Tag Archive | "bankruptcy"

The Story of Success and Failures of New Century Financial

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New Century Financial Corporation was established in 1995. The company was dealing in real estate investment. Till start of 2007, New Century had 7,200 employees. The company once was the second largest provider of subprime mortgages. The crushing of subprime has resulted in bankruptcy of several mortgage lenders.

Subprime Mortgage

Subprime Mortgage

Till the start of 2007, New Century was the second largest subprime mortgage lender in the country. Subprime mortgage is made to the borrowers who may not qualify for the traditional borrower, due to which subprime is more risky loans as compare to normal loans. As they are more risky due to which subprime mortgage loans have a higher rate of interest than normal mortgage loans.

Financial Hardships

Due to current deficit in funding, the company choose to stop accepting loan applications from the borrowers. In March, 2007, The Company said that they are failed to meet minimum financial criteria. Moreover New Century further indicated that they do not have the enough amounts to pay their creditors.

As a result of above mentioned problems, on March 13th 2007, the legal authorities start preliminary investigations against the company because of their liquidity problems. After that New Century Financial Corporation and its related companies files partitions in the court. Read the full story

What is a Co-Op’s Worst Nightmare

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When the co-op is near a default, the co-op’s worst nightmare comes true. If you want to make it worse, add a shareholder meeting to that nightmare as well.

Unfortunately, things are mostly the same in the real world as well. Where a co-op goes bankrupt, the owner is left in the cold.

A Typical Co-op:

A Typical Co-op

For those who don’t know what a co-op is, it is a corporation where the housing arrangements are carried out. In a typical co-op, a share of the legal entity is also held by the resident. Therefore, these individuals, the shareholders, hold a certain amount of shares in the corporation and not the real estate.

Technically speaking, the real estate is the property of the corporation. As for the one who owns the shares, a monthly maintenance cost is paid, which basically covers a list of things. This includes the likes of building management expenses such as cleaning, heat, water, employee salaries, garbage removal, repair costs, taxes, insurance, and the building’s underlying mortgage.

Types Of Default:

There are two basic types of default:

  1. A Technical default is something that is a bit less serious than its other type. Although not terribly serious, this default has the failure to make repairs in violation of the mortgage agreement. Read the full story

Types Of Real Estate Investment Trusts

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Real estate Investment trusts are the most significant consideration when making any equity or fixed-income investment. This is because of the involvement of greater expansion, lower risks, and larger proceeds. Also because of their ability of creating dividend income along with appreciation of capital makes them a brilliant offset to stocks, bonds and cash. REITs usually possess and administer income creating commercial real estates whether these are properties themselves or mortgages on these properties. Below is given some description about the five types of real estate investment trusts:

Retail REITs:

Retail REITs

It signifies the single largest investment by type in USA. Whatever shopping center you visit, it is most probably owned by REIT. When you think about investing in a retail real estate, you must first of all scrutinize the retail industry.

These trusts normally earn from the rent they receive from the tenants. If the retailers are encountering cash flow problems, delay or default in payment is likely to take place, finally compelled into bankruptcy. At that particular time, some new tenant is required to be located which is not an easy task. In underdeveloped economies, REITs with favorable cash positions can access a lot of decent opportunities at distressed prices.

Residential REITs:

Some REITs own and manage multi-family rental apartment buildings and manufactured housing. Before making an investment in that type of REITs, one has to take into account some important factors. For example, the best apartment markets are likely to be at those places where the affordability of home is lower as compared to the other areas of the country. Read the full story

Bank of America Mortgage Settlements

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Bank of America is one of the leading banks in the US and has been working for decades now. But currently it is going through its worst crisis which is caused mainly due to its own mismanagement and mishandling of the mortgage loans. In order to meet the challenges, they are trying to do some settlement deals with major investors in order to get out of the reigning crisis.

Background of the Story

Bank of America

After being accused of mishandling billions of worth funds in mortgages last year, Bank of America started negotiating with major consortium of investors to settle these major charges. The group has asked for an explanation from Bank of America for mishandling these funds and given them a time frame of two months.

The Accusations

The charges contains the allegations of doing a poor job in the collection of mortgage payments and also poor service provided to borrowers who were having trouble making their payments. They further said that the Bank has not lived up to the underwriting criteria and did a poor job in providing quality mortgage services.

Questions were raised over the warranties provided by the bank on the loans which were offered to the investors in shape of bonds. Moreover, this mishandling of warranties and poor management has lead to the reigning financial crisis and put the bank in deep trouble.

Bank of America purchased Countrywide a while back to avoid bankruptcy during the recent crisis. But the investors wanted to have the same loans issued by Countrywide to recoup their losses. Bank of America initially resisted these allegations and tried to fight for it but soon realized that it was its own poor management and mishandling that lead to the crisis and they agreed to go into the settlement plan.

Settlement with two Giants

As a result of the Bank’s efforts to settle things down, they managed to fix a deal with two of the market giants, Freddie Mac and Fannie Mae. Both these giants themselves were on the verge of collapse last year and were bailed out by the government.

Read the full story

Credit Card Debt Relief

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Calling the credit card company and asking for a compromise or a payment plan to get some debt relief is a bit hard. But proper planning can help you solve this problem. The way you discuss the matter counts a lot. Their willingness to work with you might be surprise for you.

How to Contact a Credit Card Company?

You need to be honest and fair while calling a credit card company and asking for debt relief. There is no need to beseech whether you are asking them for a favor, a lower interest rate, lower payments or waiver of late fees, in fact discuss your problem in a normal way will surely bring positive result. If you work the phones all day at a credit card company, you would rather spend time helping a nice, polite person than dealing with an angry one.

Choose a Best Person for Discussion

Your first and foremost action will be to decide, with whom you are going to discuss your matter? The first live person may not be able to change the terms of your card, but he can transfer you to a supervisor or another rightful person.

Discussing Your Financial Problems

Credit Card Debt Relief

If you succeed to approach someone who can help you, explain him fairly your financial problems. Discussing your troubles like dismissal from job or suffering a major illness does not mean at all that you are going to gain any sympathy. Instead, you are trying to help the credit card company understand the severity of your problem. If you have been fired and expect to find a new job in the next few months, that’s a different situation rather than if you are suddenly disabled and almost penniless.

Suggesting the Possibilities

Whatever the situation is, you will have to suggest some solutions. If you have made an estimation of your new monthly payments, that may be less than the minimum payment, suggest paying that amount. If your financial condition does not allow you to pay any installment but you have an idea to pay it later on, inform them. Assure them that you will soon get another job, or will get an insurance settlement. Read the full story

How to Negotiate Credit Card Debt Settlement Yourself?

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Each of us is now practically surviving on electronic money rather than paper money. The reason for this is the number of credit card one individual holds. This allows people to spend money where ever they wish to. This is an inappropriate method of going about things in daily life as it would only add up to our previous debt.

Considering Settling Your Debt?

Credit Card  Debt

If we go onto assume that we owe more money than we can pay, we lose our job, have no way of paying out debt, even the business fails and there is nothing left we can do to do pay off your credit card debt. In such a situation, the answer to your problem would be that you don’t really have to pay the whole debt. This does not mean that you are claiming bankruptcy but it means that you are opting for debt settlement.

When you consider opting for debt settlement, credit card companies know that they would have to cooperate with you because if you opt for bankruptcy then all their money is lost. Therefore, to keep the hopes alive that you would pay, they tend to revise the terms and conditions of the amount which is owed by you.

Approach of Credit Card Companies

The reason for this is that if bankruptcy is claimed then credit card companies are last in the line and would receive no payment at all. Therefore, the strategy of something is better than nothing is considered to be better by the companies. The revised terms could be that if you owe a dollar then they could settle for fifty cents or less. With this, eventually over a period of time, your debt would start disappearing.

Process of Debt Settlement

The process of debt settlement may sound as an easy process but this is not the case in real. For debt settlement, you need to have really good negotiating skills. The reason for this is that you might have to negotiate the terms of your contract over the phone and be persistent about what you are arguing about.

Read the full story

Quotes About Debt

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Do you know what actually debt means? A debt is when you owe somebody money. Debts get bigger every week if you are also charged ‘interest’. Interest is an extra charge on the original debt.

Here are some very interesting famous quotes about DEBT, which will sometimes make you laugh and sometimes make you think.

True Quotes:

  • Some debts are fun when you are acquiring them, but none are fun when you set about retiring them. -Ogden Nash
  • Good times are when people make debts to pay in bad times.  -Robert Quinlin
  • What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience? -Adam Smith
  • It is the debtor that is ruined by hard times.  -Rutherford B. Hayes
  • I’m in debt. I am a true American.  -Balki Bartokomous
  • The man who never has money enough to pay his debts has too much of something else.  -James Lendall Basford

Proverbs and Sayings:

In this category there are some proverbs and quotes by unknown.

  • He who promises runs in debt.  -The Talmud
  • Debts are like children: the smaller they are the more noise they make.  -Spanish Proverb
  • Interest on debts grows without rain.  -Yiddish Proverb
  • Before borrowing money from a friend, decide which you need most.  -American Proverb
  • Promises make debt, and debt makes promises.  -Dutch Proverb
  • Running into debt isn’t so bad. It’s running into creditors that hurt.  –Unknown
  • Christmas is the season when you buy this year’s gifts with next year’s money. –Unknown
  • Read the full story

Erase Debt with Credit Card Debt Settlement

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Imagine a situation, You have utilized all the credit limit on all of your credit cards. you are paying the minimum payment on each of the credit card bill you are getting. Suddenly something nasty happens. You fall sick, you loose you job or your business go broke.. anything that leaves you with little or no income at all. So, It is impossible for you to pay the debt you owe on your credit cards. Well, don’t worry. you don’t have to pay.

erase-all-your-debt

How it is better than bankruptcy?

You might be thinking that I am suggesting bankruptcy. No, I am not. I am suggesting that you should negotiate a credit card debt settlement. You have three options.

  1. Negotiate the debt settlement yourself
  2. Hire a Lawyer to settle with credit card companies for you
  3. Find a Debt relief company to represent you

Why Would They Accept Less?

Why would credit card companies accept a payment less that what they owe? well, its simple. you threat them with bankruptcy. If you go bankrupt. they are the last one in the line to get anything from your assets if any are left over from your other obligations i.e. home loan etc. Credit Card Companies are smart, they will settle for anything. may be 40 cent to a dollar or less. That’s half your debt erased.

What it takes to Erase the debt?

If you got plenty of time (which is only thing you have when you are jobless) and patience. you should do your credit card debt settlement yourself. But remember it is very hard. it can take months and at times you might get very frustrated. Other skills required to negotiate a debt settlement include good telephone manners, a serious and persistant attitude and ability to absorb a great deal of ******.  Its better that you let a lawyer handle it. but that will cost you. so its your choice. Read the full story

How to Get Out of Payday Loan

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Life is full of surprises, as unforeseen incident can bolt from the blue anytime. There are situations when you have to fight with yourself to be able to finance your expenses accordingly without having to take loans or any other financial support.

Falling For A Pay Day Loan

If you’re stuck in an emergency and cannot think of ways out of it then a payday loan might be a quick solution to your problem. A pay day loan might be similar as a wake up call for you so that you could get your act straight, pull some strings together and be able to finance your expenditure with some planning.

payday loans

However, in most cases what happens is that a person takes a pay day loan and then to come out of it they opt for another pay day loan to pay off the previous. In this manner, you keep falling in the trap hole without realizing how bad your credit score is becoming and how much you’re falling into debt.

As mentioned earlier, emergencies do not come calling. Therefore, a person has to make sure that they owe as less as possible so that they could make the most out of their paycheck without having to worry about the payments dude. Once you’ve paid off your pay day loan, your first and foremost target should be to make a list of how much you owe and think of practical ways to get out of it.

Make a list of how much you owe

First and foremost, an individual must prepare a list of how much they owe.

Read the full story

Debt Management Plans

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If you are in debt, and need someone to help you in devising a way out, regarding the payment of the money, you definitely need a debt plan. You must go for having a professional advice and must stick to it properly in order to get rid of the debt.

Debt management plan

Mostly the scammers are attracted by the debt management plans. Normally people look for a quick and effective way to get rid of the scam.  In this situation, a debt management plan is really helpful. All you need is to follow the plan seriously.

debt management

Advantages of having a plan for debt management

If the company is trustworthy and honest, so the idea of having such plan is not bad. Once you decide for it, you need to sign up with a credit counseling company which is trusted by your lender.  Their trust is significantly important because the lenders trust companies more than the borrowers. So by choosing such a company, you can have a better deal.

Anyhow, the credit counselors set up a fund that each month you need to send some money. The counselor pays that money to your lender once he receives them. This all is done according to a plan which was accepted by everyone involved in it.

Read the full story

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