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• Bankrate.com -Debt merry-go-round & Shopping for a home equity loan
**Jumping off the debt merry-go-round**
Dear Debt Adviser,
Jumping off the debt merry-go-round By Steve Bucci
I have around $15,000 in credit card debt from college. I’m approximately five to six years from my last use of these two cards, which have since been charged off. Assuming the seven-year point rolls around, what are my steps to ensuring these charges don’t follow me?
I understand the immorality of not paying a debt, but I haven’t been able to save enough to really make a substantial effort in paying it off. I fear I will get caught in a never-ending, $100-a-month payoff plan.
— Kyle
Dear Kyle,
It sounds like you need some help with your savings plan. My guess is that if you haven’t been able to save enough in five or six years to pay off your credit cards, then I’ll bet you haven’t been able to save very much at all. So, let me tackle your savings issue first, and then I’ll get to your very correct fear of a long-term, dysfunctional relationship with the collections process.
Saving money is not optional. If you want to be successful today, you can’t just save what’s left over at the end of each pay cycle. You need to have a plan to spend, a plan to save, and you need to do the saving before you spend. Low savings will force you to use credit, and in your case getting new credit may be problematic every time you hit a bump in life. A car accident, mechanical repair, illness, leaky pipe … you name it. Without savings, how do you handle it? Not well. Especially as you get older and accumulate more bumps in the road of life.
My suggestion is to immediately begin to put away a set amount each pay period based on a spending plan that includes savings. Every time you get a raise, promotion, tax refund or birthday gift of money, I want you to put half in the emergency savings fund and keep half for current expenses. Saving money that you don’t have yet is my favorite way of accumulating six months of expenses in an emergency account.
Now, on to your debt situation: The seven-year period you are referring to is the time frame for reporting your credit card accounts on your credit report. Negative information generally must be removed after seven years. But you still owe the money.
Collections businesses are big in the United States. There is a large and active market in uncollected debt that is sold and resold as the debt ages to increasingly aggressive buyers. So you can expect to hear from debt collectors for a very long time after the seven-year reporting period is over.
Another time frame you will want to be familiar with is the statute of limitations, or SOL, for collecting debt in your state. However, if your debt is beyond the SOL in your state, collectors can still call you and mail you in an attempt to collect what is owed. You can tell them you know about the statute in your state and you have no intention of paying. However, they can just resell your debt to the next collector.
As I see it, you have several choices. You can wait for the statute of limitations to run out and ignore the phone calls and collection attempts from the collectors, you can deal with the collectors on your own or through an attorney, you can file bankruptcy or you can work out a way to pay what you owe.
For complete closure on this part of your financial life, I suggest saving as much money as possible for the next six to 12 months and then contacting the creditors to explore a settlement for the amount you have saved. Be sure to get any settlement agreement in writing before you make a payment. Should you be contacted by collection companies regarding the accounts that were settled, you will need to simply forward them a copy of the settlement agreement. Whatever you do, start saving seriously and you won’t have to fear collectors ever again.
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Tips on shopping for a home equity loan
By Donna Fuscaldo • Bankrate.com
Plummeting home values and tougher lending standards make getting a home equity loan tougher than in the past. But it isn’t a lost cause if you improve your credit score and shop around cautiously.
Qualifying for a home equity loan and getting the best rate depend on several factors, including your home’s current value and your credit score. The better your credit score, the better your chance of getting a home equity loan.
To improve your credit score, avoid making late payments, pay off your credit cards and be patient. The longer you can prove you are a responsible borrower, the more faith the lender will have in you.
Don’t forget to check periodically to make sure everything on your credit report is accurate. Under the Fair Credit Reporting Act, you have the right to dispute any inaccuracies on your credit report.
Keep trying
Don’t just assume that because one bank turned you down, you’re out of luck. Try several banks. Many community banks, credit unions, and savings and loan associations also have cash and want to lend.
When looking for a home equity loan, be mindful of high-cost lenders or what the Federal Deposit Insurance Corp. calls “predatory lenders.” If the offer is unsolicited or seems too good to be true, chances are it’s not true.
Before signing a home equity loan, contact multiple lenders and rely on recommendations from family and friends. Comparison shopping is one of the best methods of protecting yourself when shopping for a home equity loan.
Create a news alert for “home equity”
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Three Days to Stop CEOs from Stealing Shareholder Votes
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Starting in 2011, shareholders will be able to vote on CEO pay packages. This is great news because:
1. Even if you don’t have any sort of pension, or own any stock, the bottom line is the new Wall Street Reform and Consumer Protection Act will help rein in CEO pay if it’s allowed to work. That’s a good thing for working people and the whole economy.
2. Pension funds hold TRILLIONS of dollars in assets belonging to people who are currently working, as well as retirees. So starting in 2011, there’s a chance to use the collective power of working peoples’ pension money to rein in out-of-control CEO pay that goes against the interests of shareholders.
But the new law is already in danger. The U.S. Chamber of Commerce, the Business Roundtable and other Big Business groups are lobbying hard for devious schemes to gut the new law’s “say on CEO pay” provisions, and we only have three days to stop them. They want the U.S. Securities and Exchange Commission (SEC) to give corporations more control over the proxy voting system—which is how most shareholders would cast votes on CEO pay.
You can help stop their proposals by sending a public comment to the SEC. But hurry! The deadline to submit your comment is Wednesday, Oct. 20.
Tell the SEC: Shareholders should vote on CEO pay—not Big Banks and Wall Street brokers. (If you add your own words and personalize your comment, even a little, it will make a much bigger impact.)
If Big Business wins on CEO pay, the rest of us lose. The Chamber wants to give Big Banks and Wall Street brokers power to vote on behalf of shareholders—knowing they’ll almost always vote to rubber-stamp excessive CEO pay. And the Business Roundtable wants to weaken investor privacy protections so corporations can send shareholders junk mail soliciting votes in favor of…whatever votes management wants.
Groups representing Big Business are hoping to sneak through these seemingly “technical” changes while nobody’s paying attention. But the fact is, these proposals will undermine the voting rights of shareholders in corporate elections—and because shareholder voting rights will rein in CEO pay, that’s a big deal for everyone who cares about working people in America.
We need your help to make sure the voices of working families are heard in this debate, loud and clear. Can you help? Personalize and submit a public comment now. It only takes a moment.
Thanks for making sure working people keep their say on CEO pay.
Sincerely,
Manny Herrmann, Online Mobilization Manager
AFL-CIO
P.S. The U.S. Chamber of Commerce is already trying to buy our elections with gobs of money from secret donors. Don’t let the Chamber undermine our new rights to rein in excessive CEO pay, too. Tell the SEC to put the interests of shareholders—including working families and the pension funds that hold our retirement dollars—before the interests of corporate executives who are trying to suck the rest of us dry.
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JUSTICE: Uncertainty Around DADT
Last week, the Justice Department asked Judge Virginia Phillips to stay her broad injunction barring the military from enforcing the Don’t Ask, Don’t Tell policy until it has an opportunity to appeal the decision to the U.S. Ninth Circuit Court of Appeals. In the appeal notice that accompanied the stay request, the government argued that ending enforcement of the policy “before the appeal in this case has run its course will place gay and lesbian servicemembers in a position of grave uncertainty.” “If the Court’s decision were later reversed, the military would be faced with the question of whether to discharge any servicemembers who have revealed their sexual orientation in reliance on this Court’s decision and injunction,” the government wrote. “Such an injunction therefore should not be entered before appellate review has been completed.” Meanwhile, the Department of Defense has also issued new orders via email late Thursday afternoon “informing all five branches of the military that they must comply with an injunction ordered by a federal judge” until the judge grants the government’s request. The Pentagon warned gay and lesbian servicemembers against changing their behavior in the interim. “We note for servicemembers that altering their personal conduct in this legally uncertain environment may have adverse consequences for themselves or others should the court’s decision be reversed,” Under Secretary of Defense for personnel and readiness Clifford Stanley wrote on Thursday.
FRUSTRATION OVER APPEAL: DOJ‘s appeal of the decision comes after intense lobbying from House and Senate Democrats — including House Speaker Nancy Pelosi (D-CA) — to allow the recent ruling to stand. As DADT scholar Nathaniel Frank explained, “The court case, I think, is one of the more likely now, for the President to say, this actually is unconstitutional and although there is a tradition of defending standing law, it’s not obligated to defend a policy that it believes is unconstitutional.” President Obama has previously implied that DADT is constitutional and Republicans and two Democrats successfully filibustered repeal in the Senate (the measure passed the House in May). But Obama has consistently argued that he would continue to try to repeal DADT through the legislative process to accommodate the work of the Pentagon’s ongoing review. “I don’t think it’s too much to ask, to say ‘Let’s do this in an orderly way’ — to ensure, by the way, that gays and lesbians who are serving honorably in our armed forces aren’t subject to harassment and bullying and a whole bunch of other stuff once we implement the policy,” Obama told Rolling Stone magazine in late September. The appeal comes a day after Secretary of Defense Robert Gates warned that ending the ban is “an action that needs to be taken by the Congress and that it is an action that requires careful preparation, and a lot of training.” “It has enormous consequences for our troops,” Gates said, ignoring research by the Center for American Progress’ Larry Korb, Sean Duggan, and Laura Conley which has found that repeal is actually a simple process and has been completed without incident by many other countries, including some of our closest allies.
MILITARY RESISTANT TO CHANGE: Gates, along with other military leaders, has resisted and delayed changing the policy before the Pentagon releases its review of the ban during the first week of December. Following Gates’ remarks, The Palm Center established a website to track his prediction that the court’s decision to suspend the policy would have “enormous consequences,” including all reported instances of harm to unit cohesion, discipline and privacy that have arisen during this period of open gay service. “Now that the ban has been suspended, we are searching vigilantly for such consequences, and we will use the new web site as a hub for reporting what we find,” Palm Center Director Aaron Belkin said. Last week, the group also submitted a Freedom of Information Act request for all documentation of reported negative consequences of the suspension of DADT. Meanwhile, the Pentagon task force that has been studying the consequences of ending the policy, is “well along” in formulating its recommendations, and officials don’t expect ruling or the moratorium to affect its work. According to some military officials, “[t]he task force found deep resistance to the idea of repealing the law in some elements of the armed services, especially within the combat units, an officer familiar with the findings said. But the surveys also have found segments of the military who were not overly worried about allowing gays and lesbians to serve.”
ENDING THE BAN THROUGH CONGRESS: During an MTV/BET/CMT sponsored town hall on Thursday, Obama told young voters that the policy should be repealed by Congress, not through an executive order or the courts. Distinguishing himself from President Harry Truman — who desegregated the armed forces via executive order in 1948 — Obama explained that “the difference between my position right now and Harry Truman’s was that Congress explicitly passed a law that took away the power of the executive branch to end this policy unilaterally. So this is not a situation in which with a stroke of a pen I can simply end a policy.” Obama stressed that he’s been able to convince Gates and Joint Chiefs of Staff Chairman Mike Mullen to support repeal and promised that the policy would end “on my watch.” “But I do have an obligation to make sure that I’m following some of the rules,” Obama said. “I can’t simply ignore laws that are out there, I’ve got to work to make sure that they are changed.” On Thursday, White House Press Secretary Robert Gibbs promised that Obama would work to end the policy during the lame duck session of Congress, telling the Advocate’s Kerry Eleveld that the President would be “actively involved in that.” Obama should also suspend discharges using his stop loss authority, thus ending the discharges of qualified men and women during wartime.
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A major announcement
Rand Paul, the Tea Party leader running against me for Senate in Kentucky, thinks Social Security is unconstitutional. Other Republicans across the nation are also campaigning on privatization and Social Security cuts.
With a Tea Party deep on the fringe, the way for Democrats to win in 2010 is to have a spine — and go on offense.
That’s why today, I am proud to announce with my friends at the Progressive Change Campaign Committee that over 200 congressional candidates and members of Congress are promising to oppose any cuts to Social Security.
We’re saying no privatization, no raising the retirement age, no messing with the best program for seniors and workers in American history — and no mincing words about it.
We’ll make sure the political insiders and the media take notice of where the grassroots want Democratic leaders to be.
The PCCC has done a great job working with me and other Democratic candidates to go on offense on Social Security — and I’ve been taking the Social Security fight directly to Rand Paul in debates, speeches, and media events.
The 200 others include:
- Senate candidates Scott McAdams (AK), Roxanne Conlin (IA), Lee Fisher (OH), Alexi Giannoulias (IL), Kendrick Meek (FL), Paul Hodes (NH), Elaine Marshall (NC), and others
- House candidates Ann McLane Kuster (NH), Joe Garcia (FL), Bill Hedrick (CA), Rob Miller (SC), Julia Lassa (WI), Manan Trivedi (PA), Ed Potosnak (NJ), Michael Oliverio (WV), and others
- Members of Congress Raul Grijalva (AZ), Mary Jo Kilroy (OH), Alan Grayson (FL), Michael Acuri (NY), Carol Shea-Porter (NH), Ed Potosnak (NJ), Bill Owens (NY), John Boccieri (OH), and others
- The full list is at SocialSecurityProtectors.com
As Rachel Maddow would say, “This is what it looks like when Democrats go on offense.”
Then, please pass this email to your friends who want bold Democrats. Thanks for being a bold progressive.
Jack Conway
Be a Seed for Change 
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