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Serving A Terrible Blow to The Idea of Fast Cash Online, Justice Supported the Debt Collection Companies in The Debt Collection Case

On Monday, it is ruled by a divided Supreme Court that no one can sue the debt collection companies if they attempt to recover credit card debt of years old from those who look for bankruptcy protection. To be more specific, according to the Supreme Court, no debt collection companies can be sued while trying to recover their years-old debt of credit card from people seeking bankruptcy protection. The justices ruled this verdict 5 – 3 in favor of the Midland funding. Though the fast cash online seems to be a great solution to get quick cash, still, with this new verdict being ruled, the consumer groups have received a terrible blow.

Yes, the 5- 3 ruling is nothing less than a shock or a serious blow to the consumer groups, who often complain about the debt collection companies to mislead people unfairly into repaying the old debts, even though the consumers are not required to do so under the law.

The court finally sided with the Midland Funding on Monday. Midland Funding is a debt collection company that was trying to recover a debt of around $1879, which have incurred by an Alabama woman for more than around 10 years ago.  The name of the Alabama woman is Aleida Johnson who had argued that the debt collection company named Midland Funding was totally wrong to try to collect the debt. She also stated a reason behind her claim. According to her, the company has wronged because as per the law of Alabama, there is a six-year limitation statute for a creditor for collecting the overdue payments.

Based on this very reason, Aleida Johnson had successfully avoided paying the debt of $1879. According to a federal appeals court, Aleida could have sued the debt collection company for attempting to collect the debt, based on the existence of Fair Debt Collection Practices Act. It is based on this Fair Debt Collection Practices Act in Alabama that a money collection company can be sued as according to the Act, all the money collection companies are strongly prohibited from making any misleading, deceptive and false representation in any way or trying to recover the debt by any unconscionable or unfair mean. This particular law prohibits any attempt of the collection companies in trying to collect the debts outside the statute of limitations, which is, in this case, is around six years.

However, according to Justice Stephen Breyer, this Act doesn’t apply in case of bankruptcy proceedings. Yes, writing for the majority, and breaking with his liberal colleagues, Justice Stephen Breyer confirms that any effort made in order to recoup years old debt during bankruptcy do not violate the law or the Fair Debt Collection Practices Act in any way. He said that the attempts made by the money collection companies were neither misleading nor false as technically the bankruptcy law supports such claims.

Breyer also added that the attempt of recovering the debt by the money collection companies, such as in the case of Midland Funding, was neither unconscionable nor unfair, as a bankruptcy trustee definitely can object to claims which are so much old that they no longer have to be repaid. And it is exactly what happened in the case of Johnson’s, which also reduces the concerns of that of the consumers might unwillingly pay a years-old debt.

Justices Anthony Kennedy, Samuel Alito and Clarence Thomas along with Chief Justice John Roberts also joined the opinion of Breyer. Though, Justice Sonia Sotomayor considered the practice to be both unconscionable and unfair.

According to Sotomayor, professional debt collectors and providers of fast cash online, have built a business out of filing unfair claims in bankruptcy proceedings to collect the debt and buying stale debt, assuming that no one noticed it. The dissent passed by her was also joined by Justices Elena Kagan and Ruth Bader Ginsburg, while Justice Neil Gorsuch preferred not to participate in the case.

Mr. Cordray, It’s Time to Step Down to Let Payday Loans Online Providers Breathe

CFPB or the Consumer Financial Protection Bureau is a controversial agency and continues to remain polarizing. The US Court of Appeals for the District of Colombia recently declared that the structure of 1 director followed by the bureau is unconstitutional. In light of the criticisms and the voters’ desire for a modification of the status quo, CFPB need to refrain from pushing regulations about payday loans online providers before the presidents enters his office.

It is common trend for federal agencies to implement some last-minute regulations when a new administration takes over the government. These regulations are usually rushed and supported by low quality assessment of the benefits and expenses. Since CFPB’s regulation can influence the financial well-being of tens and thousands of Americans, they should take time and act in good faith.

For instance, the proposed regulations on payday lending and arbitration have sparked a lot of public interest. 1.4 million comments have been received by the payday rule, which ranges from legal and economic analysis to people’s personal stories about how they quite terrified about losing access to important products and services.

The CFPB needs some time to carefully consider and reply to genuine concerns highlighted by the commenters. The staff of the bureau will really need to work 24/7 to be able to sift through, review and analyze the 1.4 million comments internally before the new administration takes over the reins of the government. Scrutinizing the comments of the arbitration rule is going to take some more time. The bureau’s proposed rule on arbitration and payday lending is going to influence significant change in the financial services market and affect so many consumers, along with their accessibility to credit. The bureau should give it the attention and time that it needs.

CFPB need to exercise control to get the rules right and to maintain legitimacy. Originally, the bureau did not have any accountability to the president and the Congress. Its structure was recently held as an independent agency by the decision of a federal appeals court. The court even said that the director of the CFPB is the single most powerful official in the entire US government, next only to the president.

The problem was addressed by the court and it gave the president the power to sack the director for various reasons other than neglect of his duty. The president has the authority to oversee the work of the CFPB and fire the director, just like for any other agency.

The CFPB also need to avoid taking aggressive actions for the interest of legitimacy until the new president decided on who he wants as director for the bureau. The future of CFPB is uncertain, and therefore, any new rules will be viewed as an invalid attempt to dictate policies. This can lead to the rules being overturned by the new administration and can cause even more uncertainties in the industry.

Instead of putting the financial industry under whipsaw policy, the bureau and its director need to step away from the pen. CFPB should spend some time to work through the information that it has received as response for its proposed rules. This way, the new administration will be able to make better, informed decisions. The major goals of the bureau is to protect the customers and promote innovation and access in financial products and that does not change. The best way for the bureau at this moment is to wait before inaugurating and announcing the final policy regarding payday loans online industry. They need to really take the time to evaluate and assess the whole situation.

Calls for the Elimination of the CFPB Continue to Increase

The Consumer Financial Protection Bureau (CFPB) has certainly made its fair share of headlines over the past few years. From its moves to make debt collections agencies more transparent and accountable to their more recent proposed payday lending rule, the CFPB has managed to maintain a vicelike grip on various sectors of the financial industry. A government organization doesn’t do the kinds of things the CFPB has been known for without amassing its share of detractors and opponents.

For a while, there were only a few individuals or organizations that were vocal about wanting to limit the power of the CFPB. Now, though, there are increasing calls for the Consumer Financial Protection Bureau to be done away with once and for all. Whether or not that will happen is something we’ll all have to wait and see. However, it is interesting that this pet organization of President Obama’s is becoming the target of increasing complaint, as Obama prepares to leave office in the very near future.

The CFPB was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It has, since its inception, morphed into one of the most unaccountable and powerful agencies of the federal government over the past five years. This agency has a staff of more than 1,000 people and a nearly limitless budget. The CFPB has taken steps to restructure the mortgage industry, put restrictions on the major credit bureaus, change student loans, and to effectively destroy the payday and title lending industries. This massive amount of control of seemingly every type of financial business seems to be a huge overreach and has already led to the demise of more than a few legitimate businesses in this country.

The thing is, the CFPB seemed to be designed to get around the standard checks and balances that most other regulatory agencies deal with from the very beginning. From the top down (and don’t forget, the CFPB is headed up by a single director, and not a bipartisan committee) the CFPB has handed down decisions that make American consumers seem to be like children, who have no idea how to handle financial transactions on their own. The CFPB has been called by some just another attempt by the government to create a nanny state.

When the government makes it a point to meddle in the financial marketplace, there will always be serious consequences. With regards to the CFPB, our laws are being superseded by the whims of a powerful, yet unaccountable agency that is controlled by a single person; an unelected one, at that! The actions that the CFPB continues to take most certainly lead to consumer-level uncertainty. New regulatory statutes handed down by the CFPB will likely wind up costing consumers more while reducing their options for financial services and products.

The lawmakers in this country need to get started with reining in the CFPB immediately. It may start by curtailing the agency’s power a bit. Completely getting rid of the CFPB would likely be the best option for everyone. Protecting consumers is best handled when multiple agencies work together and coordinate their actions. Let’s face it, there are already enough government agencies that were tasked with handling the things that the CFPB now has power over, and these agencies did a better job than the CFPB has been doing as of late.

With a change in guard coming to the White House, it is time for the CFPB to be reevaluated, put in check and potentially disbanded altogether. Failing to do so will likely lead to more financial headaches for small financial businesses and consumers.

Latest CFPB Payday Regulations are not as much of a Slam Dunk as the Bureau Believes

As you probably already know, the Consumer Financial Protection Bureau has introduced a new rule that the Bureau believes will effectively put an end to what they call “debt traps” that consumers allegedly wind up snared in due to the payday lending industry. The regulation is more than likely going to be challenged by payday lending advocates, some political leaders and those who work in the payday lending industry. There are many opposed to not just the new regulation, but the Consumer Financial Protection Bureau itself. There are charges being leveled that the CFPB, an arm of the United States government, is unconstitutional in its structure and that it lacks the official authority to implement any type of regulations on the short term lending industry.

When considering the CFPB and its new payday lending rule, it is important to consider not just the structure of the regulation, but the potential obstacles that the Bureau is likely to face in getting the new rule pushed through and made official. There are questions that interested parties need to consider.

How will the proposed payday lending rule actually protect consumers from falling into “debt traps” that some people associate with the payday lending industry? The rule is very comprehensive. To read through all of it, you’d have to be prepared to scour over 13,000 pages. But for all of the details covered in the rule, the descriptions for what makes up an actual payday loan are a big generalized. Some types of short term loans are covered, as well as some longer-term loans. Lenders who make these types of loans will need to comply with the newly created ‘ability to repay’ requirement covered in the rule. This is something that mortgage lenders and credit card companies have had to adhere to for a long time, but is new for short term lending institutions.

This requirement will force lenders to look into the potential borrower’s income, debt situation and then find out whether or not additional debt will work for the borrower. Will the person be able to make the loan payment with their existing debt level? Additionally, this rule forces lenders to consider everyday expenses, like food, utilities and other expenses that borrowers have to deal with. Here’s where it gets sticky – the lenders have to not only make these inquiries, but they have to verify all of the information. This means they will need to get paycheck stubs, credit reports and other documentation about each and every person they have to process loan requests for. These additional checks will likely make the costs of making loans so high, and the overhead costs of running a lending company so unmanageable, that many lenders will have to drop out of the market.

Will the rules even provide new levels of protection to American consumers?

Some experts believe that the new rule will prevent borrowers from “rolling over” too many loans, and that this will prevent people from getting into situations where they are rarely able to realistically pay off the principle of their short term loans. However, the elephant in the room is the fact that if the new rule effectively closes the doors of the majority of payday lending companies, then lower income borrowers, and people with low credit scores will have virtually no access to emergency lines of credit. The traditional banks are of no help to consumers with low incomes and subprime credit when those people need to borrow a few hundred dollars to keep their heads above water. By protecting consumers from loans that they don’t like, while potentially preventing those same consumers from getting access to short term lines of credit, the CFPB has shown that they have not paid a whole lot of attention to creating any type of rule that would benefit American consumers in a realistic manner.

The Clock Runs out on Proposed Payday Lending Regulation in Nebraska

A new change to the payday loan regulations in Nebraska – a change that was endorsed in full by the Greater Omaha Chamber of Commerce, along with TD Ameritrade – has died out. This proposal would have changed the payday lending rules in big ways, but will not wind up taking effect any time soon. The bill – 1036 – was introduced by way of State Senator Kathy Campbell from Lincoln. It was designed to cap interest rates on payday loans at just 36 percent. This cap represented a major reduction from where the loan fees – when amortized for an entire year – currently stand.

In addition to APR caps, the bill was also aimed at changing the way debts are collected, while requiring more reporting to be done on the payday lending companies doing business in Nebraska. However, the payday lenders can breathe a sigh of relief, since the overhaul failed to get past the Nebraska Legislature’s Banking and Commerce Insurance Committee. This means that the 60 local payday lending locations in Omaha, and more than 90 throughout the state will operate per usual for the foreseeable future.

Senator Jim Scheer is from Norfolk and is the chair of the committee. He indicated that time was a real factor with regards to the folks supporting this bill. Those same folks met a roadblock when it came to a relatively shorter legislative session. The session this year is 60 days, while the following year will be 90. Session days alternate every year. If the senator does not name a particular bill as being a priority it will more than likely not make it out of the committee. The bill is then to be talked about on the full Legislature floor. Campbell did not indicate that the payday loans bill was a priority.

Sheer said, “It got past the point of being named a priority bill, and without that designation, it had no vehicle to get anywhere on the floor.  It didn’t make much sense from the committee’s standpoint to move it into the general file if it wasn’t going to go anywhere.”

When the 90 day legislative session rolls around there may be more time for discussions and amendments to the bill via negotiations submitted from both opponents and supporters. In a 60 day session, though, lobbyists and other interested parties do not have as much time to arbitrate and come up with solutions. This process proves disappointing to those who have a stake in the proposal.

The executive director of the Women’s Fund of Omaha Michelle Zych said, “Quite frankly, we were really surprised that it didn’t make it out of committee.” Zych’s group was the organization that originally pushed for the new regulations. Her supporters criticized the fees that are currently permitted on Nebraska payday loans. They believe that there are not many other states that will allow these higher rates, and that the fees currently contribute to consumers getting stuck in “debt traps.”

Opponents of the reform, like Brad Hill said that the industry is already sufficiently regulated and that borrowers are stopped from rolling over loans that they cannot afford to pay back in time. Hill then told the hard truth that many people don’t want to hear about: the fact that people who need small dollar loans do not have anywhere else to turn, other than to local payday lending locations or to online lending companies. Time is on the side of the payday lenders in Nebraska, for at least a little longer. Both opponents and proponents of the regulation will likely turn out in force when the time for the 90 day session arrives.

Chase Well Prepared to Successfully Enter the Mobile Wallet War

JPMorgan Chase is one of the most successful financial firms in the world. It should come as no surprise, then, to find out that this company is upping its game to compete in the mobile banking market. Last month, Chase’s CEO of consumer and community banking Gordon Smith informed investors that the mobile payment landscape was likely to become more confusing prior to becoming easier to understand. Smith did ease the sting of this statement, though, by saying, “But it will become simpler.” To make a long story short, this means that by the time things shake out in the mobile payment world, Chase Pay will do all that it can to be one of the easiest to use options that is still doing business. And the system has several features that will help it to stay in the game for a while and to successfully compete for a larger market share.

This announcement from Smith was meant to bring investors back to a view of the industry that closely resembles that of the earliest days of the mobile market wars. The sentiment then was: “One of these technologies will win out, but no one knows what it is.” This is a feeling that many remember from just a few years back when Google Wallet failed to live up to expectations. This service struggled to get merchant, customer and even banks to adopt it. Things reverberated more when the Isis Mobile Wallet, which changed branding to Softcard (in order to avoid any connection with the Islamic State terrorist group) pretty much died quickly. This death led to Google purchasing Softcard assets, and led to the popularity of the new Android Pay.

Apple Pay launched publicly in 2014, and started a whole new slew of mobile wallets, and eliminated the old though of only one company “winning” the mobile wallet war for supremacy. In fact, experts now believe that multiple third party providers will have successful mobile wallet products and that banks will now begin to launch their own, branded versions of this type of technology. In other words, it is no longer a battle where one winner takes all. The new theory has evolved into customers choosing a mobile wallet that has a lot in common with how they choose banks, cars or even computers. They will choose a mobile wallet that suits their needs or a brand that they have experience with. Wallet providers, therefore, will be ready to oblige consumers with different wallets with different features for people to choose from.

For the sake of argument, though, let’s say that the vision behind Chase’s offering is crystal clear. Smith said that Chase wouldn’t be investing as aggressively in its mobile wallet if it thought it was going to wind up as an “also ran” behind other mobile payment systems. No, Chase wants Chase Pay to be one of the top dogs.

But will Chase be able to pull this off? Well, the company has a brand name that many people are already aware of and comfortable with. This company is known for being a longstanding player in the financial world, so that will likely make many consumers feel safe in trusting their mobile payment needs to Chase Pay. Smith is also very experience in this field, and will help to lead Chase Pay into the trenches successfully. It also appears that Chase Pay will have plenty of features that consumers look for in a mobile wallet system. We will all have to wait a bit to see, but some experts believe that this mobile payment system does have what it takes to successfully stand as a mobile wallet victor when it’s all said and done.

Even Wealthy People Can Have Bad Credit

While it is not all that difficult to imagine lower income people with low credit scores that is not always the case. There are plenty of people who don’t make a lot of money who happen to have good credit scores. In a like manner, you might not think that wealthy people would have any worries when it comes to their credit ratings. It turns out, though, that this is not true. There are plenty of very wealthy people in this country who have issues with their credit scores. It is at the point right now where even the rich need to be concerned about their credit scores, just like everybody else.

The recent economic problems that have taken place all around the world have put a lot of emphasis on credit scores, which, when they are on the lower end of the spectrum can limit a person’s access to obtaining loans, getting decent insurance rates and even getting hired for a new position. Many wealthy folks have actually hurt their credit scores without being aware of it. By making late payments, charging too much on credit cards and not using credit enough because of their higher income levels.

The bottom line is that being wealthy does not always mean that someone is necessarily wise when it comes to credit. Contrary to popular belief, a person’s savings and income don’t factor into their credit scores.

A financial advisor named Jeremy Portnoff said, Regardless of their finances, age, gender or ethnicity, people don’t have an understanding of how credit works. They should be aware of their scores, especially in this environment.” Mr. Portnoff went on to describe a client of his, who had more than a million dollars in assets, but still had a poor credit score. This person avoided borrowing money, rented his house and never used credit cards. These factors all worked together to create a sub par credit score and may hinder the person from getting a mortgage in the near future. Like many other people, this guy grew up with the belief that all credit was negative.

The credit crisis has made people of all economic classes more susceptible to lower credit scores. Everybody needs to have a good to excellent credit score to receive loans and to ultimately keep borrowing costs down for the entire country. Scott A. Beaudin, a financial advisor explained it like this, “We think the limit is at least 760 to qualify for the best rates.” Some people just don’t know how to build their credit scores, and many more don’t know how to keep their credit scores high over the long run. This is true for people who are rich just as it is true for middle and lower income households.

When the time comes to get a mortgage or to buy insurance, lower credit scores can be extremely harmful to wealthy people. If you have more assets, you have more of a need to insure them. But if your credit score is not up to snuff, the insurance companies will rake you over the coals when it comes to insurance premiums. No matter how much money you make, it is never a good thing to pay more for insuring your property than you ought to.

Credit scores generally range from about 300 points to 850 points. The sad fact of the matter is that most people don’t even have a clue about what their credit scores are until they apply for a loan. There is no excuse to be out of the loop when it comes to your credit score, as everyone is entitled to obtaining at least one free copy a year according to federal law.

The Average Credit Card Debt in America

All of the new and upcoming technological advances in the financial industry have gone a long way toward changing our society into more of a cash-less society. The bottom line is that many consumers are turning away from using cash and using credit or prepaid debit cards to make purchases. Even minor things, like getting coffee every morning, are winding up on some peoples’ credit cards, and the result is consumer debt accruing like never before.

iStock_000014696238XSmall-300x225Credit Card Debt is on the Rise

The United States is just starting to get back to a place of relative financial stability. After the last Great Recession, you would have thought that people would have learned their lessons about avoiding debt when it is at all possible. That doesn’t appear to be happening, though, as credit card use is rebounding, with the Federal Reserve announcing that Americans owe in excess of $880 billion dollars in revolving credit as of this past October.

All that debt is great news for the big credit card companies, but it’s not necessarily good news for the average consumer. As those big credit card companies continue to rack up profits like never before, all of that excess debt can leave the average person scrambling to make payments on time and can actually lead to people suffering from lower credit scores than they ought to have.

How do you compare?

A recent study by Credit Karma revealed that about half of its 30 million online members have credit card balances that equal 40 percent or more of their credit limit. That is not good news, since the big credit bureaus are known to penalize consumers when their credit card balances go above 30 percent of the credit card limit.

So what are the penalties that get handed out? Lower Credit Scores! And once someone has a lower credit score, higher interest rates are soon to follow. Those higher interest rates can wind up costing the average consumer thousands of dollars over the years. Even worse is the fact that lower credit scores can lead to people getting denied mortgage loans, auto loans and even jobs or better insurance rates.

How much of an impact can a lower credit score have on your finances in the future? Let’s say you were borrowing around 165 grand to buy a house. With a 4.5 percent interest rate you would wind up paying over 130K over the life of a traditional 30 year mortgage. But if you had a lower credit score that resulted in you paying 5 percent interest instead you’d wind up paying over 150K on the same loan. Just a half point difference means that you’d wind up paying nearly $18,000 dollars more than you would have if your credit score was higher…

That extra almost $18,000 could have been invested in your savings for retirement, used to purchase a new vehicle or even used as college tuition for your kids, instead of getting that extra money, though, too many Americans are simply racking up the credit card debt like never before…

Here’s what everyone needs to do if possible. Pay off high interest credit cards as quickly as possible or negotiate with the credit card companies to get lower interest rates. And never, ever allow your credit card debt to exceed 30 percent of your credit limit on any card. Finally, pay cash or use prepaid debit cards to pay for things instead of putting them on the credit card. Small purchases add up to bigger payments and more debt that most of us simply don’t have the financial wherewithal to deal with over the long haul.

Are Mobile Payment Processors the Banking Breakthrough of the Future?

In the technology world just about everyone knows that Apple leads the way and other companies soon hop on the trail that this technology giant has forged. It turns out that it isn’t just technology analysts that are staying up-to-date with the latest news from Apple, as financial industry analysts are also paying quite a bit of attention to the company too. This only makes sense, since Apple’s Apple Pay mobile payment technology has been getting a lot of press lately.

Some analysts believe that the technology could play a major role in reshaping the ever-growing mobile payment market in the months and years to come. After all, Apple shattered sales records by moving more than 10 million of its most recent iPhone model, so they know a thing or two about supplying the products and services that people demand these days.

Chris Caso, an analyst from Susquehanna said, “Apple Pay is going to be a hit. The Apple Pay mechanism is much easier than the prior attempt by Google with the Google Wallet.” Caso went on to say that he thinks Apple AAPL, 0.55% has addressed concerns about privacy by implementing a “tokenization” technology to Apple Pay that will prevent peoples’ credit card information from being stored on the systems that merchants use to process online payments.

The use of traditional credit cards has proved to be an obstacle to the mobile payment industry for years now. The process of removing a credit card to swipe at traditional points of service is not hard, so people have not been clamoring to jump on board with digital payment methods.

Caso, however, believes that Apple Pay will have distinct advantages that traditional credit cards cannot provide. The use of Apple Pay, when integrated with mobile apps from vendors, will provide distinct benefits to customers. People will be able to instantly accrue and use rewards points and other incentives that are tied directly into making payment with Apple Pay and merchant applications. In other words, merchants and vendors will continue to offer incentives to entice consumers to pay for goods and services using their smart phones.

Apple is doing all that it can to make sure that the big banks, like Chase, Bank of America and Wells Fargo, along with retailers, like McDonald’s, Whole Foods and Nike are on board to support the transition to more consumers using Apple Pay. The company has even worked out partnership deals with the big credit card companies, like Visa, MasterCard and American Express. These partnership deals allow end users to seamlessly tie their existing credit card accounts with their Apple Pay accounts for a more rewarding mobile pay experience.

The fact that the iPhone offers superior digital fingerprint technology adds another layer to the Apple Pay big picture that will make it easier, and more secure for people to transition from using their traditional wallets and move forward into the financial future by using their mobile devices to make quick payments at retail locations.

Of course, Apple does expect the final result of Apple Pay to be higher profits in the very near future. Revenue gains could reach around $89 million in transaction fees by the end of the next fiscal year. Some analysts believe that as impressive as that figure is, that by the end of 2016 those fees could peak out at over $300 million, as more retailers get on board and begin using Apple Pay. It is high time that mobile payment processing finally came into its own, and Apple Pay may very well be the technology that allows that to happen.