… relief from some of the credit card industries most damaging practices. One of those practices, Universal Default. will become illegal.  Universal Default is a provision often found in credit card policies which states that if you are more than 30 days late on any payment to any of your creditors, the interest rate on your credit card will skyrocket. This could be as much as two, three or even four times your original interest rate.  This provision can be particularly devastating for …

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Over 21 percent of student loan borrowers who attended a for-profit college default on their student loans within 3 years, according to a report released by the U.S. Department of Education.  For-profit colleges claim that the high numbers of low-income students attending their institutions are inflating their default rates.  So does being a low-income student increase your chances of defaulting on your student loans?

It’s important to note that student loans are …

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… most important changes you will see on your credit card next year:

The prohibition against “universal cross-default.” Before the passage of the Credit Cardholder’s Bill of Rights, credit card companies could declare a debtor in default if any other creditor declared that the debtor had defaulted on their loan.  For example, if a debtor paid Credit Card A in a timely fashion; but defaulted on Credit Card B, Credit Card A could declare the debtor in default on their account also. …

Tags: Credit card Personal Finance Universal default

… founder, Dmitry Shapiro. Shapiro posted a passionate open letter blaming a legal battle with Universal Music Group for the company’s bankruptcy: 

“Two years ago, Universal Music Group (UMG), the largest music company in the world sued Veoh alleging copyright infringement. While we made every effort to convince them that we were not their enemy and had not infringed on their content, they pursued a relentless war of attrition against us in federal court,” Shapiro wrote. ”We …

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… interest rate for one missed payment.  The penalty interest rate is typically called the “default rate.”  The average default rate for credit card issuers is 27.88 percent, and more than half of credit card issuers have a default rate that is much higher.  But after the implementation of the Credit Card Act in February, more debtors may see a shift in credit card issuers policies. Under the Credit Card Act it will be more difficult for issuers to hit borrowers with a default rate …

Tags: Credit Card Act default rate penalty

… an individual’s risk of  bankruptcy if they could not afford to pay. And let’s not mention “universal default.” Universal default alone could send an individual running to file bankruptcy by sending all credit card accounts into default when a debtor defaults on just one of their debts. When individuals face financial difficulties it is inevitable that they will fall behind on the bills.  One failed tactic that indebted people use is charging expenses onto credit card accounts in the …

… $4 million due on Dec. 14, for its $15.7 million convertible note. The company also said that the default could adversely affect its business and they are hoping to continue operations if they choose to file Chapter 11 bankruptcy protection.

“The company does not currently have the funds, or access to the funds, necessary to repay all of its outstanding obligations to the Holder, Wachovia, Arvato and its other creditors,” Image said in a statement.

The possible bankruptcy filing …

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… is to pay their mortgage and avoid foreclosure if possible. Also, many debtors are forced to default or pay late on one or more credit cards (or other bills reported to the credit reporting agencies) triggering what’s called “universal default” which can send the interest rate on current credit cards skyrocketing.  Once this happens the debt can balloon so fast and so large that it becomes impossible to repay.  Fortunately, the Senate bill addresses this issue.

For example, …

In the Chapter 13 Bankruptcy case Everetts, Bradley R. and Ruby J.; In re the debtors’ objection to a creditor’s proof of claim as a secured creditor is rejected by the bankruptcy court.

The details of the bankruptcy case:

The debtors financed an in-ground pool kit and defaulted on the debt. When the debtors filed Chapter 13 bankruptcy, they treated the creditor as unsecured. …

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… interest charges on outstanding balances from more than one billing cycle. It also would ban “universal default,” the practice of raising a cardholder’s interest rates when that consumer has problems paying other creditors. And it would prevent card issuers from changing the terms of a contract as long as the card holder pays on time. </em

Currently credit card companies use a wide range of tactics to quickly change credit card terms, even raising interest rates and fees for …

… avoid foreclosure by signing up for a 3 month trial in the HAMP program may end up falling into default again.  Presently, the number of defaults in the HAMP program has exceeded 60 percent and many analysts expect that number to rise.

Upside-down mortgages.  One of the biggest causes of foreclosure now is the large number of homeowners who owe more on their home than it is worth.  Many of these homeowners decide to “walk away” from their home and allow it to fall into …

… are being sued, don’t just ignore the suit.  If you ignore creditor lawsuits they can get a “default judgment” against you and gain access to the dreaded “wage garnishment” tool.

Instead of ignoring a creditor lawsuit, it would be wise to either respond to the lawsuit with the help of an attorney or to consider bankruptcy.  If you respond to the lawsuit, your response may delay a judgment against you and thus delay a wage garnishment.  However, if you actually owe the debt, a …

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