Category Archives: Debt Relief

Big Banks Continue to Settle Charges of Defrauding Homeowners

Nowadays, newspapers regularly publish articles about big banks settling charges that they routinely “misled investors while selling billions of dollars of investments linked to home loans.” The unfortunate reality is that homeowners were likely ill-advised (if at all) by these same banks of the intricacies of the loans they were taking, including the impact of interest rate hikes, the reality that they were borrowing more than they could pay, etc. Likewise, the banks that were lending to these homeowners failed to advise Wall Street about the risky nature of the loans, Wall Street failed to advise the insurance companies (like […]

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Will Student Loans Be the Next Bubble to Burst?

First the dot.coms popped, then mortgages. Are student loans and higher education the next bubble, the latest investment craze inflating on borrowed money and misplaced faith it can never go bad?Some experts have raised the possibility. Last summer, Moody’s Analytics pronounced fears of an education spending bubble “not without merit.” Last spring, investor and PayPal founder Peter Thiel called attention to his claims of an education bubble by awarding two dozen young entrepreneurs $100,000 each NOT to attend college. Recent weeks have seen another spate of “bubble” headlines — student loan defaults up, tuition rising another 8.3 percent this year […]

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Credit Card Rules Amended by Fed to Avoid Issuance to People Who Cannot Pay

The Federal Reserve approved a rule that would require credit card issuers to consider consumers’ individual incomes before extending credit, Bloomberg News reported on Friday. Credit card applications generally cannot request “household income” because that term is too vague for issuers to evaluate whether customers will be able to make the required payments on the accounts, according to a statement from the Fed on Friday. The rule is needed to prevent making credit available to consumers who lack the ability to pay, the Fed said. The change is supposed to limit issuers from giving cards to college students, yet some […]

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Forgiven debt such as credit card settlements can trigger a tax bill

Getting a tax bill after you’ve gone through foreclosure is like having a bucket of ice water poured over your head after someone has made off with your pants. You’ve lost your home and probably don’t have much money, so why would you owe the IRS anything? Here’s why: The IRS treats forgiven or canceled debt as taxable income. For example, suppose you owe $400,000 on a home that goes into foreclosure, the bank sells it for $300,00 and writes off the rest of your loan. Under the tax code, the $100,000 in forgiven debt is taxable income. In 2007, […]

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Banks Spend $82 Million to Sell Credit Cards to Students in 2009

Bank of America spends exponentially more money than any other bank to recruit students for credit cards. In 2009, Bank of America unit FIA Card Services paid colleges and alumni associations $62 million for the rights to market cards to students and members, according to a report from the Federal Reserve. The second biggest spender, Chase, dropped $13.8 million to recruit new borrowers, while U.S. Bank forked over $2.5 million. When the Credit Card Accountability and Responsibility and Disclosure Act — better known as the CARD Act — went into effect in February, it required credit card companies to disclose […]

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    LH&M helps people file for bankruptcy relief under the Bankruptcy Code.

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