adequate consumer purchases, some retailers are struggling to pull in enough income to stay afloat or grow. This means that they’re refraining from expanding or making new hires.

The problem is complex and involves all sectors of the economy and now, some analysts are suggesting that the recession will either end up having a “double dip” - meaning we’ll plunge back into recession after a brief period of economic growth - or that the first period of recession never actually ended.

So what can you expect in the coming months? It doesn’t look like any significant changes are on their way in the near future, which could mean:

• Housing market struggles: Many people are still facing foreclosure, underwater mortgages and bankruptcy. So anyone looking to sell, build or buy a house may face difficulties.
• Credit remains tight: Unless you have a squeaky-clean credit report history, you may not qualify for attractive loan terms while the recession slogs on.
• Income options are limited: While jobless numbers remain high, you may have trouble finding additional income, which can be frustrating if you’re trying to pay down debt.
• Saving matters: Whether you’re just beginning to save or working on a hefty nest-egg, now is not the time to blow it – you might need it for tough times ahead.

Posted in Bankruptcy and the Economy, Job Loss, unemployment | Comments Off

Social Security at Its Tipping Point

Social Security is at a critical tipping point—the system is paying out more dollars than it’s taking in, a recent article from CNN.com indicates. Obviously, that’s not good news for the long-term health of Social Security, or those depending on it.

The State of Social Security

The Social Security system, designed as a state-run support fund for working Americans as part of the New Deal, works on a fairly simple principle: people pay a certain amount of money into the Social Security coffers whenever they’re employed, and if and when they need more money than they’re making (based on government standards), they can collect money from those coffers.

Currently, Social Security benefits include:

• Payments to the retired and disabled;
• Payments to the unemployed;
• Funds for medical care for the aged and poor;
• Financial assistance for needy families; and
• Funds for children in need.

But, according to sources, both 2010 and 2011 will see the Social Security system pay more in benefit to needy Americans than it collects in taxes, meaning that the fund will diminish. That trend should reverse itself for a few years, but most experts apparently expect that the fund will be exhausted (that is, able to pay out only 76 percent of benefits) by 2037.

Blame the Economy

So what pushed the Social Security fund into the red? Sources note that the rough economy has played a significant role:

• High unemployment: The steady 9.5 percent jobless rate means that fewer Americans than usual are paying into the Social Security fund, which translates to less money coming into the system. Meanwhile, more people than usual are drawing unemployment benefits, which strains the system.
• Early retirement: With work difficult to find, many older Americans are opting for early retirement. This means they’re pulling money from the Social Security fund earlier than they would have normally. While early retirees are eligible for smaller payments than those who wait until their full retirement age, this still means that the system is paying out more money and taking less in.
• Government borrowing: Since the Social Security system was reformed in the early 1980s, the federal government has reportedly borrowed significant amounts of money from the trust with promises of repayment—which has yet to materialize.

So what does this mean for you? For many years now, experts have emphasized that the average American should not depend on Social Security alone to finance their retirement years. The dire state of the nation’s retirement fund reinforces that point and underlines the importance of having a personal retirement savings and/or investment fund.

Additional Resources

Social Security: Understanding the Benefits

Posted in Bankruptcy and the Economy, Social Security, government, unemployment | Comments Off

Latest Unemployment News: More of the Same

The Department of Labor’s latest report on the unemployment situation in the U.S. shows little change from a week earlier, indicating that significant recovery in the jobs market has not yet taken hold. Here’s a look at some of the latest numbers (for the week ending July 17, published at the end of last week):

• Seasonally adjusted initial unemployment claims increased 37,000 from the previous week, to 464,000, bringing the four-week floating average up 1,250 to 456,000.
• The advance seasonally adjusted insured unemployment rate was 3.5 percent, down slightly from the previous week’s 3.7 percent.
• The seasonally adjusted insured unemployment number was 4,487,000 for the week ending July 10, down from the previous week’s 4,710,000.

Week to week, the changes often aren’t very significant and don’t always reflect larger trends; however, last week’s numbers provide a somewhat hopeful picture when compared with figures gathered a year ago:

• Initial unemployment claims under state programs (unadjusted) totaled 498,022 for the week ending July 17; in 2009, the same week saw 585,575 claims.
• The number of people claiming insured unemployment benefits in state programs came to 4,581,351 in the most recent week, which marked a 186,572 person increase from the week prior, but was down from 6,256,960 during the same period in 2009.

These data, like many of the job loss information collected this year, show that recovery in the jobs market continues to be slow and inconsistent. While the national unemployment rate is down slightly from its 10+ percent high, it’s still well above where it needs to be and bankruptcy filing rates continue to remain high.

Unemployment Benefit Extension

Some more-or-less good news for unemployed Americans is that Congress and the White House have reportedly passed legislation that will extend unemployment benefits through November of this year.

The measure, which had difficulty getting through Congress because of Republican opposition, means that those whose benefits have expired or are about to will receive a few more weeks of government support.

While the nation’s unemployment rate clearly indicates that jobless citizens need help, many GOP legislators were apparently hesitant to pass the bill because of the affect it will have on the nation’s deficit.

So how will the extended benefits work? It seems that distribution of the funds will vary by state, so check out local resources to see what steps you need to take if you’re eligible for funding from the extended benefits.

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Unemployment Benefit Extension Passed, Payments Could Take Several Weeks

Congress passed a six-month extension of emergency unemployment benefits, restoring a lifeline to nearly 3 million out of work Americans whose benefits have run out since June 2.

However, a processing delay could see many Americans waiting "several weeks" for their unemployment checks to arrive, according to the Washington Post.

The bill was passed by a vote of 272 to 152 in the House on Thursday, after being approved by the Senate on Wednesday following weeks of contentious debate. President Obama is expected to sign the extension immediately.

The expected delay in payments may be difficult for those whose benefits ran out as much as seven weeks ago.

With the official unemployment rate at 9.5%, and even more working significantly reduced hours, many Americans are turning to bankruptcy to help them eliminate high-interest credit cards and personal loans--often necessary to help maintain household finances. Nearly 800,000 bankruptcy cases were filed in the first half of 2010, and even more are expected in the second half.

If you are out of work and struggling with debt, consider your options by talking to a bankruptcy attorney. Click here to connect with an attorney in your area for a free, no-obligation case evaluation.

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Congressional Disputes Hamper Unemployment Extensions

Despite some signs of economic recovery across the United States, the nation's unemployment level remains near 10 percent and, according to recent reports, concerns in the Senate over the country’s budget deficit and expansive recovery spending could prevent unemployed Americans from seeing extensions to their benefits.

So how large are the ramifications of Congress’s failure to act? Sources indicate that:

• As many as 900,000 people have already seen some decrease in the unemployment benefits they receive
• If no congressional action is taken, an estimated 1.2 million people will lose some or all of their unemployment benefits by the end of June
• If Congress doesn’t act by the end of July, more than 2 million could be affected

The lack of action —or rather, lack of productive action—:on this matter in Congress will likely mean only temporary halts to unemployment support, but those affected could see their finances take a serious hit, particularly because so many Americans are in financial situations that mean they’re only a few late bills away from default, foreclosure or filing for bankruptcy.

Unemployment Benefits and Extensions

Because of the country’s unusually high unemployment rate and difficult job market, the federal government has extended the 26-week state- and employer-sponsored unemployment insurance programs with three other forms of assistance, all of which could expire without Congressionally approved extensions. The forms of unemployment insurance in jeopardy include:

• Extension of benefits: This program allows those on unemployment to receive benefits for between 60 and 99 weeks, rather than the half-year state standard.
• Extra weekly money: Another program offers an additional $25 weekly to certain unemployment beneficiaries.
• Extension of COBRA benefits: The third program allows those who have lost their jobs to continue the health coverage they had at their last job and subsidizes the cost of that coverage, paying 65 percent for up to 15 weeks.

As some analysts have pointed out, for the millions of Americans unable to find a paying job, these extended benefits can mean the difference between good health and unmanageable medical bills.

Perhaps unsurprisingly, Senate Republicans are reportedly concerned that these extensions, while giving invaluable aid to many American families, are contributing ever more to the United States’ budget deficit, which is skyrocketing thanks in part to recovery efforts.

Though the situation may be sticky for some families, sources note that Congress still has time to act to renew the extensions.

Posted in Bankruptcy, Congress, Economy, unemployment | Comments Off

The Latest in Unemployment & Consumer Prices

The Labor Department has released unemployment data for May and the numbers suggest no significant improvement in the nation’s employment landscape—in fact, last week’s numbers marked the largest rise in unemployment since February.

Here’s a look at some of the numbers and how they relate to previous weeks.

• Initial claims: For the week ending May 15th, initial unemployment claims rose to 471,000 from 446,000, an increase of 25,000 from the previous week. The four-week average, too, rose by 3,000.
• This time last year: In this week of 2009, 540,925 initial unemployment claims were made; this year, that number was down slightly, to 407,940, suggesting that the employment situation has improved somewhat since a year ago.
• High & low claim rates: States reporting the highest rate of initial unemployment claims include California, Michigan, New Jersey, Georgia and Puerto Rico; the lowest reported rates came from New York, Kentucky, Connecticut, Missouri and New Hampshire.

The numbers surprised some analysts, who reportedly expected job growth last week. The increase in unemployment rates points to continued uncertainty in the job market, even as the economy generally seems to be recovering.

Possible Explanations

The news may not be all bad, though. In April, as the economy expanded, the official unemployment rate actually grew, not because more jobs were lost, but because more people began actively looking for work, as they perceived the job market was strengthening.

Consumer Price Index for April

The Bureau of Labor Statistics released data this week that show the Consumer Price Index for April 2010 decreased by 0.1 percent, largely fueled by a 1.4 percent decrease in the energy index. Here’s how some other sectors fared:

• The food index rose by 0.2 percent in April, spurred by rises in the price of meat, fish, poultry and eggs.
• The index for all items excluding food and energy remained unchanged.
• The indexes for recreation, airline travel and medical care rose last month, but were balanced by decreases in the indexes for apparel, household furnishings and services.

During the last year, the index for all goods and services has risen by a modest 0.9 percent, which the BLS reports is the smallest 12-month increase seen since 1966.

Additional Resources

Consumer Price Index: April 2010

The Unemployment Situation: April 2010

Posted in Bankruptcy and the Economy, Economy, consumer prices, unemployment | Comments Off

Helpful Hints for Tough Employment Times

The U.S. Labor Department released its latest unemployment numbers for the month of April, and the news is mixed. The U.S. job market added 290,000 jobs in April, more than predicted and the fourth straight month of job growth. However, the unemployment rate crept up to 9.9% from 9.7%, where it had been for the first three months of the year.

With a record-high 45.9% or unemployed people had been jobless for 27 weeks or more, the unemployment rate is expected to remain high despite other gains in the economy.

Your Rights as an Employee

In tight times, it's important to know what you can legally expect from your employer so you can take appropriate action if your rights are breached. Here's an outline of your rights as a worker.

• Right to freedom from discrimination: Federal law prohibits your employer from treating you in a specific way based on your race, ethnic identity, religion, national origin, sex, disabilities and so forth. If you suspect that a boss took action based on one of these factors, it may be a good idea to contact a lawyer.
• Right to a safe workplace: No employer can subject you to perilous conditions at work or expose you to known safety hazards.
• Right to privacy: While not every state has a right to privacy law, many do, and most include your personal possessions (like purses), storage areas, private phone calls and emails. Be careful, though, because company-owned computers or phones offer only limited protection – in general, if you wouldn’t want your boss or coworkers to see something, keep it out of work email.
• Right to whistle-blowing without consequences: Blowing the whistle on a boss or coworker (that is, notifying authorities about forbidden or illegal activities that someone is conducting or has conducted) is not legally considered grounds for termination.
• Right to leave for qualified medical purposes: Being penalized for certain types of medical leave is prohibited.
• Right to fair wages: This can get murky, because women in the U.S. only make 77 cents to males' dollar despite the law. Plus, discussing salary with coworkers is always uncomfortable, and may be forbidden in some workplaces. Know if your wage fairly represents your experience, job duties and performance—and how to address it if you aren't earning a fair wage.

It’s important to advocate for yourself in the workplace; if you suspect you were let go for reasons that violate any of the above rights, you may want to consider legal action.

But how can you prove whether or not a superior's actions were acts of discrimination? It’s a good idea to have regular discussions with your boss about your expectations at work. When you have a clear outline of what's expected of you, you have more leverage to offer concrete evidence that you upheld your end of the bargain.

Additional Resources

Worker Rights to Information

Posted in employment rights, job tips, unemployment | Comments Off