Credit and Debt Blog
A Service of Debtors Unite, Inc.
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LTD Financial Services agreed to a settlement with the Federal Trade Commission to resolve nearly 1,500 complaints of illegally threatening and misleading debtors. This settlement was announced without any acknowledgment of wrongdoing.
And so after this big settlement, you may be surprised that not a dime of it is going to the victims of harassment. Instead, it amounts to penalties owed to the federal government. It is still up to individual victims to sue for civil damages. 
The IRS views forgiven debt as a form of income. We know that debt settlement can cause your taxes to go up. Did you know that foreclosure works the same way?
That’s right. If your foreclosed property sells for less than the mortgage balance, you have pay taxes on the difference. Some foreclosed properties are selling for tens of thousands of dollars below what is owed, meaning tax bills could reach several thousands of dollars extra. One proposed bill would change that though.
If you have ever settled a debt, you may have received an unwelcome surprise. Anytime you save $600 or more on a debt balance by negotiating a settlement, the debt collector is required to issue a 1099-C form and report the information to the Internal Revenue Service.
So what exactly is a 1099-C form? In short, it is a declaration that the debt collector provided you with income to pay your debt. And now Uncle Sam and possibly your own state revenue department expect you to pay taxes on that income.
Washington Mutual was accused of pressuring home appraisers to provide inflated values. Now New York Attorney General Andrew Cuomo is expanding the investigation to include Fannie Mae and Freddie Mac, who purchased or guaranteed many of these loans.
According to Brian Faith of Fannie Mae, “if the examiner determines we own or guarantee mortgages with inflated appraisals, our guide states that the lender must buy back the loans that do not meet our standards and requirements.” This would open Washington Mutual to tremendous liabilities from homeowner defaults.
For years, most major credit card issuers offered only one type of credit card product platform. This was either Visa or MasterCard. Discover offered its own platform as did American Express.
Under pressure to reveal potentially damaging information about possible exclusivity arrangements and other anticompetitive practices, Visa has decided to avoid a trial altogether and settle with American Express. This settlement is expected to approach $2.25 billion.
When trying to eliminate credit card debt, it seems counterproductive to invest money that will likely earn a lower return than what you are paying in credit card interest. In some situations, you may wish to temporarily put off your retirement plans.
However, many people mistakenly avoid taking advantage of incentives that exceed what they are saving in credit card interest. There are indeed many situations where you should invest even when in debt.
Known as the Hillis lawsuit, this class action lawsuit may change the way credit bureaus market their products. The lawsuit accused Equifax of violating terms of the Credit Repair Organization Act in its marketing of consumer products.
Equifax and Fair Isaac Corporation entered into a class action settlement that has received final approval from the court. In this settlement, Equifax has agreed to avoid using certain words or phrases in conjunction with their consumer products until September 6, 2009.
The newest debt collection trend has a dangerous component. Uncollectible debts are being sought by aggressive debt buyers who pressure unsuspecting debtors into paying them off. Because these debts are no longer legally collectible, they can be bought by debt collectors for almost nothing.
Now some creditors are being accused of intentionally failing to update credit records in an attempt to pressure debtors to repay old accounts. Before you pay on that old account, make sure that you understand your rights, especially if the debt was discharged under bankruptcy.
Some of the most atrocious credit card fees are becoming more widespread. A new breed of credit cards has entered the marketplace, and the fees on these predatory products can easily wipe out most of the credit limit. Worse more, these leave vulnerable consumers strapped with additional debt and on a track for further credit damage.
Imaging getting $200 a year in credit card fees in addition to any traditional late or over-the-limit fees. Think a credit card cannot charge you for a credit limit increase? It is happening!
New York Attorney General Andrew Cuomo accused a major real estate appraisal company of colluding with First American and Washington Mutual. The company eAppraiseIT may have been pressured to provide inflated home appraisals, a violation of federal law.
His accusations hint at a more widespread practice that would explain the widespread problems in the subprime mortgage industry. Indeed, it is unlikely that these companies are the only ones responsible for current problems plaguing the industry.
