Creditors
Consumers with debt-related complaints have a solution
In a prior post, we discussed the biggest complaints that consumers have and how credit card and other individual debt-related issues consumed two of the top three spots on the “Top Consumer Compliant List.”
Threatening collection practices seemed to play the largest role in causing debt to rise so high on the complaint list along with collection confusion and errors that should have been easily detected and avoided.
Laws related to debt and debt collection are constantly being reviewed and changed as societal needs develop. The Credit CARD Act of 2009 created new requirements for disclosures and protections for credit card users, but according to consumers, it is not enough. Approximately 252,009 complaints were made to consumer protection agencies in 2010. Despite the new protections, consumers continue to experience deceptive practices.
Consumers are calling for even stricter laws against creditors who misbehave not just laws that provide more disclosure requirements.
Many governmental consumer agencies that participated in the survey admitted a sort of failure to handle the large number of complaints that roll into their offices daily. The failure, they say is largely due to the budget cuts that have occurred across the board. As their funding decreases, their staff size decreases, their resources decrease and they have trouble giving every complaint the attention it deserves.
“Consumer protection agencies need more funds to do their jobs effectively,” said the director of consumer protection for the Consumer Federation of America. “They provide essential public services, like firefighters and police, and deserve the same support.”
Source: Fox Business, “Auto Repair, Credit and Debt Issues Top Consumer Complaint List,” Aug. 3, 2011
Consumers say debt-related issues cause them significant headache
Filing for bankruptcy protection is very helpful for people who have found themselves with too much financial stress to handle on their own. Often, individuals file after credit card and other kinds of debt become too high as a result of a change in economic circumstances like the loss of a job, large medical bills and many other situations.
Although filing for bankruptcy is helpful, most people did not plan to end there. They try to make the payments that they can, but when they are illegally threatened by creditors, it is hard to even want to pay. According to the most recent “Consumer Complaint List,” complaints related to credit card debt collection rank number two on the list, with other debt-related complaints trailing just behind in slot number three. Number one was auto-repair transactions.
According to consumers, credit card debt collection has gotten out of control despite laws that are supposed to protect them. Consumers reported that creditors were using highly offensive and illegal techniques like saying that they would kidnap their children unless they paid or extradite them to the Dominican Republic.
A lot of the threatening calls related to online loan applications. The major problem for some consumers was that the calls were being made for debts that were not even due. Many people had already paid off the loans while others said their information was obtained in a loan application process that they never even finalized.
Attorneys can help people with debt-related issues all the way from ensuring creditor workouts to dealing with threatening collection practices. Debt is stressful enough, but when you try to go about it alone, it can be even tougher.
Source: Fox Business, “Auto Repair, Credit and Debt Issues Top Consumer Complaint List,” Aug. 3, 2011
Colorado Debt Relief: One on One Negotiation as a Bankruptcy Alternative
When you start to feel overwhelmed with personal debt filing a personal bankruptcy may seem like the only viable option. In some cases though there are favorable alternatives that can be pursued that will benefit both you and your creditors than filing for bankruptcy protection.
A qualified Colorado bankruptcy attorney can evaluate your individual financial situation to determine the most logical course of debt relief action for you. If there is a chance that your personal consumer debt can be resolved without filing for bankruptcy protection your Colorado bankruptcy attorney can help you negotiate the most favorable terms with each or your creditors in a one on one basis.
There is a good chance that your creditors will be receptive to negotiate the current terms of your debt so they can ensure that they will receive regular payments on the money that is owed. Even if the terms of your debts with individual creditors have to be extended or altered in order for you to continue to make payments it’s often still a more favorable situation for creditors than if you had pursued a personal bankruptcy.
In many cases you may have several avenues that can be followed in order to resolve your personal debt. In order to make the most appropriate choice for your individual financial situation you need to closely examine all of the details with the help of a Colorado debt resolution expert. A Colorado bankruptcy attorney will have the knowledge and experience necessary to help you make the most informed decision regarding your personal debt.
An unfortunate end for Ultimate Electronics
In a previous post, we discussed how Ultimate Electronics Inc, a Thornton, Colorado, based company, recently filed for Chapter 11 bankruptcy. The chain has 46 stores around the country, yet was struggling to maintain sales in the recession economy. Filing under Chapter 11 was an attempt to reorganize the company’s debt and regain control of their financial situation.
When Ultimate Electronic originally filed the Chapter 11 bankruptcy claim, they hoped to overhaul their operations and save as many of their stores as possible. However, the company has now unfortunately announced that plans are in the works to liquidate all its locations nationwide.
The company’s inability to pay its creditors seems to be one of the main reasons for the decision. The Chapter 11 bankruptcy petition allowed the company a little bit of breathing room, since the petition makes it very difficult for creditors to aggressively pursue collection. In many cases, this protection allows a struggling company to negotiate a new payment plan, but Ultimate Electronics’ debt apparently proved too great. Its largest debt is to General Electric Capital Corp, currently amounting to over $60 million dollars.
In internal emails given to Colorado’s 9NEWS by a senior executive, top officials within Ultimate Electronics described the decision as their only viable option, especially considering that several stores were already in the process of foreclosure due to non-payment.
Tough economic conditions delivered a hard blow to the company in the early years of the new millennium, and Ultimate Electronics never fully recovered. The company also filed for bankruptcy in 2005, but despite efforts at reorganization under a new CEO, profits remained low. This unfortunate story is another example of how harsh the current economy can be on businesses.
Source: 9NEWS.com, “Ultimate Electronics moves to liquidate all stores nationwide.” Chris Gallegos & Matt Flener, 7 February 2011
Colorado-based Jeweler Nearing End of Chapter 11 Bankruptcy
Foregoing the pursuit of a business workout, Centennial, Colorado-based jewelry store chain Shane Co. has been making strides toward completing Chapter 11 bankruptcy since it filed for protection from creditors back in January of 2009. Shane cited the poor economy and the severely negative impact it has had on the sales of their product, which is inherently a luxury item, when filing for bankruptcy. The company had also defaulted on loan agreement terms with various creditors.
Shane Co. was able to obtain court approval last week to send the reorganization plan out to creditors for a vote on whether or not to approve the plan. U.S. Bankruptcy Judge Howard Tallman presided over a two-day long hearing in a Denver courtroom last week to grant approval of the jewelry retail company’s disclosure statement to be sent to creditors. The disclosure statement effectively explains to creditors the next steps Shane Co. will be taking in the coming months to completing Chapter 11. Judge Tallman set a hearing for November 10th to address the status of the plan’s confirmation at that time.
The plan outlined in the disclosure statement stipulates Shane Co. will repay 100% of what is currently owed to creditors holding secured claims. Shane Co.’s plan also states they plan to pay those creditors with unsecured claims against the company over an unspecified period of time from the available company revenue. The company’s 2008 revenue was $64 million less than 2007′s, a 23 percent decrease that was a deciding factor in Shane Co. filing for Chapter 11 Bankruptcy.
Source: Bloomberg “Jeweler Shane’s Bankruptcy Reorganization Plan to Go to Creditors for Vote” 9/29/10