Top 10 Foreclosure States

In the US, new foreclosure filings fell from February to March, but only by 1%. According to the latest RealityTrac data, one out of every 856 housing units nationwide received a foreclosure notice last month. But as you might expect, some states did much worse than others. Can you guess which?

Here they are, listed by the highest foreclosure rate:

• Nevada - 1 in every 306 housing units

• Florida - 1 in 317

• Illinois - 1 in 441

• Ohio - 1 in 447

• Maryland - 1 in 630

• Georgia - 1 in 649

• Arizona - 1 in 662

• South Carolina - 1 in 673

• Washington - 1 in 687

• Indiana - 1 in 733

Times are still tough for real estate investors in Nevada and Florida, and they aren't much better in Illinois or Ohio. Comparing data this way can obviously be deceptive, as some States have areas with widely divergent foreclosure rates (here's looking at you, California). But the data can highlight general trends to be aware of.

What about us? In Minnesota the rate stands at 1 in every 1,228 housing units for the month of March, 2013. Experts see signs of an improving market here -- marked primarily by stabilizing home prices -- despite the frosty Spring we're having. In terms of foreclosure filings, we're seeing up and down months but the overall trend in Minnesota is positive.

The reality though is that many of us, or our friends and neighbors, are grappling with late payments, underwater assets, and the threat of foreclosure. There is relief out there, whether through a foreclosure avoidance program or a Chapter 13 restructuring of mortgage debt, including a possible lien strip of junior mortgage debts. It's a good time to speak with a professional about options. The trending downticks in foreclosures and uptick in prices means now is a great time to sort out those real estate issues.

About the author: Dan Cooke

Image credit: Jeffrey Turner

How to Dispute a Credit Card Charge

Ever buy something online that broke a day or two after you pulled it out of the box? Or maybe it wasn't even close to what the seller said you were going to get on its website?

If you paid with a credit card and the goods were truly shoddy or, worse yet, you were billed twice for it on your statement -- which is not all that uncommon -- fear not. The law is on your side.

That law is the Fair Credit Billing Act (1975) and its primary goal is to help you when there is an improper charge on your credit card bill. There's a lot to the law but here's the normal procedure for disputing a credit card charge:

1. Although you could start by calling your bank the best first step is usually to contact the merchant directly to explain what happened. The merchant's phone number is often listed right on your credit card statement. Merchants know about your dispute rights so they often want to resolve the issue directly.

2. If that doesn't work, contact the bank that issued your credit card and ask for a "charge-back". The bank's number will be printed on the back of your card. How much help you get will depend on your bank's internal policies but your bank will often act as an ally in your fight. But all banks legally doing business in the US are required to have a dispute procedure.

3. Some card issuers will remove the charge from your bill while the dispute is pending but this may depend on the transaction processor (Visa or MasterCard, e.g.).

It will help if you can keep written records of what you do, especially any contact you had with the merchant. These days it's pretty easy to send an email to a seller outlining your side of the story and that email is proof that you had a genuine complaint. Merchants and their banks will often not even fight over a small amount ($40 or less) but don't assume you can make a frivolous claim over any small charge on your bill. First, it's fraud to make a false dispute and even if you get away with it it's not good for the soul. Second, merchants have to deal with charge-backs enough that they sometimes use services to track folks who abuse the dispute process, which might hurt you later.

If your dispute is unsuccessful, your only resort may be to hire a lawyer, assuming the amount at stake is worth that expense. But unless your complaint is over something relatively minor -- such as a slightly bent cover on a book shipped to you or an electrician who took an extra day to do the work -- exercising your rights to dispute a bill is likely to get results.

The laws surrounding "charge-backs" are somewhat complex but you don't need to be a legal expert to take advantage of your legal rights. As with most things in life, you'll learn by doing.

About the author: Dan Cooke

Means Testing: How many people live in your house?

If you are trying to determine what kind of bankruptcy relief you qualify for, figuring out how many people live in your house can make a world of difference. The lawmakers have unfortunately made this a difficult question to answer. And a recent decision by the Fourth Circuit Court of Appeals has further complicated the issue.

First, some background. Regular folks filing for bankruptcy protection -- meaning people with primarily consumer debts like credit cards, medical bills, car loans and mortgages -- have to submit to "means testing" to qualify for relief. The means test compares your household income over a recent time period with the median income levels in your State for your household size. There are plenty of complexities in the income calculation (which is just one reason why it is essential to have the assistance of a competent bankruptcy attorney when running the test).

But the household size part of the calculation should be easy, right? If you live alone then your household size is one. And if you are married and have two kids then your household size is four, right? Unfortunately, it's often not that simple.

The biggest problem is that the bankruptcy laws passed by Congress do not define what "household size" means. They've essentially left it to the courts to figure that one out. There are three ways that courts have calculated the household size in a bankruptcy case: (1) The "income tax dependent" approach where the court looks at how many dependents are claimed on the filer's tax return (which can be problematic after a divorce where one spouse has custody but the parents agree to split or alternate the tax dependent claims for the kids), (2) the "heads on a bed" approach where the court simply counts how many people live and sleep in the home, and (3) the more complex "economic unit" approach which attempts to add up the people in the home who are a factor in the household economy.

Minnesota cases filed since the means test went into effect have largely followed the "heads on a bed" approach. The test has the advantage of being relatively simple: if grandchild lives with you or if you have a renter that shares your home, you count those people as part of your household size.

But until we have nationwide agreement or a Supreme Court decision resolving the issue, bankruptcy filers should be aware of the risks of relying on "heads on a bed" counting method. The Fourth Circuit Court of Appeals, in a case that was filed in North Carolina, adopted a very complex "economic unit" approach where they calculated exactly how long each person lived in the home. In that case, there were children and stepchildren who did not live in the house year-round. The calculation only counted a fraction of each child to determine the "household size," which meant that the bankruptcy filer ended up flunking the means test.

Commentators have already criticized the complexity of the court's calculations in that case. But if you live in Minnesota, the important thing to take away from the decision is knowing that "household size" is not a settled issue and you cannot necessarily rely on the "heads on a bed" counting method. Laws and their interpretations change and this is an unsettled area. Having an experienced bankruptcy attorney go over these issues for you is your best bet, particularly when courts cannot agree on how to count up the number of people in your household.

About the author: Dan Cooke

What Does the Mortgage Aid Settlement Mean?

People who were foreclosed upon by one of five mortgage banks -- Bank of America (which includes any Countrywide mortgages), Wells Fargo, Chase, Citigroup and Ally Financial --  between 2008 and 2011 could be entitled to a share of the recent $25 billion settlement.

Sounds great, right? But there are issues. The settlement will not apply to any mortgages guaranteed by Fannie Mae or Freddie Mac. It also appears that it is going to take time to sort out exactly who is entitled to relief and how much will be paid to each homeowner. Initial analysts project that it will take six months to a year before any funds are distributed and it is likely that individual payments will not exceed $2,000.

Another component to the settlement allows some current homeowners who are underwater (i.e., owe more on their mortgages than their homes are worth) to refinance their mortgages and obtain a lower interest rate.

If you think you might be entitled to relief you should stay on top of this. The StarTribune has provided a list of resources to get more information.

About the author: Dan Cooke

 

Be Wary of Celebrity Debit Cards

Well-known public figures, such as financial advisor Suze Orman and the Kardashian sisters,  have begun marketing their own prepaid debit cards, which promise people with bad credit access to instant cash.

According to the Wall Street Journal, celebrity-sponsored prepaid debit cards may pose unique dangers for consumers, due to the unreasonable fees that are being charged for using the cards. Prepaid debit cards launched by, among others, the Kardashian sisters and hip-hop king Russell Simmons ended up costing more than they were worth. The Kardashians withdrew their cards from the market after consumers discovered ridiculous fees, including an $8 monthly maintenance charge. Even Orman's recently-launched prepaid debit card has fees that can add up quickly (Orman says there will be a $3 activation fee, a $3 monthly maintenance fee, and a $3 charge for every call to a customer service representative).

Industry observers claim that these fees will still squeeze money from people who use the cards, ultimately resulting in a financial loss for low-income consumers. While it is true that having a prepaid card can help folks improve their credit rating or help to establish credit, no one should sign up for a new debit card simply because it is offered or endorsed by a celebrity.

A far better practice would be to find a local bank or credit union that offers a low or no fee account with a debit card attached to the account. For those who cannot open a regular bank account due to bad bank credit, some of the big national stores are offering pre-paid debit card accounts that have much lower service fees than the celebrity cards. Be sure to compare prices before signing up for any of these cards, even if it takes a minute or two to go over the fine print on the back of the packaging containing the card in the store.

When it comes to managing your money and your credit score, be a smart consumer and don't let the celebrity images sway you into making a bad financial decision.

About the author: Dan Cooke

Mortgage Stripping in Minnesota

Most U.S. bankruptcy courts already recognize mortgage lien stripping as an option for distressed homeowners. Minnesota has only recently allowed this as a remedy. If you have a second or third mortgage on your home that is "underwater" - meaning that your home is currently worth less than what you owe on your first mortgage - bankruptcy relief may allow you to strip any underwater mortgages away entirely, helping many struggling homeowners stay in their homes and avoid foreclosure.

A recent article in "Minnesota Lawyer" explains the current legal developments. The key Minnesota case on the issue is on appeal. We can expect a decision by the appellate court early this year and if the court follows the national trend, more Minnesota homeowners will be able to consider mortgage stripping as an option.

About the author: Dan Cooke