 No one is immune from bankruptcy. That's the message of a national survey released today by a South-Portland-based financial nonprofit. High-earners and college graduates are among the fastest-growing group of debtors filing for bankruptcy, according to the Institute for Financial Literacy. Bankrupty filing rates for people making $60,000-plus increased by more than 66 percent; college graduates by 20 percent. -- Maine Public Broadcasting report Since "get a college education" is so often prescribed as the cure-all for all our ills, the warning photo to the left is apt -- the higher ed bubble is showing all the same signs as the housing bubble did in its last, frantic moments. Here's a good example of how cut-throat the student loan business (and it IS very much a business) has become. Colleges are holding transcripts hostage, which makes it difficult for the borrowers to get the job they need to pay the loans:
This is happening at a time when recent grads are finding it particularly hard to find work, not just in their chosen fields, but anywhere. About half of recent college degree-holders were unemployed or underemployed last year, according to a recent Associated Press study. And the federal Consumer Financial Protection Bureau estimates student loan debt has passed $1 trillion, an amount greater than all outstanding credit card debt. The Department of Education put the default rate at 8.8 percent of student borrowers as of September 2010.
It's no accident that colleges are using the withholding of official transcripts to punish students behind in their loan payments. It turns out the federal government encourages the practice. Schools are not required by law to withhold transcripts, but a spokeswoman at the Department of Education confirmed that the department "encourages" them to use the draconian tactic, saying that the policy "has resulted in numerous loan repayments."
It is a strange position for colleges to take, however, because the schools themselves are not owed any money. Student loan funds come from private banks or the federal government. For federal Perkins loans, schools get a pool of federal money to apply to students' financial aid, and if students don't pay, that pool gets smaller. But the creditor is still the government, not the college. And in the case of so-called Stafford loans, schools are not on the hook in any way; they are simply acting as collection agencies, and in fact may get paid for their efforts at collection.
The other day I warned you about a company that has all the hallmarks of a scam debt relief con -- much like this one in NC (bolded points emphasis is mine): RALEIGH, N.C. -- A bogus Florida law firm, which claimed it would reduce consumers’ debts by more than half, has been barred from debt-relief work in North Carolina. Attorney General Roy Cooper announced Tuesday that under a consent judgment approved by Wake County Superior Court Judge Howard Manning,
The Consumer Law Group of Boca Raton has agreed to pay $600,000 in refunds to North Carolina customers who paid the company for help getting out of debt. “Debt relief scams take advantage of struggling consumers, adding to their burden instead of helping them get out of debt,” Cooper said. “I’m pleased that we’ve been able to win money back for these
consumers, money that can hopefully help them pay off bills and get on better financial footing.”
The $600,000 payout is on top of approximately $600,000 worth of charges the company agreed not to collect from North Carolina customers. An additional $50,000 will help cover the state's costs for work on the case. The judgment bars CLG from marketing, soliciting or offering a debt-settlement or debt-negotiation services in North Carolina. CLG is also prohibited from claiming that its services are government-sponsored, performed by attorneys, or provide legal representation for consumers. Cooper’s office filed suit against CLG in October 2010 after a probe determined that more than 650 North Carolina consumers had paid CLG for debt-relief work but gotten little or no help in return. People can continue to file complaints about CLG or other debt-relief companies by calling the attorney general’s Consumer Protection Division at 1-877-5-NO-SCAM toll-free within North Carolina, or filling out a consumer complaint form at www.ncdoj.gov. “Don’t pay an upfront fee for help getting out of debt,” Cooper said.“For real help getting your debts under control, meet with a qualified non-profit credit counselor in your local community, who won’t charge you a big fee.”
For help finding an accredited, non-profit credit counselor, contact the National Foundation for Credit Counseling at 1-800-388-2227 or www.nfcc.org.
 _To the left is a pretty extensive laundry list of lawbreaking committed by a Georgia debt collector against consumers in that state. These guys broke the federal Fair Debt Collection Practices Act (FDCPA) in just about as many ways as they could.
Keep this list in mind -- if a debt collector ever does any of this to you or anyone you know, contact a consumer attorney immediately. Keep all phone messages, voice mails, and every bit of correspondence you get from the debt collectors, and make a record of when they call, their names, and numbers.
If you are in Oregon and you know of anyone who has experienced any of these violations, I would be glad to assist. Courts can and have hit debt collectors with "statutory damages" of up to $1,000 for each individual violation committed against a consumer, PLUS making the debt collector pay the attorney fees for the consumer bringing the action.
Mother, Father, Sister, Brother, Aunt, Uncle, Grandfather, Grandmother, Friend:
If you have been asked to co-sign a loan --- for anything at all --- there is a little bit of math you MUST understand before you sign anything:
1) co-signer =
borrower
2) borrower =
fully responsible for paying back loan
3) lender =
(creditor who could not care less that you did not understand that co-signer = borrower)
If you do not understand what those three identities are telling you, PLEASE do not co-sign a loan for anyone or anything without consulting an attorney first.
 GENERATION DEBT -- HOBBLED BEFORE THEY START . . "It's going to create a generation of wage slavery," says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.
Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What's happening:
•Defaults. The portion of borrowers in default — more than nine months behind on payments — rose from 6.7% in 2007 to 8.8% in 2009, according to the most recent federal data.
•For profit-schools. The highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation's largest, got 88% of its revenue from federal programs last year, most of it from student loans.
"Federal student loans are like no other loans," says Alisa Cunningham, research chief at the Institute for Higher Education Policy. "The consequences are so high for making a mistake."
 How sad -- the Legislature couldn't muster the courage needed to stand up to the debt collector lobby. Anyone know how to photoshop the Golden Man to show him kow-towing? Story from Bloomberg: A wave of U.S. state laws that require debt collectors to document exactly who owes what has triggered a state-by-state lobbying battle over rules of evidence that the industry says could slice into profitability.
A 2009 law in North Carolina requiring collectors to provide original contracts and imposing penalties for erroneous litigation has slowed the industry’s work in that state. Other states, including Massachusetts, Florida, California and Oregon, have followed North Carolina’s law with similar proposals. Consumer advocates say the laws are necessary to curb abuses.
Sounds great, right? Sounds like Oregon is going to follow a law that has worked to stop abuses in debt collecting. Er, um ... not so fast:
The law’s effect in North Carolina emboldened consumer groups and their legislative allies to push ahead in other states, and mobilized industry opposition as well. In December 2010, a similar bill in Oregon faced organized industry opposition at a hearing, and died in committee.
“I was surprised at the degree of lobbying to stop this,” said Angela Martin, executive director of Economic Fairness Oregon, a consumer group. “We thought we had a consensus bill.”
 From the Naked Capitalism blog:
Payday Loans Are Dead! Long Live Payday Loans!
In yet another example of finance double-speak, major financial players have moved into that netherworld of the functional equivalent of loansharking known as payday lending.
While in theory short-term loans can be a boon to cash-strapped individuals, in practice, the usurious interest of payday loans result in many borrowers falling into a debt treadmill. The Pentagon was so concerned about the way that payday lending could wreak havoc with the lives of combat personnel that it restricted the rates that could be charged to military personnel to 36%. The industry howled that rules would drive payday lenders out of the business of serving the armed forces (they had previously been targeting bases). I suspect that result was a feature, not a bug.
. . . But some industry critics say fixed-income borrowers are not only more reliable, they are also more lucrative. Often elderly or disabled, they are typically dependent on smaller fixed incomes and are rarely able to pay off their loans quickly. “It’s not like they can work more hours,” says David Rothstein, an analyst at Policy Matters Ohio, an economic research group in Cleveland. “They’re trapped.”
The latest sighting, via the Associated Press (hat tip April Charney) is that bigger, more reputable-looking banks are offering payday loans, but predictably calling them something else, in much the way that the term “escort service” is meant to imply something more refined than “prostitution”. From the Clarion Ledger:
Perhaps muttering, if you can’t beat ‘em, join ‘em, big banks are now aping the payday lending industry and offering short-term loans at rates that once were called usurious.
The banks are not calling them payday loans and say there are safeguards that distinguish them from payday loans. But, it’s still a short-term note. Wells Fargo, for example, offers its loans for direct deposit customers. As The Associated Press has reported, it says customers can only borrow up to half their direct deposit amount or $500, whichever is less. Its fees are cheaper too, at $7.50 for every $100 borrowed.
That still amounts to a 261 percent annualized interest rate over the typical pay cycle. The amount of the advance and the fee are automatically deducted from the next direct deposit. . . .
Good concise article of warning from USAA Magazine. Download this file (short pdf)
 Review by: Ira Rheingold, Executive Director, National Association of Consumer Advocates
The Subprime Virus:
Reckless Credit, Regulatory Failure and Next Steps
by Kathleen Engel and Patricia McCoy
About a month ago, I had the privilege of testifying before a House Financial Services Subcommittee about the impact of new mortgage regulations on "Homeowners and Businesses." In entering the committee room and later listening to my fellow panelists (two for consumers, eight for industry), I had this terrible feeling that I had entered a new dimension, where memories had been wiped clean and responsibility and accountability were words that had no meaning or place. I sat and listened as the very same people who for years defended the indefensible banking industry's insatiable greed that led to our nation's economic collapse, complain bitterly about the state of the housing and mortgage markets and how government regulation was stifling their ability to grow (and of course, create jobs!). Beyond displaying my utter dismay that many members of Congress were giving these folks a level of respect and credibility they completely did not deserve, I really had no idea how to respond. Looking back, what I should have done to help them cure their collective amnesia was hand them Kathleen Engel and Patricia McCoy's new book, The Subprime Virus.
In The Subprime Virus, Ms. Engel and Ms. McCoy (who I should note, I have known and worked with for many years), in a strong and clear narrative voice, take us back to the beginning, to the early 1990s, when predatory lending became a household word to those of us working for consumers in our nation's poorest communities. They walk us through the growth of securitization and do a supreme job of explaining the alphabet soup of Wall Street lawyerly constructs (CDOs, SIVs, CDSs) that created the opaque and unregulated legalized gambling system that served to spread predatory lending from Chicago's South Side and West Virginia's back hills to the main streets of middle class America.
But beyond compellingly recounting this history, The Subprime Virus wonderfully explains how bank greed and government blindness and complicity led to the mortgage market collapse. Anyone reading this book, will walk away not only fully understanding the mortgage industry's destructive behavior but also should be completely outraged at the OCC's cynical efforts to grab power and protect banks, and the Federal Reserve's ideologically driven inattention to consumer protection.
Finally, for those of us interested in actually learning from history, The Subprime Virus offers a clear analysis of what we'll need to do to rebuild a safe and just housing and mortgage marketplace. And for those us who simply want to hold our friends in the banking industry and in government accountable for their failures and never let them forget their responsibility for our current economic crisis, The Subprime Virus is not only a must read, but a great present. I may just need to leave a few copies behind next time I'm visiting Congress.
Here's what appears to be a helpful site with information about credit card bills. One caution about this site though: don't think that this site (or any other) equips you to do your own credit card debt defense. The best thing to do is consult a consumer attorney before you start falling behind on credit card and other bill payments. The next best thing is to consult a consumer attorney as soon as you start falling behind on your bills. Almost the worst thing you can do is wait until after the card company has filed a lawsuit against you to consult a consumer attorney. THE WORST thing you can do is not consult a consumer attorney when you're being sued on a debt and letting the other side win by default. Every day, creditors and debt collectors file countless lawsuits that have absolutely zero merit. That is because, every day, collection agencies and creditors sell mountains of bad debts to each other in a massive shell game of "Whack-a-Mole," with each one gambling a few pennies for the chance to try and squeeze dollars out of you on debts that the prior collectors could not collect. What this means to you is that you might get sued on a debt you never owed, a debt owed by someone else entirely, a debt that is time-barred, a debt that you discharged in a bankruptcy, a debt that they cannot prove to exist, or even a debt that a court already voided before!
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John Gear Law Office LLC; 503-339-7787; John@JohnGearLaw.com. My office is in Suite 208B of the Security Building in downtown Salem. That's at 161 High St. SE, across from the Elsinore Theatre, just a block south of Marion County Courthouse. There is abundant, free, 2-hour on-street parking throughout downtown. #### #### #### Lawyerly fine print: Licensed in Oregon. This site may be considered advertising under Oregon State Bar rules. There is no legal advice given or intended on my site. I'm not your attorney unless we have met in person and entered into a representation agreement; while I hope you will consider me when you seek an attorney, you should not hire any attorney based on brochures, websites, advertising, or other promotional materials.