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Tax Relief Scams

Optima Tax Relief have published a great article about tax relief scams on their blog. We thought we'd write a follow up.

Because the IRS is increasing enforcement to unprecedented levels, there's been an increase in the number of unethical tax resolution scams preying on people who owe back taxes. This year we've already seen rising numbers of consumer complaints about tax resolution scams. In tough economic times, it's especially important to not ignore IRS problems. Taxpayers must realize that they have to be careful when choosing a tax relief professional to resolve their back taxes and IRS problems.

We highly recommend you review the article from Optima Tax Relief to find out ways you can help protect yourself from the bad guys.

Tax relief, like debt relief, is an industry plagued by unscrupulous characters looking to make a quick buck. We at Debtmerica pride ourselves for being one of the leading FTC compliant firms. Our clients have always come first, which has been ingrained in our team at Debtmerica.

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Government will now oversee credit reporting

Tuesday, 17 July 2012 12:00

Government will now oversee credit reporting Consumers worried about how their credit rating might affect the costs they face for carrying credit card debt might soon be able to find a bit of relief.

The federal Consumer Financial Protection Bureau will begin overseeing the credit reporting industry on September 30, and therefore help to ensure that Americans only have accurate information listed on their profiles, according to a report from the agency. Credit reports are used to create consumers' credit scores, which in turn are used to determine not only eligibility for loans, but also the terms of those agreements.

In all, there are about 400 companies nationwide that participate in some sort of credit scoring, but only about 30 of the "larger participants" will be regulated, the report said. Those 30 companies alone make up 94 percent of all receipts in the industry, and the three largest issue more than 3 billion credit reports annually for some 200 million Americans.

Erroneous markings on a credit report can lead to significant problems for borrowers and in some cases prompt them to seek out debt relief options. Add a comment

Rewards credit cards can be helpful if borrowers are careful

Friday, 13 July 2012 12:00

Rewards credit cards can be helpful if borrowers are careful Accounts that grant consumers benefits for taking on credit card debt are growing more popular with borrowers in nearly all income groups.

While many experts have noted that rewards credit cards are largely for more affluent consumers, a large number of those in lower income ranges are now using these accounts regularly as well, according to a report from Phoenix Marketing International. In all, 74 percent of people with incomes between $20,000 and $29,900 last year had rewards cards, and used them to spend for 72 percent of their credit card purchase value.

Further, only 26 percent of those in this demographic paid an annual fee on their rewards card, the report said. However, that number was higher than the 23 percent of people in all demographics who paid such a fee for a non-rewards account.

Because of fees and higher interest rates, rewards credit card accounts can end up costing borrowers more than those without benefits, and may lead borrowers to end up needing to seek debt relief. As such, these cards should be handled cautiously. Add a comment

Lower delinquency spells broadening credit for subprime borrowers

Wednesday, 11 July 2012 14:00

Lower delinquency spells broadening credit for subprime borrowers As the economy continues to improve, many of the nation's financial risk experts believe lenders will keep broadening credit standards while delinquencies remain in decline.

Bank risk professionals now believe that lenders will keep allowing subprime borrowers to take on credit card debt and have more access to auto loans over the next six months, according to a survey by the Professional Risk Managers' International Association for the credit scoring company FICO. In all, 50 percent expect subprime auto lending to expand most significantly, while 38 percent believe credit cards will see the largest gain. Only 12 percent felt the same about residential mortgage lending.

Further, experts also predicted that instances of delinquency for most account types would decline in the second half of the year, the report said. The majority expected dips in late payments on auto loans (77 percent), mortgages (73 percent), small business loans (72 percent) and credit cards (69 percent).

Those who have run into financial trouble and ended up seeking some sort of debt relief option may want to be cautious about borrowing in the future, and approach any new accounts they open responsibly. Add a comment

Consumers still reducing credit card debt on time

Monday, 09 July 2012 13:00

Consumers still reducing credit card debt on time The rate at which consumers fall behind on their credit card debt payments continues to drop, as do consumers' balances on those cards.

New data from the nation's six largest credit card lenders shows that delinquency rates dropped once again in the second quarter of the year and could continue to do so for some time more, according to a report from Reuters. Barclays Capital found that the delinquency rate - accounts 30 days or more behind on payments - for these institutions stood at just 2.35 percent of all balances, down from more than 6 percent at the start of 2009, when the recession was still ongoing.

This trend has also allowed consumers to slash their credit card balances considerably, the report said. Data from the credit monitoring bureau Equifax shows that borrowers have cut their obligations by more than $170.4 billion since October 2008, a decline of 22.7 percent.

Consumers who saw their credit standings take a tumble during the recent recession have largely been able to repair them by seeking debt relief options and generally being more conscientious in attempting to clear their balances. Add a comment

Consumers getting better handle on credit card debt, other loans

Thursday, 05 July 2012 14:00

Consumers getting better handle on credit card debt, other loans Americans have been able to be far more conscientious about making their bill payments on time and in full in recent months, and that is particularly true when it comes to dealing with their outstanding credit card debt.

Consumer delinquencies on credit card bills dipped once again in the first three months of the year, and now stand at lows not seen in more than a decade, according to the latest Consumer Credit Delinquency Bulletin issued quarterly by the American Bankers Association. In all, consumer credit card delinquency slipped to just 3.08 percent of all outstanding balances, down from 3.17 percent at the end of last year.

This was the lowest level seen since 2001, and now stands at well below the average seen over the last 15 years of 3.93 percent, the report said. However, that average was likely inflated considerably by the high rates of delinquency and default observed during and following the recession.

The recent economic downturn led many Americans to fall behind on all types of loans and prompted many to seek some sort of debt relief. However, many are now finding it easier to handle their accounts as the economy improves. Add a comment

Mobile wallets coming into starker focus

Monday, 02 July 2012 14:00

Mobile wallets coming into starker focus Many companies are working on ways to allow consumers to begin dealing with their credit card debt using their mobile phones instead of swiping their cards in the traditional way, but there may be some way to go when it comes to standardizing this type of purchase.

Mobile wallet purchasing platforms are expected to be the next big thing in the credit card industry, but because there are so many companies developing their own versions of the technology, it may be some time before a uniform system exists, according to a report from San Francisco, California, television station KGO. For this reason, there are factions forming for two of the largest competitors in the field, and each will likely have its own stable of partner retailers.

"You have Google proposing, 'This is how we'd like to do it,'" Derek Kerton, the principal analyst for the Kerton Group and chair of the Telecom Council Silicon Valley, told the news station. "But you have companies like the carriers in the United States, forming an association called ISIS, saying, 'No, no, don't work with Google, work with ISIS. This is the payment consortium that's going to bring this all together.'"

However, both will likely try to incentivize business participation in their programs by giving the companies a large amount of information about the people using mobile wallets, the report said. For instance, users might be able to link their store loyalty, credit card rewards, social networking and local couponing accounts to their mobile wallets, which would give retailers more detailed information about customer spending, saving and sharing habits. That, in turn, could be used to create more direct marketing.

Studies have shown that consumers who use swipeless credit card purchasing systems are likely to spend more money than they would with a regular card, and considerably more than if they used cash. For this reason, it may be a good idea for those who have sought debt relief in the past to carefully consider the benefits of such a program, and, if possible, try to restrict the use of these accounts to make everyday purchases. Using a credit card often can lead to balances that quickly grow quite sizable and can therefore be difficult to get back under control again. Add a comment

Lenders willing to extend more credit card financing

Friday, 29 June 2012 10:00

Lenders willing to extend more credit card financing Consumers who want more power to deal with credit card debt were likely able to find it last year as a result of slackening underwriting standards for the nation's largest lenders.

Last year, credit qualifications broadened for 35 percent of the 20 major financial institutions that issued credit cards, according to the latest Annual Survey of Credit Underwriting Practices issued by the U.S. Office of the Comptroller of the Currency. Another 50 percent said they held their standards steady, and only 15 percent actually tightened them.

It was generally the improving economic conditions seen nationwide that prompted lenders to once again begin broadening qualifications for credit cads, the report said.

"Examiners attributed the easing of standards to changes in economic outlook, product performance, competitive environment, risk appetite, and market strategy," the report said. "The primary methods used for easing credit underwriting standards were changes in pricing and fees, scorecard cutoffs, and debt-to-income ratios."

Consumers seeking debt relief have generally been more conscientious about paying down their outstanding balances since the end of the recession, leading to all-time record lows in instances of both delinquency and default. Add a comment

Subprime consumers gaining more access to credit

Wednesday, 27 June 2012 12:00

Subprime consumers gaining more access to credit Consumers who may have had their credit card debt written off as uncollectable in the past might now be able to once again begin borrowing.

Data suggests that the extension of new lines of credit, and particularly creditcards, to consumers with subprime credit card ratings has expanded 41 percent in the last year, according to a report from MarketWatch. This includes 24 percent of all new credit card accounts issued last year and this year being granted to borrowers with credit scores below 700, up from 22 percent in 2010.

The reason for this is that the risk of default for credit card accounts has fallen considerably in the last three years, the report said. While default risk stood at 7 percent in 2009, immediately following the recession, it is now just 3 percent. However, that rate is still notably elevated from the 1 percent default risk observed in 2005, prior to the onset of the recession.

Consumers who have defaulted on their credit card accounts may need to seek some form of debt relief to help avoid some of the costly fallout that may occur. Add a comment

Experts recommend reasonable approach to credit card debt

Monday, 25 June 2012 12:00

Experts recommend reasonable approach to credit card debt With millions still struggling with large outstanding balances, consumers who are trying to reduce their credit card debt should do so responsibly by exploring all their available options.

Many consumers are now attempting to get out from under their large credit card balances, and experts generally recommend that they do so as responsibly as possible by first reviewing all aspects of their finances to ensure that they are making wise decisions which they can afford, according to a report from USA Today. For one thing, it may be helpful to first try to get a lower credit card rate, either by calling their lender and negotiating for one, or by obtaining a new balance transfer accounts that come with 0 percent APRs for the first several months the account is open.

Those who cannot afford to make larger payments to their accounts may also want to consider earning additional income or scaling back their contributions to retirement savings until the balance is paid off in full, the report said.

Borrowers who are in especially tough situations may want to consider the various debt relief options available to them. Add a comment

Charge off rates driven down by more hiring

Friday, 22 June 2012 12:00

Charge off rates driven down by more hiring Delinquent and defaulted credit card debt has been on the decline for some time now, and new data suggests that instances of both are tied very closely to unemployment rates.

As the effects of the recession slip away and employers continue to expand their hiring practices, it's expected that consumers will make more on-time payments into their various credit card debts, according to new data from the Mercator Advisory Group. When the recession began, instances of both charge offs and early-stage delinquency spiked at the same times unemployment did, and since it ended, both have moved slowly downward.

Now, both of these financial concerns are standing at or near all-time lows for all of the nation's largest lenders, the report said. However, some experts note that even if unemployment continues to fall from its somewhat elevated state, there must be a logical bottoming-out in charge offs and delinquencies.

This is particularly true because improving credit conditions have allowed lenders to expand issuing to subprime borrowers. In many cases, these consumers are those who ran into financial trouble in the past and ended up having to seek some form of debt relief. Add a comment

Credit card debt rises as borrowers increase spending

Wednesday, 20 June 2012 13:00

Credit card debt rises as borrowers increase spending One of the nation's largest lenders and payment processors found that consumers took on more credit card debt but fell behind on payments less often between March and May.

In that three-month period, Discover Financial Services saw both the dollar value of purchases on its branded credit cards and the number of transactions it processed rise 5 percent, according to a report from the Associated Press. Consumers put some $26.1 billion on their cards during that time, and balances consequently grew 4 percent to a total of $46.6 billion overall.

However, the company also saw instances of both delinquency and default slip to all-time lows during this time, the report said. Accounts 30 days behind on payments fell to just 1.91 percent of all balances from 2.79 percent, and those so far behind they were written off as uncollectable fell to 2.79 percent from 5.01 percent.

Consumers who have more credit card than they can handle and end up falling behind on their bills may want to consider the benefits that seeking debt relief services can provide them. Add a comment

May saw fewer delinquencies and defaults

Monday, 18 June 2012 13:00

May saw fewer delinquencies and defaults Consumers continued to make on-time payments into their outstanding credit card debt in May, despite experts' predictions that late accounts might increase.

Economic indicators such as a disappointing jobs report ledsome experts to speculate that instances of both delinquency and default would increase for the nation's top six credit card lenders in May, but that didn't happen, according to a report from the Wall Street Journal. In fact, only Discover Financial Services saw any increase at all, and that was a small one in its charge off rate. In fact, that increase was so incremental - to 2.65 percent of all balances from 2.6 percent in April - that it was below typical seasonal fluctuations.

Further, lenders are reining in their attempts to market new accounts to consumers as a result of these economic factors, the report said. Some believe this may further delay increases in delinquency and default in the near future.

Falling behind on credit card payments can be a troubling behavior for consumers, and those who do so may want to seek some form of debt relief as a result. Add a comment

Credit card defaults increase even as delinquency drops

Friday, 15 June 2012 13:00

Credit card defaults increase even as delinquency drops The rate at which consumers fell behind on paying down credit card debt continued to generally improve in April, but the charge off rate seen by the nation's top lenders increased because of an anomaly with one issuer's schedule.

Due to a quirk with its calendar, Citi had an additional three days in April to write off seriously late credit card payments as uncollectable, and as such, the charge off rate for the nation's top lenders spiked for the first time this year in April, according to new statistics from Fitch Ratings. In all, the charge off rate for these financial institutions climbed to 5.44 percent from 5.17 percent, but would have remained flat if not for Citi's added time.

At the same time, the rate of late-stage delinquencies - those accounts 60 days or more behind - slipped to a low not seen in 17 years, the report said. These balances accounted for just 2.03 percent of all handled by the major lenders, down from 2.14 percent in the same month last year.

Consumers who fall behind on their credit card payments may need to seek some form of debt relief to get out from under the financial burdens they face. Add a comment

Credit card debt plaguing fewer consumers post-recession

Wednesday, 13 June 2012 13:00

Credit card debt plaguing fewer consumers post-recession The recent economic downturn caused many consumers to reassess the ways in which they dealt with credit card debt, and millions seem to have been successful in slashing their reliance on their accounts.

Between 2007 and 2010, the amount of credit card debt carried by the average American family as a portion of their total outstanding balances took a significant tumble to just 2.9 percent, down from 3.5 percent, according to new data from the Federal Reserve Board's most recent Survey of Consumer Finances. Further, the percentage of families nationwide who carried a balance on these accounts declined to 39.4 percent of all households, down from 46.1 percent three years prior.

And those who carried a balance were also able to successfully cut them, the report said. The median balance from those who carried one fell about 16.1 percent to just $2,600, and the average balance dropped 7.8 percent to $7,100.

Many consumers also saw seriously delinquent credit card accounts written off by lenders as uncollectable during this time, and those who did so may have had to seek out various forms of debt relief. Add a comment

Consumers using credit and debit cards more often

Monday, 11 June 2012 13:00

Consumers using credit and debit cards more often Though consumers are now being far more cautious about dealing with credit card debt, they are still relying on those accounts, and their debit cards, more often than cash when making purchases from retailers.

Debit and credit, respectively, have both surpassed cash and checks as the most common type of payments at real-world retail stores in the U.S., according to new data from Javelin Strategy and Research. Further, over the next several years, both card-related payment methods are expected to grow even more popular and increase their share of total transaction volume, thanks in large part to an increase in use for both prepaid cards and mobile wallet credit card platforms.

Further, it's expected that credit card purchases will continue to increase in volume as the economy improves over the next five years, the report said. In all, retail purchases at real-world point of sale locations, rather than online, total about $3.8 trillion annually, and make up roughly 96 percent of all sales in the U.S.

Many consumers have been more careful with their outstanding balances since the recession, when many faced financial trouble and needed to seek some amount of debt relief. Add a comment

April sees credit card debt tumble

Friday, 08 June 2012 13:00

April sees credit card debt tumble The amount consumers owed in credit card debt fell in April, in keeping with the recent trend of fluctuations in these balances from one month to the next.

Consumers' balances on revolving credit accounts - that is, balances that can be added to and subtracted from between one month and another, most commonly associated with credit cards - shrank 4.8 percent in April when compared with the same month last year, according to the latest statistics from the Federal Reserve Board. Now, the total balances on those accounts stand at $862.3 billion, down from March's $865.7 billion, but still slightly higher than the $862 billion observed at the end of February.

However, the total amount consumers owed still rose as more sought education financing and auto loans, the report said. In all, non-revolving credit jumped 7.1 percent, but due to the declines in credit card balances, overall consumer credit increased at the slowest rate seen in six months.

Consumers have been trying to get their finances in order for some time now, and many have sought numerous types of debt relief as a means of doing so. Add a comment

Larger amount of senior citizens have sizable debts

Wednesday, 06 June 2012 13:00

Larger amount of senior citizens have sizable debts These days, millions of senior citizens are struggling with credit card debt and other sizable balances that can make their lives more difficult in retirement.

A number of reports have come out in recent months detailing the struggles seniors and Baby Boomers have faced in the last several years when it comes to dealing with outstanding debts, according to a report from McClatchy Newspapers. For instance, the average amount owed by consumers age 55 and up between all their outstanding balances increased to $70,370 in 2007, more than double the amount observed in 1992, according to new data from the Employee Benefit Research Institute.

Further, the Federal Reserve Bank of New York recently reported that consumers aged 50 and up owed 17 percent of the nation's outstanding credit card debt, the report said. And public policy group Demos recently noted that the average amount owed on credit cards owned by consumers 65 and older rose to $10,235 in 2008, up from $8,138 just three years earlier.

Significant outstanding debts of any kind can be difficult for seniors to bear because they live on fixed incomes, and can create a financial emergency that may necessitate them to seek out debt relief. Add a comment

Are retailers now pushing rewards credit cards?

Monday, 04 June 2012 13:00

Are retailers now pushing rewards credit cards? Now that the economy has made significant strides over the last year and a half and millions of consumers are once again feeling good about their personal finances, many might feel they are in a position to begin dealing with credit carddebt once again.

As a result of this new trend, many major national retailers are now choosing to increase the values of their offers to consumers for store-branded credit cards, according to Consumer Reports Money Adviser. In the past, the most valuable perks store-brand credit cards offered to borrowers was the ability to receive a discount of 20 or 30 percent on checkout, but only for the day they signed up. But now, many major store chains are choosing to offer perks such as a 0 percent introductory rate for the first several months the account is open, cash back rewards, ongoing discounts for all purchases made at the store, and other incentives.

The benefit of store-branded cards is that in most cases, they carry the logo of a major card issuer such as Visa, MasterCard or American Express, meaning that they can be used to make purchases elsewhere as well, the report said. This can be extremely beneficial when it comes to earning cash back for purchases at other locations, not just the store that issued the account.

Perhaps the most generous of these accounts is Costco's American Express card, the report said. It offers a 0 percent interest rate on purchases for the first six months the account is open, and it only increases to 15.24 percent after that, well below the interest rates offered on other major retailers' offerings. Further, it also grants 3 percent cash back on fuel purchases up to $3,000 per year - and 1 percent after that - plus 2 percent cash back on travel, and 1 percent on all other purchases.

But because these are retailer-issued cards, it's even more important to read the fine print on an agreement, the report said. For instance, the Walmart card says that it offers 1 percent cash back, but that's only after giving just 0.25 percent cash back for the first $1,500 worth of purchases, and 0.5 percent after reaching $3,000 in spending in a given year.

Consumers with retailer-issued cards will have to be aware that they usually come with high interest rates, which may result in their having to seek out debt relief. Add a comment

More consumers putting medical bills on their credit cards

Monday, 04 June 2012 13:00

More consumers putting medical bills on their credit cards These days, millions of consumers remain uninsured or have healthcare plans that do not cover certain expenses, and these must be covered out of pocket. However, many are choosing to put the resultant bills on their credit cards, leading to more credit card debt.

A recent survey by Demos found that close to half of all low- and middle-income households in the U.S. are carrying debt from the out of pocket medical expenses they've faced, according to a report from the New York Times. As a consequence, the average amount of medical debt carried on their credit cards stood at $1,678.

In all, about 75 percent of households that carried debt faced some kind of out of pocket medical expense in the last three years, and 62 percent of those who did said they took on credit card debt to cover it, the report said. The median amount of these accumulated balances was $800.

Consumers who face significant medical bills may end up having to seek out debt relief options, particularly if they put those balances on their credit cards. Add a comment

Consumers continued to take on student loan debt, reduce credit card balances

Friday, 01 June 2012 13:00

Consumers continued to take on student loan debt, reduce credit card balances During the first quarter of the year, consumers continued to cut the balances they carried overall, particularly slashing their credit card debt and mortgage balances, but still sought out new lines of student loan financing.

The total amount of money consumers owed on all their outstanding lines of credit slipped once again in the first quarter of 2012, falling by roughly $100 billion to a total of $11.44 trillion, down 0.9 percent from the final three months of last year, according to the latest Quarterly Report on Household Debt and Credit published by the Federal Reserve Bank of New York. The two most significant driving factors in pushing down outstanding balances were sizable declines both outstanding home loan balances, which fell $81 billion - or 1 percent overall - to a total of nearly $8.19 trillion.

Further, consumer credit card debt continued its continual slide, falling to $679 billion from the $704 billion observed at the end of last year, the report said. This was also another decline on an annual basis, from the $696 billion seen in the same quarter last year. Further, consumer credit card balances are also down 21.6 percent from the all-time high of $866 billion in the final quarter of 2008.

But even as consumers eschewed most other types of debt, student loans continued to surge, the report said. Outstanding balances on these accounts now stand at $904 billion, up $30 billion from the fourth quarter last year and an increase of $663 billion from the totals seen in 2003. Student loan debt has been the second-largest form of consumer credit, surpassing credit card balances, since the second quarter of last year, and Donghoon Lee, senior economist at the New York Fed, noted that is the only form of consumer credit that has increased significantly from the totals seen at the all-time peak for household credit seen in 2008.

Nonetheless, consumer appetite for new credit has grown significantly in the last two years, and now stands 15.5 percent higher than the levels seen in the first quarter of 2010, the report said.

Consumers have been trying to get out from under their outstanding balances since the recession hit, and many have been successful in finding at least some amount of debt relief during that time. Add a comment

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