After being accused by New York Attorney General, Andrew Cuomo, of using illegal scare tactics to “terrify” indebted Americans into repaying their debt, a Buffalo, N.Y., debt collection agency run by convicted felons has been shut down by state authorities (more…)

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The International Monetary Fund has forecasted that the U.S. economy will contract 2.5 percent before the end of this year but will expand 0.75 percent by the end of 2010, according to analysis of the IMF’s World Economic Outlook report from April (more…)

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The Supreme Court has agreed to take on a case that addresses the constitutionality of a provision in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that restricts “debt relief agencies,” including lawyers, from advising their clients to take on additional debt before filing for bankruptcy (more…)

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Missouri Attorney General Chris Koster has taken legal action against a Texas debt settlement company, filing a lawsuit against Credit Solutions of America for illegally charging consumers for debt relief services the company never provided (more…)

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A new report shows that consumers are charging less to their credit cards while also paying down the balances on those cards. (more…)

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Two debt settlement companies have been sued by New York Attorney General Andrew Cuomo on behalf of 20,000 New York consumers, as part of Cuomo’s probe into the debt settlement industry. Credit Solutions of America, Inc. in Texas and Nationwide Asset Services, Inc. in Arizona are both facing charges of fraud, deceptive practices, and false advertising, Reuters reports (“New York AG Sues Texas, Arizona Debt Settlement Firms,” May 19, 2009).

CSA is accused of defrauding 18,000 New York customers out of about $17 million in fees over a five-year period from January 2003 to September 2008.

Through marketing and advertising campaigns CSA promised to reduce customers’ debt by 60 percent, but Cuomo’s office found that only an average of 1 percent of CSA customers actually saw these results.

CSA, the self-proclaimed largest debt settlement firm in the country, instructed its customers to make monthly contributions to a savings account instead of making their debt payments and to ignore calls from creditors, which often drove customers further into debt and failed to result in a successful resolution. The New York Times reports that the debt settlement firm even suggested that its customers sell their blood plasma, mow lawns, and borrow from their neighbors to drum up funds for their savings account (“2 Firms Accused of Fraud in Debt Settlement,” May 19, 2009).

Lawyers representing CSA said the debt settlement company “disputes liability over the complaints and supposed practices” because the alleged fraud occurred during a 12-month period when the company was under different ownership. The company has also faced litigation in South Carolina, Idaho, and Texas.

Cuomo has also charged Nationwide Asset Services with falsely advertising that it could reduce customers’ debt by 25 to 40 percent. But of the 18,000 New York customers it enrolled between January 2005 and May 2008, Nationwide settled the debts of less than 2,000 of these customers.

“Today’s lawsuits send a clear message that we are prepared to rein in this unregulated industry and protect New Yorkers who are proactively trying to work their way out of debt,” Cuomo said in a statement released by his office (“Attorney General Cuomo Sues Debt Settlement Companies for Deceiving and Harming Consumers,” May 19, 2009).

Cuomo’s two lawsuits are part of a larger probe of the debt settlement industry announced earlier this month in which he subpoenaed 17 debt settlement companies in addition to Nationwide and CSA.

Popularity: 11% [?]

In this economy, everyone’s looking for another way to scrimp here and cut back there. When every penny counts, you want to make sure you’re saving as much as you can on basic household items and life’s bare necessities.

You’d be surprised at how much extra money you can keep in your account just by doing an audit of all your monthly expenses and making a few simple adjustments. Here are 10 tips to help you start saving more today in all areas of your life.

1. Ditch the paid checking.

Look for a bank that offers free checking with no minimum balance. You could save as much as $100 a year in fees if you’re currently paying for your checking account.

2. Don’t leave for the grocery store without coupons and a shopping list.

Avoid impulse shopping. Sticking to a list of must-haves and going in armed with coupons for the items on your list could cut your grocery bill in half. Check weekly newspaper ads, and sign up for alerts on Internet coupon sites to get notified of upcoming deals. Pay close attention to the price-per-ounce (or other unit) when comparison shopping: A similarly priced item may actually be much more expensive than you think because it’s smaller and you’re getting less for your money.

3. Resist the convenience of the convenience store.

It’s easy to pick up a gallon of milk, a loaf of bread, or that roll of paper towels you need when you stop to fill up at the gas station, but you’re paying for the convenience of that one-stop shopping: These stores often charge some of the highest prices for food and groceries. Avoid paying 50-percent markups. Find time to make your shopping runs, and get your groceries at the grocery store.

4. Audit your electricity use.

Ask your electric or gas company to check out your utility usage, or do it yourself. Depending on when your usage is heaviest, signing up for an off-hour rate program or a load management program could help you save hundreds of dollars a year on your electric bills.

5. Pore over your phone bills.

Take a fine-tooth comb to your cell and home phone bills to see if you’re paying for minutes and services you don’t need. Make adjustments so you can take advantage of plans that give you the best rate for times when you tend to use the most minutes. Consider getting rid of your landline altogether: Most cell phone providers offer monthly packages with lots of minutes and free roaming and long distance for less than what you’re paying to maintain both a cell phone and a landline.

6. Keep your car in shape.

A regular engine tune-up and something as simple as making sure your tires are properly inflated can help you save around $100 a year on gas.

7. Insist on fixed bids for repair services.

Only hire people and companies for home repairs who offer fixed-price bids for work. Home repair servicers often draw complaints, many times for trying to charge more than they initially quoted once they’re midway through the repairs.

8. Cut back on car insurance coverage.

To save money on your monthly premiums, unless you’re on the road a lot, consider raising the deductible on your collision and comprehensive coverage to at least $500 or, if you have an older car, getting rid of collision completely.

9. Get new homeowner’s and renter’s insurance quotes.

Call around or get quotes online from sites like Esurance and 2Insure4Less.com. You could find a lower rate with a new provider or use competitors’ lower quotes to negotiate a better rate with your current insurer. Check your state insurance department to make sure you aren’t paying more for insurance than typical rates in your area.

10. Shop around for the best prices on your prescriptions.

You may end up having to get different medications at different locations, but the savings can be huge. Consider trying mail-order pharmacies, and, if possible, always opt for generic versions of your prescriptions.

For even more money-saving ideas, check out the Federal Citizen Information Center’s 66 Ways to Save Money.

Popularity: 12% [?]

With a vote of 45 to 51, Senate Republicans defeated a measure that would have allowed bankruptcy judges to modify mortgage terms for bankruptcy filers, dealing a blow to the Obama administration’s foreclosure rescue program, which has yet to make a noticeable dent in the number of families losing their homes, The Washington Post reports (“Senate Defeats Measure to Allow Bankruptcy Judges to Change Mortgage Terms,” April 30, 2009).

The defeated measure would have allowed bankruptcy court judges to modify the mortgage terms of a bankruptcy filer’s primary residence with the possibility of having the filer’s interest rate or principal balance lowered in a process known as a “cramdown.” Currently bankruptcy judges can only modify mortgages for second homes or investment properties.

While opponents of the bill, including the nation’s biggest banks and Republicans in the Senate, argue that the bankruptcy modification provision would increase lending costs for future homebuyers and, therefore, destabilize the housing market even further, supporters of the cramdown measure contend that it would help more than 1.7 million struggling homeowners to stay in their homes.

In spite of the defeat, the measure’s sponsor, Senator Dick Durbin, D–Ill., is determined to keep pushing for cramdown legislation that he says is needed. In the time since he’s been campaigning for bankruptcy code reform, Durbin says home foreclosures have jumped from 2 million to 8 million.

“I’ll be back. I’m not going to quit on this,” Durbin said. “At some point, the Senators in this chamber will decide the bankers shouldn’t write the agenda for the United States Senate.”

The measure is part of a larger Senate housing bill that includes a provision to revamp the Hope for Homeowners program and a proposal to temporarily increase the deposits guaranteed by the Federal Deposit Insurance Corporation, and which still has to be reconciled with the House’s version of the bill. House Democrats will most likely remove the cramdown measure from the bill to help get it passed by both houses of Congress.

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In what is turning out to be the worst recession since the Great Depression, many Americans are struggling to pay their bills as companies continue to shed jobs and the economy continues to contract.

In this recession, costly expenses like medical bills are taking a backseat to daily expenses like water, electricity, food, car, and mortgage payments. Now, as with credit cards, consumers are struggling to keep up with their medical bills and increasingly letting more and more of their bills go unpaid.

The Commonwealth Fund, a healthcare research foundation, reports that in 2007, 41 percent of adults were struggling to pay their healthcare bills, up from 34 percent in 2005 (“When Medical Bills Outpace Your Means, Seize Control Swiftly,” The New York Times, April 25, 2009). And it’s not just the uninsured who have fallen behind on their payments, nearly two-thirds of people with medical debt actually have health insurance.

Experts say, however, that there are ways to manage your medical debt even if you aren’t capable of paying it off right away.

1. Communicate with your creditor.

If you know you’re going to be late on one or more of your medical bills, let your creditors know. Just talking with them won’t obligate you to make a payment, but if your creditor is aware that you’re trying to stay on top of your debt you may be able to avoid collections, at least temporarily, and protect your credit.

2. Review your bills.

Keep a running tab of your doctor visits and medical procedures to accurately review your bills when they come in. Errors in medical billing can occur often, so if you find a discrepancy call your provider for an explanation. And remember that it can never hurt to resubmit bills to your insurer if you’ve been denied coverage.

3. Bring in extra help.

Try negotiating with your provider for a discount or for some leeway on repayment. If your creditor still won’t work with you, consider hiring a billing specialist who may be able to help you find errors in your medical bills and better understand the often-complex language of medical billing.

4. Avoid the plastic.

Don’t react with panic when you receive a late-payment notice by transferring your medical bill debt onto your credit card. Chances are if you can’t pay your medical bill now, you’re not going to be able to pay the credit card bill when it comes in later. And medical bill charges that stay on your credit card will immediately start earning interest, not to mention that charging a large sum to your credit card could negatively affect your credit score, if you’re carrying too high a debt load.

5. Know your rights.

Just because a medical bill goes to collections, doesn’t mean creditors have free rein to hassle you into paying; they have guidelines and rules to abide by — they can only call between 8 a.m. and 9 p.m. and they can’t scare you into paying the debt. Ask for the caller’s name and request that they send you the name of the creditor and the amount you owe in writing. Visit the Privacy Rights Clearinghouse for a guide to debt collection.

Popularity: 12% [?]

In response to the rising number of mortgage scams in his state, Missouri Attorney General Chris Koster announced a “zero tolerance” policy for companies engaging in misleading mortgage refinancing practices, according to press release from Koster’s office (“Attorney General Koster declares ‘Zero tolerance’ on Mortgage Scams,” April 20, 2009).

“This Attorney General’s office will have zero tolerance for any mortgage broker or refinancing lender that uses deception to lure consumers into doing business with them,” Koster said. “The Attorney General’s office will use all its powers to investigate and prosecute businesses that use deception and fraud in advertisements to Missouri consumers.”

Under the new campaign, Koster has already sued two businesses, Goldstar Home Mortgage and Oxford Lending Group, for sending misleading direct mail advertisements to consumers that encouraged homeowners to refinance their home loans.

Goldstar’s mail piece included the name of the homeowner’s bank at the top of the letter, which Koster argues made the homeowner’s own bank appear that it was encouraging homeowners to refinance with Goldstar. The company also marketed loans that were “inappropriate” for homeowners — loans that, in at least one case, would have left the homeowner with a mortgage worth more than the home itself.

Oxford Lending’s direct mail pieces stated that homeowners had a special opportunity to refinance under the “Economic Stimulus Act of 2008.” Oxford also used the U.S. Department of Housing and Urban Development’s label and name to suggest that the letter was coming from the government and not Oxford.

Koster warned Missouri homeowners to be cautious of any mail having to do with mortgage refinancing, loan consolidation, mortgage modification, and foreclosure relief. With interest rates at historic lows and foreclosures at record highs, Koster says homeowners, seniors in particular, who looking to save their homes are particularly vulnerable to these mortgage scams.

“Increasingly, mortgage brokers are using deceptive ploys to draw Missourians back into the refinancing game,” Koster warned. “Our goal is to alert consumers that these scams are out there and to sue every mortgage broker who crosses the line.”

Popularity: 8% [?]