Posted on Thursday, 4th February 2010 by Boun Vilailath

A 2009 USA Today survey found that each of the 10 largest banks allow consumers to overdraw checking accounts.  By doing so, banks reaped a record $38.5 billion from overdraft fees that year, nearly twice the $20.5 billion collected from credit card penalties, such as late and over-limit fees.

“Overdraft fees are the mother lode of (deposit) fees,” says Michael Moebs of Moebs Services, an economic research firm.  “If it weren’t for the overdraft fees, 45% of banks and credit unions wouldn’t have made money in 2008.”

Banks have covered a debit card overdraft as small as $1 and charged a fee as high as $35 as well as charging $7 – $10 daily for being negative after a certain period.  Some banks also charge fees before consumers actually overdraw by deducting a purchase when it’s made, instead of when the transaction clears.  And they process transactions in order from highest to lowest dollar amount to empty the account quicker and trigger more overdrafts.

Banks contend consumers can avoid overdrafts by keeping track of their money.  Consumers contend, though, that banks’ policies make it challenging to avoid fees.  Banks have long said that customers appreciate automatic overdraft coverage and that this service helps consumers avoid the embarrassment of a declined transaction.  In truth, as banks have now acknowledged, these fees can push consumers into financial distress.

Rep. Carolyn Maloney sponsored legislation requiring banks to obtain consumers’ permission to cover overdrafts, disclose APRs, and pay transactions in a way that do not increase fees.  The Federal Reserve’s new regulation prohibits banks from charging overdraft fees on ATM and debit card transactions unless consumers “opt in” to overdraft protection.  The regulation is effective in July 2010 and it protects consumers who unknowingly overdraw their accounts.

In anticipation to the changes, some banks have eliminated “free checking” accounts and are finding new ways to raise revenue by hiking ATM fees or introduced charges for features, such as identity theft alerts, that they once offered for free.  J.P. Morgan Chase renamed its Chase Free Checking program to Chase Checking, and added a $6 monthly fee.  TCF Financial Corp, a Minnesota based bank who turned retail banking upside down in 1986 when it introduced “totally free checking” accounts, is now putting an end to them.

Although overdraft fee charges have been limited, consumers are angry that banks are passing them the “bill.”  Sadly, banks had to rely on overdraft fees to compensate for bad loans.  Consumers should anticipate new and creative banking fees in the coming months.

Tags: Bank, Checking, Consumer
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Posted on Thursday, 4th February 2010 by Boun Vilailath

The now retired and former CEO of Bank of America Corp, Ken Lewis has been named in a civil fraud suit by New York AG Andrew Cuomo.

The suit alleges that Lewis and former CFO Joe Price mislead investors and the government when purchasing Merrill Lynch & Co in 2008.  Cuomo contends that the two officers understated the losses at Merrill in order to get BOA investors to approve the deal.  Once the merger was completed, they then overstated the firm’s willingness to terminate the deal because of the losses unless the government provided a second bailout.

The government provided $20 billion in additional bailout money for the combined BOA and Merrill companies in Jan 2009.  BOA is currently involved in a $150 million settlement agreement with the Securities and Exchange Commission for its decision to pay billions of dollars in bonuses to former Merrill employees.

Tags: Bank, Lender
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Posted on Monday, 1st February 2010 by Boun Vilailath

If you’re in debt and considering a debt relief program (credit counseling, debt settlement, or bankruptcy), please read my new FREE eBook, “Debt Relief: Protection from Collectors and Unscrupulous Service Providers.”  It will clarify those relief solutions and help you to make an informed decision.  Book excerpts:

A recent consumer report conducted by Harris Interactive indicates that many Americans are not making sound financial decisions.  They are not well informed about financial issues, do not keep adequate financial records or monitor spending, and are not saving enough money to finance their retirements…

This book is not about budgeting and will not recommend that you give up your daily cup of coffee.  Comparatively, it’s about providing insight into real solutions that work, while saving you the disappointment and thousands of dollars in service fees.  The commercial seen on T.V. promising you relief, is simply just that.  Promises.  All the while, you hear about credit counseling agencies claiming to be the most effective relief service.  The fact is credit counseling is not what it is made out to be.  If majority of debtors are failing to pay a portion of their debts under a Chapter 13 bankruptcy program, how in the world will they manage to repay 100% of the balance under a credit counseling service?  Together, we will set out to find answers that can truly benefit your situation.

Debt Relief: Protection from Collectors and Unscrupulous Service Providers –

Tags: Book, Consumer
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Posted on Wednesday, 27th January 2010 by Boun Vilailath

Global Debt Systems announces innovative program to clarify debt-relief solutions and inform consumers about their options free of charge.

Minneapolis, MN (January 26, 2010) – Responding to increasing public concern over debt settlement practices, consumers now have access to online training that teaches them how to analyze their financial condition and select a debt relief solution that complies with their situation.  Global Debt Systems has developed a free pre-debt relief e-learning curriculum, which is available through globaldebtsys.com.

Each of the debt relief options uses a very different approach to debt reduction and the solutions must be clearly understood to determine its suitability.  Consumers seeking assistance from credit counseling or debt settlement services should not treat the program as a solution that provides protection from creditors.  Bankruptcy is the only solution that offers protection to consumers.  It is a legal solution, enforceable by the courts and executed according to legal guidelines.  Some consumers will want its power to halt a creditor’s collection efforts or stop a pending lawsuit.

None of the debt relief solutions can salvage a credit score.  Consumers struggling with debt should not ignore the problem by doing nothing.  There are options available; however, each strategy should be fully explored before making any decision.  The adverse effects can be fatal to one’s life and family.

“No matter which debt relief option is chosen, they all should reduce either the interest rate charged or the amount of debt owed, and will serve to increase consumers’ economic welfare by freeing up more of their money to pay for other necessities,” states Global Debt Systems Chief Consultant Boun Vilailath.  “The course serves to not only educate consumers, but also teach them how to detect unscrupulous debt relief service providers.”

The Pre-Debt Relief Course launches in February.  It consists of a four-course curriculum that educates consumers about credit and debt, and proceeds to clarify each debt relief option.  All non-profit organizations, churches, and community clubs are welcome to preview the course.  For more information, visit globaldebtsys.com.

About Global Debt Systems

Global Debt Systems improves the process of resolving delinquent consumer debt by training and outreach efforts designed to create mutually beneficial results for creditors, consumers, and debt counselors. We provide e-learning services to companies and organizations that educate and advocate for ethical business practices.  Located in Minneapolis, Minnesota, the company donates time and a portion of its profits to various non-profit organizations that promote responsible budgeting and financial management.

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Posted on Saturday, 23rd January 2010 by Boun Vilailath

Banks on Wall Street are inserting “clawback” provisions and deferred stock awards to executives in an effort to reduce public scrutiny of excessive cash bonuses.

In a recent filing, Morgan Stanley said its CEO James Gorman will receive deferred stock valued at $5.4 M but no cash bonus for 2009.  If he meets certain performance targets, an additional $2.7M worth of stock will be awarded to him.

He will also receive a “clawback” deferred stock that will boost his pay for 2009.  However, the bank can reclaim that award in case of any wrongdoing by Gorman.  The figure will be announced later this year.

Morgan Stanley announced a $617 million profit in the 4^th Quarter from its investment banking and retail brokerage businesses.  The bank’s 2009 compensation expenses, including salaries and bonuses, rose 30 percent to $14.4 billion from $11.1 billion in 2008.

Does Gorman deserve the bonus?  Yes he does.  In fact, even if Morgan Stanley didn’t produce a profit, I still think he deserves it.  The $8.1M bonus is minute compared to the banking industry’s recent meltdown.  Executives should be retained and fairly compensated while managing a crisis.  It’s an incentive to stay focused on the problem and bring out the best ideas.

As an entrepreneur, I understand one truth; you get what you pay for.  Even as a debt settlement professional who has been critical of banking executives, I understand bonus packages are necessary in order to keep those who are valuable to the organization.  Each person has unique talents and equality discourages a person from becoming their best.

Tags: Bank
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Posted on Thursday, 21st January 2010 by Boun Vilailath

The Free Pre-Debt Relief Course is an innovative program designed by Global Debt Systems to give consumers insight into their financial condition and debt relief options that may be available to them.  It is our commitment to provide consumers with straightforward information, which we hope can guide them in their decision to;

• Enroll into a Debt Settlement Program or Credit Counseling Program
• Hire a debt settlement company or do it themselves
• Or, decide if a bankruptcy attorney should be consulted

Hiring a debt relief company can be costly, time-consuming, and has no guarantee of success.  Before enrolling into a debt relief program, get unbiased facts on the debt settlement, credit counseling, and bankruptcy solutions.

The course introduces consumers to collections and debt settlement.  Students will become knowledgeable about the American credit system and they can immediately begin making informed decisions.  This powerful information can instantly turn problems around.

Receive the FREE Pre-Debt Relief Course by registering today.  Understand your rights and options, and smartly choose which debt relief solution best suits your financial circumstances.  For more information, visit http://tiny.cc/UZQQV.

Tags: Consumer, Debt Settlement
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Posted on Tuesday, 19th January 2010 by Boun Vilailath

Consumers filing for bankruptcy protection peaked in 2005, in anticipation of tougher regulations enacted under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).  Those regulations made it more difficult for consumers to discharge all debts and, instead, forced more people into debt payment programs – commonly a Chapter 13 bankruptcy.

Consumer Bankruptcy Filings

Source: American Bankruptcy Institute
*Data includes U.S. Territories

After the sharp drop from 2005’s record highs, totals have risen steadily.  By the end of 2008, filings again exceeded one million per year.  Because consumers have less control over repayment terms under the new regulations, those terms can be challenging for many people living paycheck to paycheck.  As many as two-thirds of borrowers are unable to complete the terms of a Chapter 13 bankruptcy program and have to exit it.  However, most borrowers are able to discharge their debts by converting to a Chapter 7 liquidation bankruptcy.

In 2009, the total filings reached 1.4 million, soaring 32% from the previous year – making it the highest since the passing of the BAPCPA.  The most recent data available (November 2009) show that Chapter 7 filings were up 42% compared with the same period a year earlier.  Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November.

The surge can be attributed to foreclosures and unemployment.  For those reasons, most borrowers now qualified for Chapter 7 bankruptcy and could walk away from their debts without entering into a Chapter 13 repayment program plan.  The new bankruptcy law was intended to prevent consumers from discharging debts in such ways.  This is not what Congress had in mind with the BAPCPA.

Tags: Bankruptcy, Consumer
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Posted on Monday, 18th January 2010 by Boun Vilailath

Experience immediate results and save thousands of dollars

Minneapolis, MN – The decision to hire a debt settlement company to aid in resolving charged-off debts or go at it alone is heavily influenced by self-confidence.  Consumers should be conscious about the natural advantage they possess when dealing with collection agencies.  To elevate that advantage and save them thousands of dollars, Global Debt Systems has produced a comprehensive do-it-yourself e-learning training program, which is available through www.globaldebtsys.com.

The business ethics surrounding debt settlement companies is as an on-going concern of regulators.  Illinois Attorney General Lisa Madigan supports recent legislation designed to end abusive and unfair practices in her state.  The bill prohibits companies from charging up-front fees, limit commission fees, and end deceptive promises of specific results in advertising, marketing and all other communications to consumers.

Countless consumers that receive service from settlement companies have unfortunately been sued or forced into bankruptcy.  US personal bankruptcy filings in 2009 reached 1.4 million, soaring 32% from the previous year – making it the highest since the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005.

“Consumers in financial trouble need to be proactive in resolving their debts in a timely manner or they may face bankruptcy,” said Global Debt Systems Chief Consultant Boun Vilailath.  “The collection industry is becoming a routine business with prescribed steps designed to clear out debts.   Delinquent accounts incur bogus fees which inflate the balance, so accepting a reduced lump-sum payment is clearly favorable as oppose to pursuing the full amount for an indefinite period.  Collector threats become less effective once the debtor understands the nature of the game.”

The e-learning program launches in February.  It consists of a seven-course curriculum that introduces the world of collection and debt settlement, and equips students with the knowledge and power to take control of their debts and finances.  For more information about registration and our promotional offer, visit www.globaldebtsys.com.

About Global Debt Systems

Global Debt Systems improves the process of resolving delinquent consumer debt by training and outreach efforts designed to create mutually beneficial results for creditors, consumers, and debt counselors. We provide e-learning services to companies and organizations that educate and advocate for ethical business practices.  Located in Minneapolis, Minnesota, the company donates time and a portion of its profits to various non-profit organizations that promote responsible budgeting and financial management.

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Posted on Wednesday, 13th January 2010 by Boun Vilailath

In debt settlement, consumers have the natural advantage.  Why?  Because collectors are relentless in chasing after what you possess.  That is the money owed to them.  And, when they have to compete with other creditors for the money, it can dramatically reduce the amount they’re prepared to accept.

The difference of hiring a debt settlement company to assist you in resolving the delinquent accounts or going at it alone is the confidence factor and thousands of dollars in up-front fees.  Collection agencies are known to be relentless, persistent, demanding and sometimes outright abusive.  Collection attorneys and their assistants are no different, in fact a phone call from them can insinuate a lawsuit proceeding.  The process becomes extremely intimidating and unnerving.

If consumers invest time to understanding the collections process and their rights, their confidence in representing their case to collectors will become less frustrating.  The debt collection business works almost as an automated process.  They purchase or are contracted to collect the debt for the original creditor for pennies on the dollar.  The added penalty, collection, and interest fee are bogus.  So accepting a reduced amount is clearly in their best interest as an alternative to pursuing the debt indefinitely.  Debts that are not collected in a reasonable time are repackaged and sold to another collector for a lesser amount.

When dealing with collectors, consumers have to anticipate the attitudes they are to encounter.  And, you should always expect collection attorneys to be more difficult in negotiations.  Attorneys prefer to negotiate with other attorneys and are often rude or dismissive to debt settlement agents.  However, they are more willing to work out a settlement with the debtor than debt settlement companies.

All together, by understanding the laws that govern the collections process, the collector’s aggressive tactics are less effective.  Since the consumer or debt settlement company has authority over the settlement funds, they have a natural advantage over the collector seeking those funds.

I always recommend going at it alone before hiring help.  However, before doing so, you must understand your rights and how the process works.  You cannot negotiate from a clueless perspective.  That would be foolish because debts that are unpaid have legal consequences.  If a lawsuit is proceeding against you, you must seek the advice of a qualified attorney.

If you are considering enrolling into a debt settlement program, then do so by fully understanding the pros and cons.  The best thing about debt settlement programs is that they can take the worry off of you and provide support during the process.  However, you must seek representation from a TASC or USOBA certified member firm.  These services come at a hefty price in the form of up-front fees.  To collectors, debt settlement companies can be seen as another competitor in contention for the debtor’s limited funds.

The mistake made today by most consumers is that they enroll into a debt settlement program and then drop the program in an effort to do it themselves.  It’s also fair to say that because the program is projected to conclude in up to 36 months; financial circumstances may change and force the program to end.  Today’s uncertain economy makes that more of a possibility.

The best advice is to get educated in understanding the process and make your decision based on your circumstances.  The process of debt settlement is not much different whether going at it alone or hiring help.

Tags: Consumer, Debt Settlement
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Posted on Tuesday, 12th January 2010 by Boun Vilailath

Locating the debtor can take many months.  After finally reaching the debtor via phone, it’s time for the collector to get into action.  However, before they can begin the collection, they must start off with the “Mini-Miranda” warning; informing the debtor that the call is an attempt to collect a debt and the conversation is being recorded.

Take a step back. What goes on from here can affect the account’s status.  The facts of the debt account should determine how you react to the collector. Is the debt entering into collection for the first time?  How long has this debt been delinquent since the last payment?  Am I about to be sued?

If the account is entering into collection for the first time, the process may be new to you.  If your intention is to pay off the debt, kindly inform them of your plans and hang up the phone immediately.  During this period, money is tight and paying the collector may be impossible.  There’s no need to discuss your intentions any further.  If you plan to file bankruptcy, let the collector know and forward your attorney’s contact information.

Before hanging up the phone, the collector will work quickly to keep you on the phone.  The longer you’re on the phone, the more personal financial information you divulge.  Don’t carry a conversation with them.  They are professionals, and by the end of the call, most debtors will authorize a post dated electronic withdrawal to pay the debt in a schedule.  The worst thing about this scenario is that most of the time the electronic checks will bounce and it will put them further in the hole by reneging on a contract and they incur return check fees.

If you’re in a position to pay the debt, why not negotiate a little?  All debt collectors will accept a reduced amount to get an immediate payment.  Chances are your credit rating has already suffered dramatically.  Having an account reported as “settled” is narrowly identical to a “paid-in-full” status.  A settlement payment releases you from all legal remedies associated with unpaid debts and the chances of being approved for another loan is comparable to as the debt being paid in full.

Even if you had the money to settle with the collector, how do you know if the collector is legally entitled to collect on the debt for the original creditor?  Consumers have the right to ask the collector to validate the debt.  In the validation period; the collector must present proof that they are contracted by the original creditor to collect the debt, provide accurate accounting on the debt, refrain from reporting the collection account to credit bureaus, and stop all communications until the debt has been validated.  In order to successfully request validation, the consumer must submit a validation letter within 30 days of receiving the collector’s initial letter that informs them about the debt.

If the debt has been delinquent for a very long time, it may be the collector’s last attempt to collect the debt before the statue of limitations expires.  It is common for consumers to hear from collectors before the debt expires.  The collectors are usually aggressive in demanding a payment.  If the consumer cannot make that payment, their last resort is to file a lawsuit before the debt expires.

Debts that exceeded its time limit are considered time-barred.  Collectors pursuing time-barred debts cannot force payment through the courts.  They can only request the consumer to pay the amount.  However, collectors can still sue the consumer after the statue of limitations has expired.  They can argue that the consumer either; waived the statue of limitations, extending the statues, or re-aged the account.  In most cases, the consumer must prove that the statues did in fact expire.

As time passes on delinquent accounts, I recommend that you carefully avoid admitting owing the debt.  This can re-age the debt and start the time period over again.  The best advice is to tell the collector, “I don’t know what you’re talking about and stop contacting me about this debt.”  Send them a cease and desist letter requesting that they immediately stop contacting you.  Seek the advice of a qualified consumer attorney if the collections don’t end.

Tags: Collection, Consumer, Debt Settlement
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