“The personal finance Top 10 - Washington Post” plus 1 more

The personal finance Top 10 - Washington Post

Posted: 19 Dec 2010 12:30 AM PST

Right about now, many people look back on the year that was and measure the triumphs and tragedies.

Some of the biggest news stories in 2010 centered on pocketbook issues, with most of them involving great losses as many people across the country continued to struggle to find employment and hold on to their homes. As I reflect on the year, I thought I would give you my list of the Top 10 personal finance stories. Here they are, from top to bottom:

1 Unemployment. Hands down, this has been and still is the wrench in the cog of the economic recovery. And it may continue to be the big story in years to come. Economic forecasters in a survey by the Federal Reserve Bank of Philadelphia predicted that the national unemployment rate will continue to be high, staying above 9 percent next year, then dropping to 8.7 percent in 2012 and 7.9 percent in 2013.

2 The Great Recession was declared over. It took more than a year, but the National Bureau of Economic Research affirmed this year that the economic downturn that started in December 2007 officially ended in June 2009. It was the longest downturn since World War II. The news was met with lots of sneers. Technically, the recession may be over, but the financial suffering continues.

3President Obama signed into law the most sweeping overhaul of financial regulation in decades. Part of the landmark legislation includes the creation of the independent Consumer Financial Protection Bureau, a watchdog agency whose mission is to protect consumers from the abusive lending practices that contributed to the crisis. The government also has new powers to seize troubled financial firms.

4Flash Crash. On May 6, the financial markets experienced a dramatic drop in prices, declining more than 5 percent in a matter of minutes, only to recover a short time later. "The whipsawing prices resulted in investors selling at losses during the decline and undermined confidence in the markets," wrote the Securities and Exchange Commission and the Commodity Futures Trading Commission in a joint report.

5 Foreclosure-Gate. Major lenders halted foreclosure sales nationwide after reports that mortgage loan servicers signed thousands of foreclosure documents without verifying the information. The practice, known as "robo-signing," led to a joint investigation by all 50 state attorneys general.

6 Major phases of the Credit CARD Act went into effect. Among other things, credit issuers can no longer push you over your card's credit limit with fees or interest charges. Issuers can't charge interest on the fees. Adults younger than 21 can't get credit unless they can prove they have the income to pay the debt or have a co-signer.

7 New federal rules took effect aimed at reining in shady debt-settlement companies. Debt-settlement companies now have to make specific disclosures to potential customers - how long it will take to get results, how much the service will cost and the potential negative consequences that could result from seeking debt relief.

8 Introduction of an online clock showing the billions in student loan debt that is being amassed. The Student Loan Debt Clock at www.finaid.org/studentdebtclock keeps a running tally of outstanding federal and private student loans. In June, the total debt on student loans exceeded debt on credit cards for the first time.

9 Social Security turned 75. Despite the fact that Social Security has kept many people from slipping below the poverty line, we are still debating whether it's a worthy social program. Notably this year, former U.S. senator Alan K. Simpson, co-chairman of Obama's bipartisan debt commission, got in trouble for saying this about Social Security: "We've reached a point now where it's like a milk cow with 310 million tits!"

10 Velma Hart. Hart became the symbol of middle- and higher-income folks unhappy with the lack of economic progress by Obama and his administration. Hart expressed to the president during a town hall meeting in Washington her fears about the economy, and this turned her into an instant media darling. Her quote for the history books: "The financial recession has taken an enormous toll on my family. My husband and I joked for years that we thought we were well beyond the hot-dogs-and-beans era of our lives. But quite frankly, it's starting to knock on our door and ring true that that might be where we're headed again. And quite frankly, Mr. President, I need you to answer this honestly: Is this my new reality?"

Two months later, Hart was let go as the chief financial officer for Am Vets, a nonprofit Maryland-based veteran services organization. Turns out her fears were justified.

Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com. Questions are welcomed, but because of the volume of mail, personal responses may not be possible.

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Personal Finance: Bankruptcy is no longer a doomsday - Philadelphia Daily News

Posted: 26 Dec 2010 12:00 AM PST

Posted on Sun, Dec. 26, 2010

The cruelest recession since the Depression has pushed people who never would have dreamed of bankruptcy to ask themselves whether they dare file now.

Fear holds many back, as they worry their financial options will be ruined for life. But that is hardly the case, said Tara Twomey, a lawyer with the National Consumer Law Center. Bankruptcy has a stigma and can stay on a person's credit report up to 10 years, but "people drowning in debt can get a fresh start and go forward keeping their important assets," she said.

Bankruptcy lawyers say some people who are serious about putting their lives in order often can get a home loan two to three years after coming out of bankruptcy. Even credit cards are offered, though they carry interest rates that people should shun.

Experts agree that bankruptcy does not ruin your life, but they emphasize that those considering it should look into other options, including working out new arrangements with lenders.

(Experts caution that those in dire financial condition not wait too long to file. More on that later.)

Charge today, then repent

With 15 million people jobless and about one in four homeowners underwater on their mortgages, many people have learned that charging today on the belief that they can pay tomorrow is a dangerous trap. Following a lull in bankruptcies after Congress tightened rules in 2005, personal bankruptcies are increasing. According to the U.S. government, about 1.5 million Americans filed for bankruptcy in the 12 months ended Sept. 30, a 14 percent increase over the number who filed during the 12 months ended Sept. 30, 2009.

And studies show "people are in worse shape than ever" when they file, said Robert Lawless, who teaches bankruptcy law at the University of Illinois at Urbana-Champaign. Too many people wait until it is too late "and suffer more than they need to," he said.

Once a lender threatens to take your car or home, talking to a reliable bankruptcy lawyer is wise, Lawless said.

He emphasizes "reliable." Some ambulance-chasing bankruptcy lawyers take advantage of people worried about debt that is not truly unmanageable, and they push people into bankruptcies they do not need. Debt-counseling and debt-repair firms can take money from clients and not make payments to creditors.

A solution is to find out from a debt counselor whether you can handle debts by putting yourself on a strict budget. But do not go to firms that advertise or promise to get rid of your debts. Select one that gets funding from the United Way or a local government, an indication it has been scrutinized.

Do not wait too long

In bankruptcy, a person probably will be able to keep his or her home and car, but that is not a certainty. Some bankruptcy lawyers say that people who do not file for bankruptcy and unsuccessfully try to juggle an array of bills increase the risk that lenders will take back a car or home.

Bankruptcy features multiple rules, and they apply differently to Chapter 7, which tends to be for the deeply desperate, and Chapter 13, which gives people a three- to five-year payment plan.

The advantage of bankruptcy is that foreclosures, evictions, repossession, garnishment of wages or Social Security payments, utility shut-offs, and collection calls stop. Wait too long to file, and a legal judgment might eliminate options for saving an asset.

"Do not wait until the car is on the verge of repossession or two days before the home is foreclosed," bankruptcy lawyer Max Gardner said.

Once you file for bankruptcy, only debts you have had until then are relieved. Say you're unemployed and relying on credit cards for food and gas. If you file, the card companies might cancel your cards. But while you are in bankruptcy, you might get credit card offers because the banks might consider you a safer risk now that you have little or no debt and you cannot file for another seven or eight years. Remember that you will not get any relief for debts taken on after bankruptcy.

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

Personal Finance

Sunday, December 26, 2010