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“Payday Loans: Quick Approval to Long-Term Debt?”

アメリカ 弁護士 法律事務所 法律  給料日ローン:簡単な承認から長期債務へ?In these tough financial times, having an extra bit of cash can add some important breathing room. Payday loans (sometimes called check loans, cash advances, or quick cash) can be attractive to individuals facing financial troubles. Although these quick loans may help some consumers, for others, they only create even more headaches. And it is the experience of those frustrated customers that has caused the federal government and a handful of states to take a critical look at this growing area of lending.

A relatively new loan type, payday loans offer consumers a quick influx of cash. In the last decade, payday loans have flourished because people facing a financial bind find them to be a convenient alternative to bouncing checks, paying late fees on credit cards, and even having their utilities shut off. To apply for such loans, consumers usually have to show only a pay stub or some other proof of regular income (such as Social Security); no credit checks are involved. Then the consumer gives the lender a pre-dated personal check for the amount of the loan plus a fee (usually around $100) and receives the loan money.

At the end of the loan term, which is usually two weeks, there are three possibilities: 1) the lender cashes the check and receives the full loan amount plus the fee, 2) the lender tries to cash the heck but the consumer doesn't have enough money to cover it, resulting in a bounced check that will cause the borrower to be hit with fees from both the bank and the lender, or 3) the consumer refinances the loan and pays additional fees. It is this third option that gets most consumers in trouble. Referred to in the industry as "rolling over" the loan, this process allows consumers to extend the loan into future months until they hopefully will have the ability to pay off the entire loan amount all at once. However, each time a loan is rolled over, the consumer must re-pay all fees associated with the loan, which can sometimes end up being double the original amount lent.

It is these sky-rocketing cumulative fees, along with the fact that many of these loans involve annual percentage rates of more than 400 percent that has been the source of much of the worry over payday loans. In some cases, these harsh loan terms have resulted in legislation aimed at creating consumer safeguards. A few states, including New York, have enacted laws effectively banning payday lending altogether. Arkansas has recently moved to shut down payday lending within the state, relying on a unique clause in its state constitution that bans lenders from charging an annual interest rate higher than 17 percent. Congress passed a federal law in 2006 that imposed limits on the ability of such lenders to reach out to military personnel. However, this trend is by no means national, and in many states, payday loan stores outnumber fast food chains.

If you or a loved one are considering a short-term loan of any type, it is important to put as much thought and research into this as you would a large mortgage or other long term loan. In order to avoid falling victim to any type of lending practice, payday or not, try to work with a lender you trust (or find one your family/friends trust). And remember, if it seems to good too be true, it probably is.

What to do if you or someone you know has an unfair payday loan?

  • If you have multiple high-interest loans, consider working with a trusted lender to assess whether consolidating them makes sense for you.
  • File a complaint with your state attorney general's office, state consumer protection agency, or banking department.
  • Contact your state and federal legislators-urge them to take action to ensure fair lending in your state.
  • Talk to your lawyer about possible recourse.

(Summer 2008)

"Home Foreclosures: Know Your Rights"

アメリカ 弁護士 法律事務所 法律 サブプライムローンの現実:家屋が差押えられたときのあなたの権利Foreclosures are big news these days. Between sub-prime mortgages falling apart and the stalling housing market, you could be forgiven for thinking most homeowners are on the verge of foreclosure. Although this is clearly not the case, if you are one of the unfortunate homeowners teetering on the edge of foreclosure, or against whom foreclosure proceedings have already begun, you should be aware of some important rights and responsibilities.

A foreclosure is a legal action in which a lender takes ownership of the property used to secure a loan because the owner failed to make required payments. Foreclosures can happen quickly. Although traditional foreclosures involve court supervision, not all foreclosures require court orders. Depending on your state and the original terms of your loan agreement, a foreclosure can be completed in 45 days or less. Still, if you are currently going through foreclosure, don’t panic. Although this is a very stressful and serious situation, you do have options, and being pro-active is in your best interest. In fact, if the foreclosure is still in its early stages, it is likely that your lender would prefer to work things out with you and not foreclose.

Be Informed
When you first receive notice of a foreclosure action, there are some important steps to take. First, identify the parties involved. Today, most mortgages are sold and repackaged many times after the loan is first given. In some cases, the company that currently owns the loan won’t actually be the one with the authority to renegotiate or modify the loan.
This means that the company starting foreclosure proceedings against you isn’t actually the party you will work with. Although you may have originally worked with your local bank, your loan may now be owned by a larger company located in a different state. Knowing the parties should help prevent confusion and move the process along faster. It will also help protect against fraud. Once proceedings start, your name and address are public record, providing valuable information to individuals and corporations looking to prey on the vulnerable. Don’t assume that just because a letter arrives in your mailbox that it is from a reputable, reliable source.

You should familiarize yourself with relevant state and federal laws and the policies of your specific lender. The Federal Trade Commission’s website (www.ftc.gov-search “Foreclosures”) provides valuable information on how to find your state’s regulations and on avoiding foreclosure. Because states vary greatly with regard to timing and notice requirements, knowing the specific laws governing your state and lender can save time and headaches.

Assess Your Options
If you are about to miss a payment or if you have received a foreclosure notice, you aren’t out of options yet. You should contact the “loss management” department of your lender immediately. Depending on your situation and lender, you may be able to refinance or determine a “work-out” plan. Although you still owe money, this will prevent a foreclosure from appearing on your credit record and could save your home.

Get Help
If foreclosure is a realistic possibility for you, don’t run from the problem - confront it head on and get help. Help can come in various forms: credit and debt management advice from credit counselors, legal guidance from your attorneys, and sometimes even government action from state consumer protection agencies (if you think fraud or predatory lending has been involved).

As a homeowner you should be aware of your financial rights and responsibilities.
There are many steps involved in the home lending process; if you are interested in learning more about your options, be sure to contact your lender or work with your attorney. Although financial struggles create stressful times, do what you can to ensure that your rights, and in some cases your home, are protected.

(Fall 2007)

"Bankruptcy and Credit Counseling"

Bankruptcy and Credit CounselingUnfortunately, major debt is a reality in many Americans’ lives. In October 2005, the Federal government passed a new bankruptcy law affecting millions of Americans. Among other things, the law requires individual or group credit counseling within 180 days prior to filing a bankruptcy petition.

The Federal Trade Commission has issued the following warning regarding Credit Counselors:

Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report … The truth is, they can’t deliver. After you pay them undreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.

How, then, does one complete the mandatory counseling and not get ripped off?

The new law requires the U.S. trustee to provide a publicly available list of approved not-for-profit credit-counseling agencies that can provide the mandatory services. These credit agencies are permitted to charge only “reasonable fee[s],” and “provide services without regard to ability to pay the fee.”

Debtors work with approved counseling agencies to develop debt-management plans. Debt-management plans may consist of the credit-counseling agency collecting a lump sum each month that it then distributes to creditors (debt management), or the agency may help the debtor by negotiating better credit terms with the creditors while payments continue to be made directly to creditors (debt negotiation). Once developed, the debt-management plan must be filed with the applicable bankruptcy court along with a certificate from the agency that assisted in its development.

(Summer 2007)

"Preappoved Credit Card Offers"

Preappoved Credit Card OffersIf you have a credit card and a decent credit record,
chances are that you receive dozens of “prescreened” or
“preapproved” offers for credit cards every month.

There’s nothing wrong with these offers. You get them because
companies that solicit new credit card accounts have asked a
consumer reporting company for a list of people in the
database who meet certain criteria or who have a certain
credit score. Receiving preapproved offers-or rejecting them-does not have any effect on your credit rating. In fact, prescreened offers can be useful if you are in the market for a credit card. They can help you learn about what’s available, compare costs, and find the best product for your needs. Because you are preselected to receive the offer, you can only be turned down under limited circumstances.

However, preapproved credit card offers do contain sensitive personal information.
If other people have access to your mail, or if you dispose of preapproved offers in the trash without shredding them, then they can put you at risk for identity theft. If you decide that you don’t want to receive prescreened offers of credit and insurance, you can opt out of receiving them by calling 1-888-5-OPTOUT or by visiting www.optoutprescreen.com. The telephone number and website are operated by the major consumer reporting companies.

(Fall 2006)

"Interest Rates and Mortgage Woes"

Interest Rates and Mortgage WoesInterest rates have risen over the past year, which means that if you have an adjustable-rate mortgage, your payments are probably taking a bit more money out of your pocket. A slight increase in mortgage payments is no problem for most people, but it may spell trouble if you need to make other large or unexpected payments. You also may be concerned if rising interest rates are combined with falling house prices in your area, which can make it difficult to sell your home. Read on to find out more about mortgages and what to do if you think you may fall behind on your mortgage payments. If you anticipate any problems making your mortgage payments, you should contact your lender and your lawyer as soon as possible.

Is there anything I can do if I can’t pay my mortgage?

When people get behind on their mortgage payments, it’s usually because of job loss, divorce, illness, or medical bills. The first thing to do if you’re having trouble making your mortgage payments is to take the matter seriously. Many people refuse to face the fact that their home is on the line and delay doing anything until it’s too late. Then you should take the following steps:


  • Contact your lender as soon as possible. Call or write to explain your problem, and be sure to include your account number to speed the process.

  • Ask if you could defer paying principal for a few months.

  • Ask if you could refinance the loan at a lower rate to help make your payments affordable.

  • If that won’t work, ask for time to sell the home yourself. If you’re actively trying to sell your home, your lender may cooperate by reducing monthly payments.

  • Contact the nearest housing counseling agency, which offers advice and services to help you ward off foreclosure. If your loan is insured by HUD, for example, a HUD-approved agency can help you apply for federal mortgage-relief programs that may provide temporary aid. If you have a VA-insured loan, contact a local VA office for assistance.
  • Consider filing for bankruptcy, which in some states may ward off immediate foreclosure. But be sure to talk with a lawyer before beginning any bankruptcy proceedings.

What is foreclosure?

Foreclosure is a legal action in which a lender takes ownership of the property used to secure a loan because the property owner failed to make mortgage payments. Foreclosure terminates the homeowner’s ownership interest. A foreclosure decree orders the sale of mortgaged real estate so the proceeds can satisfy the debt.

What happens when a lender forecloses on the mortgage?

he law varies by state, and these differences have a critical impact on the homeowner’s rights. That’s why it’s important to consult a lawyer in your state as soon as you can. In general, if the lender forecloses, all your rights to your home will end immediately or soon thereafter. The foreclosure process may take no more than six months, though some states have a more lengthy process and include rights of redemption.

State laws do provide homeowners with certain protections. In Illinois, for example, when a foreclosure suit is filed, the homeowner has ninety days to make up the back payments to reinstate the mortgage. After that date, the lender can legally require that the mortgage be paid in full within seven months of the original foreclosure notice. The important thing to remember is that you must act immediately to protect your home if your lender intends to foreclose.

(Winter 2006)

"Refinancing Your Home"

Refinancing Your HomeIf your interest rate is higher than the current market interest rates, then you may benefit from refinancing your mortgage. Whether refinancing is a good option for you depends on the market, your mortgage, and your circumstances. You will need to have at least 20 percent equity in your home if you wish to avoid paying private mortgage insurance. Talk to your lawyer to work out the pros and cons.

(Winter 2006)

"Correcting Credit Card Billing Mistakes"

Correcting Credit Card Billing MistakesOver the holiday period and during the sales, you will probably use your credit cards to make dozens of purchases. You also might return items and have amounts refunded to your credit card, and purchase items online. In an age of identity theft, it is more important that ever to keep track of your purchases and returns and to pay attention to your account statements ensuring that no mistakes have been made. The good news is that a federal law, the Fair Credit Billing Act, gives you valuable rights if there are billing errors on your credit card or department store accounts. Your lawyer can give you more information about the act and advice on the steps to take if you notice major billing mistakes on your credit card statements.

What are Billing Errors?

The Fair Credit Billing Act requires credit grantors to correct billing errors promptly. The act defines billing errors as

  • unauthorized charges; these include charges made by someone not authorized to use your card, and automatic charges you authorized for a service or subscription that you have since cancelled;
  • charges that are not properly identified on your monthly statement or that are for amounts different from the actual purchase price; or
  • charges for something that you refused to accept on delivery because it was unsatisfactory or that the supplier did not deliver according to your agreement.

Billing errors may also include

  • errors in arithmetic or multiple charges for a single transaction;

  • failure to reflect a payment that you made or other credit to your account, such as a return; or

  • failure to mail a billing statement to your current address (if the credit grantor received notice of that address at least twenty days before the end of the billing period).

Keeping Track of Your Bills

Of course, you’re unlikely to notice any billing errors if you do not check your credit card statements against a record of your purchases. Your statement usually gives only the date of purchases, the price, and the store from which you bought each item. Credit card statements can be difficult to decipher when the statement only includes a merchant’s corporate name (such as “ABC, Inc.”) rather than the store name (such as “Candy’s Groceries”). It’s a good idea to check your statement against sales receipts. If you keep sales receipts, you may also return an item in the event that it is defective, damaged, or the wrong size or color.

Reporting Billing Errors

If you notice any billing errors, you should write or telephone the card issuer promptly. As a practical matter, most consumers would prefer to call the card issuer’s 800 number for billing questions, and most disputes can be settled in this way. (You can find the correct 800 number on your billing statement.)

However, the Fair Credit Billing Act only protects written―not telephone―inquiries, so making a written inquiry will better preserve your legal rights. Do not include written inquiries about billing errors with your payment. Instead, you should check the billing statement for the correct address for where to send billing questions. The letter should contain your name, address, and account number. State that you believe your bill contains an error, specify the charge at issue and explain why you believe it is wrong, and include the date and suspected amount of the error. Include copies of any sales receipts or other documentation that may be relevant. It’s also a good idea to send your letter by certified mail requesting a return receipt, so that you have proof that you sent the letter to the correct address.

Either a written or telephone inquiry must be made within sixty-days of the statement date. The sixty day time limit is very important; if you fail to observe it, you may forfeit your rights under the Fair Credit Billing Act. After you have notified a creditor of a billing error, the law requires the creditor to acknowledge your letter within thirty days (unless the credit grantor can fix the billing error in less time). The credit card issuer must resolve the dispute within two billing cycles (but not more than ninety days) after receiving your letter.

Following the Rules

If the credit grantor does not follow each of the time limits and other requirements in the Fair Credit Billing Act, then it cannot collect the disputed amount or related finance charges, even if the disputed bill turns out to be correct and the amount is thus money you truly owe. For this reason, it’s important to keep track of the dates on which you sent correspondence to the creditor, and the dates on which you received replies.

If the Bill Is Incorrect

If the creditor determines that your bill was in fact incorrect, then you obviously do not have to pay the contested amount. In addition, the Fair Credit Billing Act provides that you do not have to pay finance charges or late fees related to the contested amount.

If the Bill Is Correct

If the credit grantor finds that the disputed bill is correct and you do not want to take the matter further, then you must pay the bill and any related finance charges or late fees. You may ask for copies of relevant documents. If you fail to remit payment, then the credit grantor may take action to collect the amount and may report you to credit bureaus as overdue for the amount in question.

If you still disagree with the credit grantor’s finding, you should notify the grantor of your views in writing within ten days. If you refuse to pay the disputed amount, then the creditor may begin collection procedures and may report you to a credit bureau. However, in its report to the credit bureau, the credit grantor must state that you do not believe you owe the money. Remember, if a creditor reports negative information about you to a credit bureau, it can affect your credit score and make it more difficult for you to get credit in future.

If you are unable to resolve the dispute to your satisfaction, you may want to consult a lawyer.

Complaints and Litigation

The Federal Trade Commission enforces the Fair Credit Billing Act for most creditors. To file a complaint or to get free information on consumer issues, you can use the complaint form at www.ftc.gov.

It is also possible to sue a creditor who violates the Fair Credit Billing Act. Courts have the ability to award twice the amount of any finance charges between $100 and $1000 (i.e., a maximum of $2000) and may also award damages in some cases. Your lawyer can give you more information about pursuing litigation under the act.

Effect on Your Credit Rating

A credit grantor may not threaten your credit rating because you failed to pay a disputed amount, a related finance charge, or other charges while you’re trying to resolve a billing dispute. Once you have taken the steps described above by writing down the details of the billing dispute and sending them to the credit grantor, the law prohibits the credit grantor from reporting the account as delinquent because you have not paid the disputed amount or related charges. Until the credit grantor answers your complaint, the law forbids it from taking any action to collect the amount in dispute. You must, however, continue to pay any undisputed amounts.

In addition, the Equal Credit Opportunity Act prohibits creditors from discriminating against people who have exercised their rights under the Fair Credit Billing Act when they are applying for credit. Simply put, you cannot be denied credit simply you’ve disputed a bill. If you think a mistake has been made, you have nothing to lose by making an enquiry.

(Winter 2005-2006)

"New Bankruptcy Law Now in Effect"

New Bankruptcy Law Now in EffectIt’s easy to spend too much money on credit cards at any time of the year, but it can be particularly difficult to stick to a budget during the holiday season. If you have seriously overextended your credit and have more debt than you can handle, then you have several options, including credit counseling and debt consolidation. The most serious step you can take is filing for bankruptcy.

If you are considering filing for bankruptcy, then you need to know that a new bankruptcy law, the Bankruptcy Abuse Prevention and Consumer Protection Act, came into effect on October 17, 2005. Under the new law, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy protection. (You can find a list of these organizations at www.usdoj.gov/ust). The law implements a new “means test” to determine whether a debtor is eligible to file for bankruptcy under chapter 7 (under which all non-exempt assets are sold and most unsecured debts are discharged), or must file under chapter 13 (under which a portion of unsecured debts must be repaid from wages over three to five years).

Now that the new bankruptcy law is in effect, it is more important than ever to seek legal advice early if you are concerned about your debt burden.

(Winter 2005-2006)

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