Seniors With RV Payments They Can’t Afford

MoneyTips

By Eric Olsen, Executive Director, HELPS Nonprofit Law Firm

Recreational Vehicle (RV) loans last typically for 10-15 years and sometimes up to twenty years. Often a medical condition or simply a change in lifestyle makes the RV no longer necessary. Sometimes a high RV payment can become simply unaffordable. What are the solutions for seniors with an RV they no longer need or with an unaffordable RV payment?

If you have equity in your RV, meaning it is worth more than what is owed, you can sell it, pay off the loan, and pocket the difference. Or you can sell the RV for what it is worth and cover the difference owed to the bank, so the bank will release the title to the new purchaser. However, often more is owed on the vehicle than the amount it would sell for and many seniors can’t afford to make up the difference. I have been an attorney for over forty years and am the Executive Director of HELPS, a national charitable nonprofit law firm that helps seniors …

Credit Card Charge-Offs Hit Seven-Year High

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Watch Your Credit Card Debt

Are you keeping your credit card debt under control? Recent data from Bloomberg shows that more consumers are having a hard time doing so.

Credit card issuers reported a 3.82% charge-off rate on credit cards in the first quarter of 2019 – the highest percentage of written-off accounts in almost seven years. In addition, accounts that are 30 days past due increased for each of the seven largest card issuers, suggesting the charge-off trend will continue. (If you’re already 30 days late on your payments, you’re at increased risk of default.)

Banks are nowhere near panic, nor should they be. Data from the St. Louis Federal Reserve shows that delinquencies are still near historic lows, well below the 6.77% peak in the second quarter of 2009. For perspective, St. Louis Fed data shows that the delinquency rate on credit card loans for all commercial banks fell below the 3% mark in Q2 2012 and has not topped 3% since then. Fro…

Why Are So Many Of Us Living Paycheck To Paycheck?

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Survey Suggests Economic Overconfidence

If the economy is so great and unemployment is so low, why do so many Americans live paycheck to paycheck? And why don’t we seem to care?

The February PYMNTS.com Financial Invisibles Report attempts to answer these questions, noting, “For three consecutive quarters, consumers have been optimistic about their financial futures – even while slipping further into debt.”

Results from the corresponding Q3 2018 survey suggest that we’re relying too much on credit – giving us false confidence in our financial outlook.

Overconfidence Rules

According to the survey, 38.8% of Americans thought they were in better financial standing compared to a year ago, with 43.3% saying they were in about the same financial shape – similar numbers to the first two quarters of 2018…

How To Prevent The Shutdown From Hurting Your Credit Score

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If you’re a furloughed government employee or other worker sidelined by the shutdown – or worse, working without a paycheck – you’re probably at risk of missing payments or racking up large credit card bills. How do you keep your credit score from dropping as a result?

On-time payments are one of the most influential factors in your credit score, so let’s start there.

Hopefully, you have an emergency fund to cover short-term payments. If not, your shutdown goal is to minimize negative reports to the three major credit reporting agencies (Experian, Equifax and TransUnion). Credit scoring systems don’t have any mechanism to make exceptions with missed payments, but lenders have some leeway in how missed payments related to the shutdown are reported.

Avoid all delinquencies, even if you have to run larger credit balances to do so. If delinquency a…

Forced Credit Account Closures Rising While More Applications Denied

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According to Federal Reserve data, serious credit card delinquencies rose sharply in late 2016 and continued to grow through 2018, nearing 5% of cardholders. Similarly, involuntary account closures rose from 4.2% in 2016 to 7.2% in 2018 – but why?

If the economy is doing so well, why are people having trouble paying credit card bills and having accounts closed? Credit scores provide a clue.

A low credit score is a solid indicator of risk for credit card companies. Involuntary account closures are approaching 20% for consumers with credit scores below 680, while transitions into serious delinquency are approaching 25% for those with scores below 620.

In addition, overall revolving debt (mostly credit card debt) has grown from $969 million in 2016 to $1.037 trillion as of the third quarter of 2018.

Given increases in debt and delinquency, card issuers believe they were too free with post-recession credit – and they are reacting accordingly. In t…

Nearly 1 In 4 Feel They’ll Never Escape From Significant Debt

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According to the latest Household Debt and Credit Report from the New York Federal Reserve, America’s total household debt has surpassed $13.5 trillion. Do you sometimes feel like $13 trillion of that debt is yours?

Based on a recent survey by LightStream, almost one-quarter (23%) of Americans believe that it’s nearly impossible to climb out of significant debt once you acquire it. The sense of hopelessness can lead to bad decisions and a treadmill of running debt. In that harmful mindset, $13,000 might as well be $13 trillion – you’ll never pay it off anyway.

Don’t let despair blind you from alternatives. According to LightStream senior vice president Todd Nelson, “People who are carrying debt often overlook cost-reducing solutions.” Nelson adds that debt consolidation can be a smart strategy that can benefit Generation Xers (ages 36-51) with good credit.

Why does Nelson highlight Generation Xers? LightStream found that while large majorities of adult …

More Americans Defaulting On Credit Cards

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According to the Federal Reserve’s G.19 Consumer Credit report, America’s outstanding revolving debt – mostly credit card debt – was closing in on $1.04 trillion as of June 2018. How will we pay all that money back? An increasing number of Americans may not be able to do so.

ValuePenguin analyst Joe Resendiz calls credit card defaults “a cause for concern.” Resendiz highlighted increased second-quarter credit card default numbers for both JPMorgan and Bank of America as disturbing points amid generally good reports.

The second quarter 2018 Household Debt and Credit Report from the New York Federal Reserve backs up some of these concerns. At 6% of all consumer debt, credit card debt remains firmly in third place for all non-mortgage consumer debt behind student loans (11%) and auto loans (9%). However, the sheer number of credit card accounts – approximately 480 million, over four times the number of auto loan accounts and over five times the number of mortgage lo…

This Lender Repos 1 In 3 Cars It Finances

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We frequently hear about America’s crushing student loan debt – but auto loans are not far behind. While student loans are approaching $1.5 trillion, outstanding auto loans topped the $1.2 trillion mark in the third quarter of 2017 according to the New York Federal Reserve.

Subprime borrowers (FICO credit scores below 620) hold almost one-quarter of the dollar value of auto loans. Given that level of risk, it’s no surprise that over 4% of auto loans are delinquent by 90 days or more and repossession is a real threat.

Subprime lenders are more likely to repossess autos since they service higher-risk clients. However, Jalopnik reports that one lender – Credit Acceptance – expects to repossess 35% of the cars that it finances every year. It’s difficult to absorb that default rate without charging high interest rates to make up the difference. Borrowers who already have difficulty paying receive rates that make monthly payments even higher – leading to a cycle of def…

Credit Card Delinquencies Soar

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America’s economy is improving by most standards – but is it improving on the backs of excessive debt?

According to the New York Federal Reserve, total household debt reached a new high of $13.15 trillion in the fourth quarter of 2017. While the majority of household debt is mortgage debt, consumer credit rose by the largest amount in sixteen years, and revolving debt (primarily credit cards) increased by a substantial $26 billion from the third quarter of 2017.

Debt is not necessarily bad, even high-interest credit card debt, as long as it’s managed well. Unfortunately, Federal Reserve data also shows a general increase in credit card delinquencies.

Credit card delinquency rates had decreased steadily from the 2009 recessionary peak of 6.7% down to 2.12% in early 2015, but since then delinquency rates have trended upward. Delinquencies dropped slightly in the fourth quarter of 2017 – from 2.52% in the third quarter to 2.48% – but the overall upward tre…