Car repossessions have reached a figure not seen in over a decade. According to Fitch Ratings, the number of subprime auto borrowers who were at least 60 days past due on their car payments increased to 5.67 percent (5.67%) from 2.5 percent (2.5%), which was the figure reported in April 2021.
Numbers like these have not been seen since January 2009 when 5.05 percent (5.05%) of subprime car borrowers were at least 60 days late on their car payments during the peak of the Great Recession.
Creating a budget can be a challenge but sticking to one can be even harder. For someone who has less than perfect credit, the creation of an affordable monthly budget is crucial.
Consumers who have subprime credit scores, meaning their scores range between 580 and 669 on the FICO scoring model, often struggle with being able to handle a budget that not only meets their needs but actively works towards paying down debt.
The U.S. Supreme Court declined to expand a federal law protecting consumers against harassment and threats in debt collection attempts. The court unanimously upheld a lower court’s dismissal of a proposed consumer class action lawsuit against the auto-lender Santander Consumer USA Holdings Inc. over allegations it violated the Fair Debt Collection Practices Act.
The case came down to the definition of “creditor” and “debt collector” and whether a company that buys debt should be treated as a creditor, not subject to the the collections law. The law applies only to companies that collect debts on behalf of others and does not apply to businesses like Santander who purchases the distressed debt from other companies after it defaults, the Supreme Court ruled.
The ruling was the first written by the court’s newest justice, Donald Trump-appointee Neil Gorsuch, who wrote that any changes to the law should come from the U.S. Congress, not the court. The four Maryland residents who had defaulted on their car loans filed the proposed class action lawsuit in 2012 in federal court, accusing Santander of violations of the debt collection law including misrepresenting debt loads and bypassing the debtors’ lawyers.
Click here to read more on this story.
If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources:
https://www.reuters.com/article/us-usa-court-debt-idUSKBN1931NA
According to data released this week by the Federal Reserve Bank of New York a record 107 million Americans have auto loan debt. That accounts for approximately 43% of the adult population in the U.S.
Auto loans have been increasing rapidly. In early 2012, only 80 million Americans had car loans. But now more Americans have auto loans than home loans- and according to recent numbers, many are having trouble affording their monthly payments. There are currently 6 million people who are 90 days or more behind on their car payments.
After the financial crisis, so-called “sub-prime” auto loans were routinely given to borrowers with less than perfect credit. Low quality loans spiked to pre-crisis levels in 2015 and 2016, according to federal data.
Many of the consumers qualifying for these loans do not understand the terms and conditions. The interest rates can be astronomical- sometimes as high as 20% and penalties for default can be severe.
Santander Consumer USA Holdings Inc., which is counted among the biggest subprime auto-loan firms, verified income on just 8% of borrowers. Limited verification of loan applicants’ stated incomes and employment “creates more uncertainty around whether borrowers will be able to afford their monthly payments, which becomes particularly important if they have poor credit records and risky loan terms,” the analysts wrote.
Click here read more on this story.
If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources: http://www.marketwatch.com/story/auto-lender-santander-checked-income-on-just-8-of-subprime-loans-bundled-into-bonds-2017-05-23
Barclaycard sold $1.6 billion of credit card balances in the first quarter of 2017 to the personal-loan company, Credit Shop Inc. Oftentimes, the accounts that are sold are ones that the card issuer has determined to be too risky for its business or are already in delinquency. In these type instances, a card issuer can sell the account balances for pennies on the dollars.
Here is what you need to know if your credit card company sells your debt.
The reasons card issuers buy and sell debt. Some debts are more “reliable” than others. For this reason, cardholders pay widely different interest rates, depending on how risky the lender judges them to be. “Subprime” borrowers tend to pay substantially higher interest rates to make up for the possibility that they might not be able to pay back the debt.
How will you know if your debt has been sold? In many you will only find out if your debt has been sold when you hear it from the new owner or a debt collector calls you and demands payment.
What if a debt collector calls? If you receive a call from a debt collector, the Fair Debt Collection Practices Act protects you from abuse and harassment. A debt collector is not allowed to call you excessively or make any threats. They are also prohibited from calling you before 8 a.m. or after 9 p.m. and cannot misrepresent the amount you owe. By law, you have the right to demand documented proof of the existence of the debt and the amount you reportedly owe. This request must be made in writing within 30 days of the first contact from a debt collector. During the time it takes to investigate and reply to your request, all calls from the debt collector must stop.
You also have the right to request that all future contact be made in writing. This can prevent disruptive and embarrassing calls at home or at work. You have the right to sue if a debt collector violates any of these rules.
What responsibilities do credit card companies have? Under the federal CARD Act, which went into effect in 2010, credit card companies are required by law to give cardholders 21 days from the date the statement mails to make a payment. Credit card companies are also required to provide a 45-day written notice before any rate increases. If you receive this notification, consider paying off the account if you are able to or transferring your balance to a low-interest credit card or zero-percent interest card, which overtime will be less costly to repay.
If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources:
http://www.nasdaq.com/article/what-happens-when-credit-card-companies-sell-your-debt-cm776572
Subprime auto loans are back in a big way, and according to recent data have climbed to the highest level in a decade, with large increases in loans to borrowers with credit scores below 660. The number of subprime auto loans becoming delinquent has climbed to the highest level since 2010 in the third quarter and is following a pattern similar to the months leading up to the 2007-2009 recession, according to data from the Federal Reserve Bank of New York.
New auto loans to borrowers with credit scores below 660 have nearly tripled since the end of 2009. In 2016, approximately $50 billion of new auto loans per quarter have gone to those borrowers thus far. About $30 billion each quarter has gone to borrowers with credit scores below 620.
The increasing delinquency of subprime auto loans is concerning because it comes as the overall economy is on the mend and the employment rate is improving. The credit quality of other types of loans has improved.
Delinquency rates declined in the quarter for mortgages, student loans and credit cards. The number of individuals with a new foreclosure notation on their credit reports hit the lowest level in 18 years of data.
The increase in auto loans, particularly the subprime sector, has raised alarms among some regulators in Washington. The rate at which auto loans for borrowers with credit scores below 620 has climbed for 10 consecutive quarters, especially on loans made to those with the lowest or subprime credit scores.
Lenders know that subprime borrowers are more likely to default and become delinquent on their loans and charge them higher interest rates. The mistake during the financial crisis was that while the lenders expected higher defaults among subprime loans, they failed to anticipate just how high it would rise.
Click here to read more on this story.
If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
