New FICO credit rules could cause credit scores to rise

 

  • New criteria will strip some negative information from credit reports.
  • For those affected, scores could rise by up to 20 points.
  • The new changes took effect July 1, 2017.
Do you know your credit score?

As of July 1, 2017, consumers may have noticed that their credit score has increased.

Improved standards for new and existing public records in the databases of the three major credit reporting companies were implemented on July 1. As part of this change, a majority of civil debts and tax liens will be excluded, which means some credit scores will edge higher.

The new standards follow a report by the Consumer Financial Protection Bureau that found problems with credit reporting companies and recommended changes to help consumers.

Altogether, about 7 percent of the population will have a a debt, such as a judgment or tax lien removed from their credit file, according to a report by Fair Isaac. The company calculates and sells FICO scores, one of the most commonly used scores by lenders.

Once that information is stripped out, their numbers could rise by up to 20 points, Fair Isaac said.

“Analyses conducted by the credit reporting agencies and credit score developers FICO and VantageScore show only modest credit scoring impacts,” the Consumer Data Industry Association, which represents Equifax, Experian and TransUnion, said in a statement.

Still, credit reporting and scores play a key role in most Americans’ daily life. The process can determine the interest rate a consumer is going to pay for credit cards, car loans and mortgages — or whether they will get a loan at all.

In the near term, “it will lower the cost of borrowing,” said Andrei Andreev, an adjunct professor of finance at San Diego State University.

For now, by eliminating those large sources of potential for errors, “we think it will represent credit worthiness better,” he said. (Incorrect information on a credit report is the top issue reported by consumers, according to the CFPB.)

Contact Vujovic Law at www.vujoviclaw.com to see if bankruptcy or other debt options might help address debts that you may have other than judgments and tax liens.  Often, a bankruptcy discharge can improve your debt to income ratio, which can make it easier for you to qualify for certain types of credit, depending upon lender guidelines.

Depending upon your individual case, filing for bankruptcy protection can help to finally put a negative credit history behind you and lead to an opportunity to pursue a fresh financial start, enabling you build your new credit history, rather than being overwhelmed by the consequences of credit mistakes of the past.

FTC Brings Suit Against North Carolina Debt Collector for “Phantom Debts”

On June 23, 2017, the Federal Trade Commission (FTC) announced that it has filed a complaint in the U.S. District Court for the Western District of North Carolina against a North Carolina debt collection company and its owner, alleging that the defendants took money from consumers for fake or “phantom” debts they did not owe.

According to the FTC, the defendants bought counterfeit payday loan debts from a lending company through a debt broker and began collecting on the debts. When consumers began complaining that they never took out the payday loans, or that they did not have an outstanding balance, the defendants reported the complaints to the broker, who then provided the defendants with a full refund for their purchase. Per the Complaint, the defendants kept collecting on the debts for more than seven months despite their knowledge that the debts were phony.

As a result of the alleged actions, defendants are charged with violating section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibiting unfair and deceptive acts or practices, and section 814 of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692l, prohibiting the use of false or deceptive means in collecting debt. The FTC seeks both immediate

NC ATTORNEY GENERAL SPEAKS OUT ON BEHALF OF STUDENT LOAN BORROWERS

Earlier this month, the U.S. Department of Education announced that it will delay important new rules that protect student loan borrowers from predatory and deceptive practices.

North Carolina Attorney General Josh Stein released the following statement in response:

“Education is one of the best reasons I can think of to borrow money. But unfortunately, there are some in our world who take advantage of those who are vulnerable – and that includes student borrowers. As North Carolina’s Attorney General, protecting people, including students is my top priority.

“That is why I find this news deeply troubling. The rules, which were to take effect on July 1, would protect student borrowers – delaying them is misguided and irresponsible.

“These delayed rules were hard-fought and sound consumer protection measures born out of the problems that other attorneys general and I have seen plague student borrowers time and time again.”

The delayed protections include:

  • Prohibiting schools from forcing students to pursue complaints in arbitration rather than in court;
  • Prohibiting schools from requiring students to waive participation in class action lawsuits; and
  • Providing automatic relief and group relief for defrauded federal student loan borrowers in certain circumstances, including following legal actions by state attorneys general.

NCLC Calls on Congress to Restore Federal Protections Against Abusive Debt Collection

Contact us at Vujovic Law to see how we can help stop the abusive creditor tactics described in the recent U.S. Supreme Court decision described below:

In a decision authored by Justice Neil Gorsuch, the Supreme Court ruled in Henson v. Santander Consumer USA, Inc. that the Fair Debt Collection Practices Act (FDCPA)—the key federal law that prohibits late night debt collection calls, threats, harassment of neighbors, and contacts after the consumer tells the debt collector to stop—did not apply to Santander. Because Santander was collecting debts it bought from a different lender, the Supreme Court held that it did not qualify under one of the FDCPA’s definitions of debt collector, which covers companies that regularly collect debts owed or due another.

“The Supreme Court did not address a separate definition of debt collector that looks at whether the company’s principal purpose is debt collection,” clarified National Consumer Law Center (NCLC) staff attorney April Kuehnhoff. “Debt buyers are still covered under the FDCPA if they meet the principal purpose test,” she added.

“Today’s decision is bound to lead to consumer confusion since consumers won’t know whether or not the FDCPA protections apply to the debt buyer contacting them,” said NCLC attorney Margot Saunders. “The FDCPA is a 40-year-old law written before the rise of the modern debt buying industry. To ensure that consumers are fully protected from abusive debt collection activities, the onus is now clearly on Congress to amend the FDCPA to clarify that all debt buyers are debt collectors covered by the statute. This will not only protect consumers but also prevent a race to the bottom as debt buyers move to restructure their companies in an attempt to avoid having to comply with federal consumer protection statutes.”

FREEZE KIDS’ CREDIT TO GUARD AGAINST ID THEFT

FREEZE KIDS’ CREDIT TO GUARD AGAINST ID THEFT: ADVISES NC ATTORNEY GENERAL TO PARENTS

North Carolina Parents are now able to use security freezes to protect children’s credit

NC Parents now have a new tool to help protect their children’s credit from fraud according to North Carolina Attorney General Roy Cooper.

North Carolina House Bill 607 took effect January 1, 2016 and gives parents and guardians the ability to freeze the credit reports of all children under age 16.

“A security freeze locks down your credit report to keep identity thieves from opening accounts and racking up debts in your name,” Cooper said. “ID theft can strike victims of any age and now parents can protect their kids’ credit from the very beginning.”

In the past, the major credit bureaus have said that they could not freeze credit reports for minors who had not yet established any credit. The new law requires credit bureaus to create and freeze a child’s credit report upon request of a parent or guardian.

A security freeze or credit freeze is one of the best ways to keep criminals from being able to take out a loan or open a credit card in someone else’s name. A freeze blocks access to credit unless you have given your permission, meaning that a criminal who has stolen your child’s identity will not be able to use it to open new accounts.

How to get a security freeze for your children

  • Request a security freeze for your child under age 16 by mail, by telephone, or online. Visit ncdoj.gov/creditfreeze for contact information.
  • To lift a freeze permanently or temporarily, use the PIN or password established when setting up the freeze.
  • It may cost up to $5 per credit bureau to place or lift a freeze on a child’s credit.
  • A freeze is free if the child already has a credit report or has been a victim of identity theft.

North Carolina adults can freeze their credit reports for free online with each of the three major credit bureaus, with information available at ncdoj.gov.  Once your credit is frozen, you can thaw it when needed to take out credit yourself.

For more tips on protecting your identity and cleaning up the damage ID theft can cause, visit ncdoj.gov or call 1-877-5-NO-SCAM toll-free within North Carolina.

Editorial: Proposed NC wage garnishment bill would damage families

Editorial writer William Brewer is a bankruptcy lawyer who practices in Raleigh, NC and is a past President of the National Association of Consumer Bankruptcy Attorneys (NACBA).

The nation is finally and slowly emerging from the Great Recession – a period during which delinquency rates on consumer debts were five times higher than the rates during the previous five years. Simply put, many North Carolinians could not pay their debts because of lost jobs and fast-declining home values.

The result, not surprisingly, has been an explosion in lawsuits, especially by large national debt buying outfits that specialize in purchasing bad debts from the original creditors for pennies on the dollar and then trying to collect whatever they can.

The balance between the rights of these giant creditors to seize property from debtors and the rights of the debtors to keep property necessary to provide for their families is a delicate one. Those who have the ability to pay debts ought to do so. But, when confronted with the choice of paying a consumer debt like a credit card bill or providing for a family’s needs, family should come first. Unfortunately, the ability to put families first has been placed in jeopardy by the introduction of a wage garnishment proposal in the North Carolina Senate (Senate Bill 632) by Sen. Andrew Brock.

To understand the Senator Brock’s proposal, a little history lesson is helpful.

North Carolina law has long placed reasonable limitations on the right of a creditor who has successfully sued a debtor to seize his or her wages. Since 1870, state law has prohibited the seizure of such wages from the previous 60 days when it can be shown that the earnings “are necessary for the use for a family supported, wholly or in part, by his labor.”

Our courts have repeatedly upheld and applied this law to allow a debtor to protect 60 days of wages from his creditors, whether in the form of unpaid wages or wages received and in the bank, but only so long as they are necessary for the support of the debtor’s family. In other words, for almost 150 years, North Carolina has balanced the competing interests in this area by allowing a debtor to provide for his or her family.

Unfortunately, the new Senate proposal would destroy this balance by allowing a creditor to garnish 25% of a wage earner’s “disposable income,” which it defines as the debtor’s gross wages, minus taxes.

Let’s think about how this would play out in the real world. Consider a single mother with two children who earns $42,000 as a state employee. From her gross monthly pay of $3,500, $700 is deducted for taxes, $210 for retirement, and $200 for medical insurance, leaving her with take-home pay of $2,390. No one can dispute that she needs all $2,390 to support her family. However, Senate Bill 632 will allow a creditor to garnish an additional $700 from her pay, leaving her with only $1,690. The consequences will be devastating to her family.

As practical matter, the only refuge for such an unfortunate wage earner will be to file bankruptcy. But here’s the rest of the story: North Carolina has one of the lowest bankruptcy filing rates in the nation. For the first quarter of 2014, the national average for bankruptcies was 3.23 for every 1,000 people. North Carolina ranked 40th among the states with a rate of 1.82.

By contrast, the rates in our sister states in the southeast that allow wage garnishment along the lines of Senator Brock’s proposal are the highest in the nation. Tennessee is first with a rate that’s 350% of North Carolina’s. Georgia and Alabama are second and third with three times the North Carolina rate. Virginia has a rate 70% higher than North Carolina. South Carolina, which has no wage garnishment, has a filing rate 13% lower.

The conclusion from all this is inescapable: if the General Assembly and Gov. McCrory enact a law that dramatically expands wage garnishment in our state, bankruptcy filings will soar by 200-300%.

As a bankruptcy lawyer who has represented debtors for over 30 years, these statistics are not surprising to me. Contrary to conventional wisdom, people are not quick to file bankruptcy. Whether their reluctance emanates from embarrassment, a sense of defeat or simple personal morality, most will not file until they see no alternative; until they have to. For thousands upon thousands, expanded wage garnishment will provide the “have to.”

So, while the Senate proposal is clearly in the best financial interests of bankruptcy lawyers like me, it is bad public policy and I strongly urge state lawmakers to reject it.

A Student Aid Bill of Rights: Taking Action to Ensure Strong Consumer Protections for Student Loan Borrowers

Student Aid Bill of Rights: Taking Action to Ensure Strong Consumer Protections for Student Loan Borrowers

WHITE HOUSE PRESS RELEASE

Office of the Press Secretary

 

FACT SHEET: A Student Aid Bill of Rights: Taking Action to Ensure Strong Consumer Protections for Student Loan Borrowers

Higher education continues to be the single most important investment students can make in their own futures. Five years ago this month, President Obama signed student loan reform into law, redirecting tens of billions of dollars in bank subsidies into student aid. His historic investments in college affordability include increasing the maximum Pell Grant by $1,000, creating the American Opportunity Tax Credit worth up to $10,000 over four years of college, and letting borrowers cap their student loan payments at 10 percent of income. He has also promoted innovation and competition to help colleges reduce costs and improve quality and completion, including a First in the World fund. While these investments have helped millions of students afford college, student loans continue to grow.

That is why, today, President Obama will underscore his vision for an affordable, quality education for all Americans in a Student Aid Bill of Rights. As part of this vision, the President will sign a Presidential Memorandum directing the Department of Education and other federal agencies to work across the federal government to do more to help borrowers afford their monthly loan payments including: (1) a state-of-the-art complaint system to ensure quality service and accountability for the Department of Education, its contractors, and colleges, (2) a series of steps to help students responsibly repay their loans including help setting affordable monthly payments, and (3) new steps to analyze student debt trends and recommend legislative and regulatory changes. In addition, the Administration is releasing state by state data that shows the outstanding federal student loan balance and total number of federal student loan borrowers who stand to benefit from these actions.

A Student Aid Bill of Rights

I. Every student deserves access to a quality, affordable education at a college that’s cutting costs and increasing learning.

II. Every student should be able to access the resources needed to pay for college.

III. Every borrower has the right to an affordable repayment plan.

IV. And every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.

Today’s Actions to Promote Affordable Loan Payments

Americans are increasingly reliant on student loans to help pay for college.
Today, more than 70 percent of those earning a bachelor’s degree graduate with debt, which averages $28,400 at public and non-profit colleges. Today’s actions will help borrowers responsibly manage their debt, improve federal student loan servicing, and protect taxpayers’ investments in the student aid program:

. Create a Responsive Student Feedback System:The Secretary of Education will create a new web site by July 1, 2016, to give students and borrowers a simple and straightforward way to file complaints and provide feedback about federal student loan lenders, servicers, collections agencies, and institutions of higher education. Students and borrowers will be able to ensure that their complaints will be directed to the right party for timely resolution, and the Department of Education will be able to more quickly respond to issues and strengthen its efforts to protect the integrity of the student financial aid programs. In addition, the President will direct the Department of Education to study how other complaints about colleges and universities, such as poor educational quality or misleading claims, should be collected and resolved and to strengthen the process for referring possible violations of laws and regulations to other enforcement agencies.
These actions will help ensure more borrowers get fair treatment throughout the federal student loan process.

. Help Borrowers Afford Their Monthly Payments:The President will announce a series of steps to improve customer services and help borrowers repay their direct student loans, which are made with federal capital and administered by the Department of Education through performance-based contracts.
High-quality, borrower-focused servicing helps more borrowers successfully repay their federal student loans. Building on the stronger performance incentives put in place last year, the Department will now raise the bar by:

o Requiring enhanced disclosures and stronger consumer protections throughout the repayment process, including when federal student loans are transferred from one servicer to another, when borrowers fall behind in their payments, and when borrowers begin but do not complete applications to change repayment plans. These steps will better protect borrowers from falling behind in their payments and ensure consistency across loan servicers.

o Ensuring that its contractors apply prepayments first to loans with the highest interest rates unless the borrower requests a different allocation.

o Establishing a centralized point of access for all federal student loan borrowers in repayment to access account and payment processing information for all Federal student loan servicing contractors.

o Ensuring fair treatment for struggling and distressed borrowers by raising standards for student loan debt collectors to ensure that they charge borrowers reasonable fees and help them return to good standing; clarifying the rights of Federal student loan borrowers in bankruptcy; working with the Department of Treasury to simplify the process to verify income and keep borrowers enrolled in income-driven repayment plans; and working with the Social Security Administration to ensure that disability insurance recipients who can discharge their student loans are not instead seeing their disability payments garnished to repay defaulted loans.

. Prioritize Further Steps to Meet the Needs of Student Borrowers:The federal government has a responsibility to ensure that students who borrow federal loans have every opportunity to repay those loans through fair, affordable monthly payments. To continue to improve the information and customer service offered those borrowers, the President will direct the Department of Education to:

o Work with the White House Office of Science and Technology Policy to find the most innovative and effective ways to communicate with borrowers, leverage the latest research identifying key factors that influence borrower repayment and keep actual borrower behavior in mind, so they stay in repayment and avoid default.

o Work with the Office of Management and Budget to regularly monitor key trends in the student loan portfolio, improving loan servicing and budgeting and considering possible policy changes.

o Invite expertise from across the government to review best practices for performance-based contracting that could further improve outcomes for borrowers.

In addition, new requirements may be appropriate for private and federally guaranteed student loans so that all of the more than 40 million Americans with student loans have additional basic rights and protections. The President is directing his Cabinet and White House advisers, working with the Consumer Financial Protection Bureau, to study whether consumer protections recently applied to mortgages and credit cards, such as notice and grace periods after loans are transferred among lenders and a requirement that lenders confirm balances to allow borrowers to pay off the loan, should also be afforded to student loan borrowers and improve the quality of servicing for all types of student loans. The agencies will develop recommendations for regulatory and legislative changes for all student loan borrowers, including possible changes to the treatment of loans in bankruptcy proceedings and when they were borrowed under fraudulent circumstances.

Making Progress on A Student Aid Bill of Rights

Together, we can continue our work toward ensuring that all Americans have meaningful opportunities for a high-quality, affordable postsecondary education without the threat of unmanageable debt. The President’s vision laid out in the Student Aid Bill of Rights incorporates the progress we’ve made, his existing proposals, and the new actions announced today.

I. Every student should have access to a quality, affordable education at a college seeking new ways to lower costs and increase learning.

. America’s College Promise: In January of 2015, the President released a bold new proposal to make two years of community college free for responsible students, letting students earn the first half of a bachelor’s degree and earn skills needed in the workforce at no cost, benefiting nearly
9 million students, and ensuring states and community colleges do their part to help students succeed.

. First in the World Grants: In September, the Department of Education awarded $75 million to colleges and universities across the country under the new First in the World (FITW) grant program to encourage colleges to adopt cutting-edge innovations and proven strategies that expand college opportunity, improve student learning, and reduce costs. This year, the President has proposed increasing FITW to $200 million.

. Call to Action on College Opportunity: Last December, the President, Vice President, and First Lady joined college presidents, K-12 superintendents, non-profit, foundations, and businesses to announce over 600 new commitments to help more students prepare for and graduate from college.

. College Ratings: The Department of Education continues its work to develop a college ratings system by the 2015-2016 school year that will help students and families compare the value offered by colleges and encourage colleges to improve by highlighting institutions that successfully educate students from all backgrounds; maintain affordability; and help students gain a degree or certificate of value.

II. Every student should be able to access the resources needed to pay for college.

. Dramatically Increasing Investment in Pell Grants: The President raised the maximum Pell Grant award to $5,730 for the 2014-15 award year – a nearly $1,000 increase since 2008, helping more than 8 million Americans a year afford college. This year, the President has proposed new investments to ensure the maximum Pell grant keeps up with the cost of inflation.

. Simplifying the Process to Apply for Federal Student Aid: The Department of Education has helped students and their families fill out the Free Application for Federal Student Aid (FAFSA) in a fraction of the time it used to take-20 minutes from over an hour-through a redesigned tool that asks less questions and helps filers get their income data directly from the Internal Revenue Service. This year, the President has proposed eliminating more questions from the FAFSA.

. Simplifying and Improving Education Tax Benefits:The President created the American Opportunity Tax Credit (AOTC) to provide families with up to $10,000 over four years of college. This year, the President has proposed simplifying and improving education tax benefits for more than 25 million families, including making AOTC available for up to five years and eliminating taxes on student loan debt forgiveness under income-driven repayment plans.

III. Every borrower has the right to an affordable repayment plan.

. Pay-As-You-Earn Loans: Under the President’s Pay As You Earn plan, recent student borrowers can cap federal loan payments at 10 percent of their income. Last June, the President directed the Department of Education to amend its regulations to make the plan available to all direct loan borrowers, helping nearly 5 million additional borrowers by December 2015.
This year, the President has proposed reforms to the program that will streamline and better target all income-driven repayment plans to safeguard the program for the future.

IV. And every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.

. Transitioning to a Student-Centered Direct Loan Program: In 2010, the Administration took action to make federal student loans more reliable and efficient by eliminating subsidies to banks and successfully transitioning all new originations to the Direct Loan program. New performance-based contracts that were created by the Department incented servicers to find new and innovative ways to best serve students and taxpayers and this June, the contracts were strengthened to improve the way servicers are compensated to help borrowers repay their loans on time and ensure high-quality servicing.

. Simplifying Income-Driven Repayment Plans and Improving Borrower Outreach:
In 2012, in partnership with the Internal Revenue Service (IRS) the Department of Education made it easier for borrowers to enroll in an income-driven repayment plan by creating an online application that lets borrowers get their required income information directly from IRS. Along with outreach efforts spanning targeted email campaigns, social media, and partnerships with outside organizations, more than 2.4 million borrowers are able to manage their debt through and income-driven repayment plan.

. Building Tools and Resources to Support Federal Student Loan Borrowers:
Since 2012, the Department of Education has developed a suite of tools and resources to help federal student loan borrowers, including a financial aid counseling tool that helps borrowers make good education financing decisions, understand their options for paying back their loans, and accurately compare and select repayment options customized to their individual circumstances.

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The White House . 1600 Pennsylvania Avenue, NW . Washington DC 20500
.202-456-1111 <tel:202-456-1111>

NORTH CAROLINA TOP TEN CONSUMER COMPLAINTS FOR 2012

NC ATTORNEY GENERAL ROY COOPER SHARES TOP TEN CONSUMER COMPLAINTS FOR 2012 Do Not Call, lending, and telemarketing fraud top the list of complaints: A total of 23,205 consumers filed complaints with the Consumer Protection Division of North Carolina Attorney General Roy Cooper's Office in 2012. Cooper encouraged consumers to learn about the top sources of complaints as a way to avoid costly problems. If you think you've been ripped off or just didn't get what you paid for, let my office know about it. Even better, we'd like to help you avoid trouble in the first place by helping you learn to avoid common problems, Cooper said. Complaints were up 25 percent from 2011, when 18,483 written consumer complaints were filed with Cooper's office. Complaints about Do Not Call violations topped the list for 2012, with 6,126 complaints total. Many consumers complained about continuing to get unwanted telemarketing calls after they'd placed their number on the Do Not Call Registry, while others complained about illegal prerecorded robocalls pitching things like lower interest rate credit cards and home alarm systems. Cooper would like to see stronger penalties for telemarketers who violate Do Not Call and related laws. Cooper's office has been fighting a case in federal court for three years that is expected to have a major impact on Do Not Call enforcement. The case, against satellite television provider DISH, involves several million calls to consumers made by DISH, its dealers and representatives. North Carolina law makes it illegal for a business to call you using a recorded message, and the Consumer Protection Division has been able to use consumers' complaints to identify the culprits behind some illegal robocalls and take action to shut them down. Cooper has also warned consumers to simply hang up on robocalls, since pressing a number to get more information or try to stop the calls is actually likely to result in more calls. The Federal Trade Commission is currently offering a $50,000 prize to encourage people to develop new technology to block robocalls. Also included in complaints about unwanted telemarketing calls are complaints about political robocalls, which Cooper has long pushed to ban to numbers listed on the Do Not Call Registry. He would also like political robocallers to be required to provide a contact name and number to stop the calls at the beginning of each recorded message instead of at the end of the call. Complaints about lending were number two on the list for 2012, with 4,314 complaints filed about issues such as interest rate hikes, charges for late payments, foreclosure relief scams and other lending related matters. Last year, Cooper won a landmark national settlement to reform mortgages and prevent foreclosure abuses, winning more than $338 million in help for North Carolina homeowners. The Attorney General is fighting a proposal to bring payday lending back to North Carolina, which would likely lead to more complaints about lending. Cooper fought in court for years to chase payday lenders out of North Carolina, and the last storefront payday lenders operating in the state closed their doors in 2006. Senate Bill 89 would allow payday lenders to open up shop again, charging interest rates of more than 300 percent on loans that must be paid back in two weeks. Complaints about telemarketing fraud came in at number three on the list, with 3,418 filed in 2012. Popular telemarketing fraud schemes include phony sweepstakes and lotteries, sweetheart scams, fake government grants, and counterfeit check scams. Fraud artists usually operate from outside the country and try to trick victims into sending them money overseas, through wire transfers, reloadable debit cards, or even by bringing or sending them large amounts of cash. Victims reported $8.5 million in losses to telemarketing fraud to us last year, with victims losing on average $10,000 each. Cooper's telemarketing fraud experts work with federal and international law enforcement to try to unravel the schemes, and they've also negotiated agreements with Western Union and Moneygram to make it harder for telemarketing fraud rings to use their services. They also help families deal with the often difficult process of convincing senior loved ones that they're being scammed, and work to keep victims from being ripped off repeatedly. Complaints about health care, home repair, motor vehicles, credit and collections, television services, Internet and computers, and telecommunications rounded out the top ten. See the complete list of top ten consumer complaints of 2012 at www.ncdoj.gov. The top ten list is based on written complaints filed with the Attorney General's Consumer Protection Division. Tens of thousands of North Carolina consumers also get help from consumer protection experts from the office over the phone and by email as well as at scam jams and other educational events across the state. Scammers are never shy about making money at your expense, and they can be very convincing, Cooper warned. Learn to recognize scams so you can avoid them, and report them to help us enforce the law. Cooper shared information about top complaint sources and top tips as part of National Consumer Protection Week, March 3-9, 2013. Cooper also issued a list of top ten tips to help North Carolinians avoid scams and unfair business practices. Visit www.ncdoj.gov for more consumer tips and tools. North Carolina consumers who want to check up on a business, get tips or file a complaint can contact the Attorney General's Consumer Protection Division. Call 1-877-5-NO-SCAM toll-free within North Carolina or submit a complaint online. Once a consumer files a written complaint, the NC Attorney General's office can try to help resolve the situation. In cases where there is a pattern of illegal business practices, the Attorney General may also take action to enforce the law on behalf of all North Carolina consumers. Media Contact: Noelle Talley (919) 716-6413

NC ATTORNEY GENERAL COOPER AGAINST EFFORT TO RESTART PAYDAY LENDING IN NORTH CAROLINA

North Carolina Attorney General Roy Cooper makes his position quite clear: “This is the same old rip-off we ran out of our state years ago. These overpriced loans trap borrowers in a cycle of debt many cannot escape. Payday lending was a bad idea then, and it’s a bad idea now.” Background: Cooper fought in court for years to chase payday lenders out of North Carolina. A bill filed recently in the NC Senate would allow payday lenders to open up shop yet again in the state, charging excessive interest rates on loans that must be paid back quickly. Senate Bill 89 would amend the Check Cashing Licensing Act to allow a check casher/lender to pay out cash loans of up to $500 for a fee of 15 percent of the cash advance. On a typical loan repayable in two weeks, the annual percentage rate would be more than 300 percent. Current state law allows a maximum rate of 16 percent on consumer loans under $25,000 except that licensed consumer finance lenders can charge up to 36 percent on loans under $600. The bill would not allow payday loans to be made to military personnel or their spouses. Congress already banned payday lending to military personnel in 2007 to protect service members from these predatory loans. In the late 1990’s, payday lenders expanded rapidly across the state. Many North Carolina consumers who took out payday loans saw their debts mount quickly when they were unable to find the money to repay their original loan in such a short period of time. After legislators outlawed payday lending in 2001, some payday lenders closed their doors while others used a variety of ruses to keep operating. Cooper and the Commissioner of Banks’ office fought a long legal battle to shut down illegal payday lenders in North Carolina, winning agreements to close the last storefront payday lenders operating in the state in 2006. Last year, Cooper became concerned about payday-type loans being offered by Regions Bank, which tried to claim protection under federal law because it is chartered in another state. Thanks to pressure from Cooper’s office and other consumer advocates in the state, the bank stopped making those loans in North Carolina last month. Media contact: Noelle Talley (919) 716-6413

Student Loans: Debt for Life

Student Loans: Debt for Life

This much we know: College pays. You can lose your house to foreclosure, but never your education. Four-year college graduates’ pay advantage over high school grads has doubled over the past 30 years. If money for tuition is tight, the advice goes, borrow what you need. Students have been listening. In 2010 student debt exceeded credit-card debt for the first time. In 2011 it surpassed loans for vehicles. In March, the Consumer Financial Protection Bureau announced that student debt had passed $1 trillion. It grew by $300 billion from the third quarter of 2008 even as other forms of debt shrank by $1.6 trillion, according to a separate tabulation by the Federal Reserve Bank of New York. In a press briefing at the White House in April, Education Secretary Arne Duncan said, “Obviously if you have no debt that’s maybe the best situation, but this is not bad debt to have. In fact, it’s very good debt to have.”

If student loans are good debt, how do you account for the reaction of Christina Mills, 30, of Minneapolis, when she found out her payment on college and loans from law school would be $1,400 a month? “I just went into the car and started sobbing,” says Mills, who works for a nonprofit. “It was more than my paycheck at the time.” Medical student Thomas Smith, 25, of Hamilton, N.J., is $310,000 in debt and is struggling to make ends meet even before beginning to repay his loans. “I don’t even know what I eat,” he says. “I just go to the supermarket and buy the cheapest thing I can and buy as much of it as I can.” Then there’s Michael DiPietro, 25, of Brooklyn, who accumulated about $100,000 in debt while getting a bachelor’s degree in fashion, sculpture, and performance, and spent the next two years waiting tables. He has since landed a fundraising job in the arts but still has no idea how he will pay back all that money. “I’ve come to the conclusion that it’s an obsolete idea that a college education is like your golden ticket,” DiPietro says. “It’s an idea that an older generation holds on to.”

Even if you buy into the notion that education debt is good debt, at what point does it become too much of a good thing? Mark Kantrowitz, publisher of FinAid.org, which researches aid to financially assist students, estimates that student debt, compounded by rising enrollments, is growing by nearly $3,000 a second.

“The question isn’t the debt per se. It’s what the students are getting in return,” says Richard Arum, a New York University sociologist who specializes in education. Many students are incurring heavy debts for an education (ethnomusicology, theater arts) that just isn’t worth it from a strictly financial viewpoint. (Money isn’t everything, but try telling that to the collection agency.) Education is a benefit to society by creating a workforce that creates wealth, pays taxes, and stays off welfare. But state governments—whose schools educate 7 in 10 students—have raised tuition abruptly because of their own financial problems. So far the federal government has offset the state cutbacks by boosting financial aid, but Education Under Secretary Martha Kanter testified to Congress earlier this year that “this path is not fiscally sustainable.”

There’s a lot of speculation that college debt is the next bubble after housing, the latest sector in which prices leap above real value. American colleges may not be turning out the kind of graduates that employers want. In Academically Adrift: Limited Learning on College Campuses, NYU’s Arum and sociologist Josipa Roksa of the University of Virginia write that employers are being forced to turn to foreigners or graduate and professional schools to fill jobs that they once filled with homegrown college graduates.

That’s the value side. The cost side is ugly, too. The economic slump that began in 2007 has forced people to pay more for college even as it has driven more of them into it as a refuge from an unfriendly job market. The National Center for Education Statistics projects that college attendance this fall will be up 19 percent from the fall of 2007. Meanwhile, state and local support for higher education last year was the lowest in 25 years of measurement, in inflation-adjusted dollars per student, according to the State Higher Education Executive Officers Association. Two-thirds of college seniors graduated with loans in 2010, and those who did had an average of about $25,000, according to the Institute for College Access & Success.

zachmanifold@gmail.com posted on September 06, 2012 14:08