Danielle DiMartino Booth tell us what is really going on at the federal reserve board and why this might not end so well. We discuss her new book, Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America.
- People with no credit pay 65% more for car insurance than people with excellent credit, on average. Drivers with no credit pay at least twice as much in PA, NJ and MI.
- Farmers Insurance seems most reliant on credit data, with credit newcomers paying over twice as much as excellent-credit customers. Even GEICO (least reliant) has a 40% penalty.
- The five major auto insurance companies use credit data in 90% of the states in which they operate, on average. Only Progressive uses credit data in all of the states it serves.
- Travelers is the most transparent about its use of credit data, providing a clear disclosure when generating quotes.
What Do You Think About Church Bonds?
Have you been involved with church bonds? I have inherited a bond which has gone into default. The trustee petitioned the court to allow a restructuring of the loan by transferring the debt to a third party. It seems that the bond holders will not receive value owed on the bonds. Over a period of 15 to 30 years, the bond holders will receive some amount of their bond and interest but not all. The trustee says this will be better than a foreclosure on the original debt. Is this a common practice? Seems to me the trustee gets all of his cost and the bond holders do not.
This is a common practice for more debt markets than just church bonds. In fact, you can see something similar happening in Greece right now or another good example “will” be the State of Illinois. The bottom line is that the country, church, organization, etc. cannot pay the loan back. At this point, one of two things could occur. The organization, church, country, etc. could default and no one gets anything.
The entity could also go to the bond holders and restructure the debt. That is a fancy way of saying – you are not going to get what you have coming to you; however, something is better than nothing. Welcome to the Post Financial Crisis Environment of Debt!
So, what about church bonds? A church will issue a bond and borrow money from its congregation or other investors and agree to pay back the money with a fixed interest payment over a period of time and then return the principle at the end of the investment period. It works really like any other bond.
Church bond financing has been a wonderful tool for churches to build their ministries. There has always been a risk that goes along with church bonds. A Pastor and lay leader group of the church might feel that this is where the Lord wants the church to go and that bond financing is the route to take. But by being overly convicted about what they feel is the Lord’s direction, they might get careless with the structuring of the debt or might end up putting together a deal that is destined to fail.
I have always believed that you move with faith. I also believe that along with faith and direction, God also asks us to use common sense and conduct extensive due diligence on every available option and take a great amount of care and time in the process. Many times, that due diligence process is not conducted as it should. Worst case scenario – you have a church that is practicing horrible stewardship and the whole process is doomed from the start.
On the surface, loaning money to the church sounds like a great move. But a congregation can get caught up in the spirit of things and on blind faith and loan their money without once again doing the proper research and evaluation.
The bottom line is that it can be a great method for church financing. In this environment, you just have to be especially careful. Remember that oftentimes a church will go into a bond deal because they cannot get traditional financing. Don’t just trust! Do the due diligence ! Church and business don’t always mix well!!
The Top 10 Things You Need to Know When Dealing with a Debt Collector
The Consumer Financial Protection Bureau recently published a report on the most common consumer complaints Americans submit. Since the CFPB started accepting debt-collection complaints in July 2013, consumers have filed some 316,810 of them. The problem is that consumers don’t know what to do when a debt collector calls. So, to remedy that here is what you need to know.
(1) Know your Statue of Limitations period
The statute of limitations period is the time period where a debt collector or a creditor can sue you as a means of collection of the debt. In Texas, it is 4 1/2 years past the first missed payment that made the debt go bad. Once you get passed that time period, the debt collector has no legal power over you.
(2) Even Past the Statute of Limitation period you always owe the debt
You have to know that you always owe the debt. Once again, the difference is whether the debt collector has legal power over you to collect. (see above)
(3) The debt collector cannot do anything to harm you beyond file a lawsuit
They can’t garnish your wages (unless it is student loan debt). They can’t take you to jail. They can’t repossess your car unless the loan was on your car. They can’t take your house unless the loan was on your house. They can’t take your driver license. They can and they will unlawfully threaten you. However, it is only bullying designed to get you to take action.
(4) Beware of the downside to sending a cease and desist letter
You have the right to send the debt collector a cease and desist letter alerting them that they must cease all debt collection efforts. The downside is that you put them in a corner giving them only one way to collect – filling a lawsuit (if you are still in the statute of limitation period). If they don’t honor your cease and desist letter and continue to collect, you have the right to sue them.
(5) If they sell your debt it is a good sign
When a debt collector is not getting anywhere, they have the option to either file a lawsuit or give the debt back (if they are collecting for a creditor) or sell the debt (if they own it). Anytime a debt is sold, I have always thought it was a sign that the debt was not worth taking legal action over. If that is the case, wouldn’t you rather manage debt collectors than manage lawsuits?
(6) If you get a call from a debt collector, verify that the debt is yours.
This happens all the time. Consumers get served with a debt collection letter and it is not even their debt. If that is the case, send certified mail to the debt collector telling them that in no uncertain way this debt is yours.
(7) If you get harassed the law is on your side
The Fair Debt Collections Act states that if a consumer is harassed the consumer has the right to sue the debt collector for damages and the debt collector has to pay the consumer’s legal bills. One of the best pieces of legislation that Congress has ever written.
(8) Your debt will probably stick with you for a lifetime
You have to manage your credit report because an old defaulted debt will more than likely get sold from debt collector to debt collector. Oftentimes, when that occurs, the debt collector will put that back on your credit report as a new debt. even though that is not true. You have to watch your credit report and get those erroneous remarks removed from your credit report. This is one of the main reasons why you want to avoid default. It can stick with you for a lifetime.
(9) Stay organized and keep good notes
If you find yourself in a debt collection process, take good notes. Down the line you might need proof to get something removed from your credit report and or to make a debt collector go away.
(10) Negotiate, Negotiate, Negotiate
The payment of debt is negotiable. A debt collector oftentimes pays pennies on the dollar for the debt. So, they have big profit margins. In addition, oftentimes they claim you owe more debt than you do after they illegally trump of the bill. You can always negotiate. Be aggressive! Also, if you reach a deal, always get them to acknowledge in writing before you make any payments.
This is not written to give you tips on how to get out of a debt. You should pay back your debts in some form. It is about making the playing field fair.
For more information on the entire process. Read Bob’s book Deceptive Money.