Majority of College Students are Current on Credit Card Bills

Equifax finds college students with credit cards are paying their full balances each month, some with assistance from their parents. A majority of college students have one or more credit cards and pay off their balances each month, according to a new survey from Equifax. Nearly 70 percent of the students surveyed have one or more credit cards, and 72 percent said they pay their balances in full each month, Equifax reports in a news release on the survey. The survey includes more than 600 college students between the ages of 18 and 24, known as “Generation Z.”

A majority of the survey respondents with credit cards use them for different purchases, while 16 percent said they save their credit cards for use during an emergency. Eighteen percent of respondents who regularly use their credit cards said their parents pay their balances each month, and 59 percent who are not keeping up with their monthly payments said they plan to do so within a year, according to the news release. More info here http://bit.ly/2ceoCFd

Debt collection companies continue to handle a majority of complaints in a timely manner

Year-to-date debt collection complaints to the Consumer Financial Protection Bureau are down 10.9 percent as of July 2016, and monthly complaints declined as well. Year-to-date debt collection complaints compared to this time last year declined from 24,753 in July 2015 to 22,062 in July 2016. Complaints in July 2016 compared to July 2015 decreased by 28.3 percent from 3,832 to 2,747. Complaints to the CFPB typically fluctuate as more data come in, but WebRecon CEO Jack Gordon estimates the year-to-date complaints should still be about 10 percent less than this time in 2015, according to his summary of the report. More info here http://bit.ly/2bjv89p

Credit Card Balances Influence Increase in Household Debt

The Federal Reserve Bank of New York’s latest Household Debt and Credit report shows credit card debt is increasing while overall credit card use and delinquency rates decline. Household debt increased in the second quarter 2016, primarily due to a rise in auto loan and credit card debt as of June 30. Overall household debt increased by $35 billion to $12.29 trillion in the second quarter. Total household debt remains at 3.1 percent below its peak of $12.68 trillion in third quarter 2008, but it is 10.2 percent above reports from second quarter 2013.

Credit card debt increased $17 billion to $729 billion; however it is still lagging behind the high of $866 billion reached in the fourth quarter of 2008, according to a blog post by the Fed accompanying the report. While credit card balances increased, credit card delinquency rates improved to 7.2 percent in the second quarter compared to 7.6 percent in the first quarter. More info here: http://nyfed.org/2bjo8tl

Total Bankruptcy Filings Decline in July

Despite the overall decline, commercial filings continue to increase, according to the American Bankruptcy Institute.

Total bankruptcy filings declined in July compared to July 2015 as well as to figures in June this year, according to a news release from the American Bankruptcy Institute and data provided by Epiq Systems, Inc.
The total bankruptcy filings declined 15 percent to 61,308 in July this year, compared to 71,875 in July 2015. There were 53,386 consumer filings in July, a 16 percent from 69,214 in July 2015.
Total commercial bankruptcy filings, however, increased 10 percent to 2,922 in July 2016 compared to 2,661 in July 2015.“July is the ninth consecutive month with a year-over-year increase in commercial filings. However, total commercial chapter 11 filings decreased in July 2016, as the 355 filings were 45 percent less than the 645 commercial chapter 11 filings registered in July 2015,” according to the news release.
“Businesses facing financial headwinds continue to turn to the financial fresh start of bankruptcy,” said ABI Executive Director Samuel J. Gerdano. “Driven by distress in the energy and retail sectors, commercial bankruptcy filings for 2016 will likely total close to 40,000.”
The American Bankruptcy Institute also reports that the average nationwide per capita bankruptcy-filing rate in July was 2.53 (total filings per 1,000 per population); a slight decrease from the filing rate of 2.56 percent recorded in the first half of this year. There were 1,978 average total filings per day in July 2016, a 15 percent decrease from 2,319 per day in July 2015.
States with the highest per capita filing rate (total filings per 1,000 population) through the first six months of 2016 include: Tennessee (5.56); Alabama (5.34); Georgia (4.62); Illinois (4.21); and Utah (4.10.)

Debt Collector May Have Violated FDCPA When It Accepted Payment on Time-Barred Debt in Chapter 13 Bankruptcy Case

The Eleventh Circuit Court of Appeals affirmed the district court’s decision that the plaintiff’s complaint failed to state a claim under either the Fair Debt Collection Practices Act or the Florida Consumer Collection Practices Act because the debt the collection agency sought to collect did not arise from a consensual “consumer” transaction but, instead, arose from the negligent conduct of the plaintiff’s sister in an automobile accident.

Debt Obligation from Tort Damages is Not a “Consumer Debt” under FDCPA

The Eleventh Circuit Court of Appeals affirmed the district court’s decision that the plaintiff’s complaint failed to state a claim under either the Fair Debt Collection Practices Act or the Florida Consumer Collection Practices Act because the debt the collection agency sought to collect did not arise from a consensual “consumer” transaction but, instead, arose from the negligent conduct of the plaintiff’s sister in an automobile accident.

Which Households Have Negative Wealth?

The Federal Reserve Bank of New York finds consumers with student loan or credit card debt, for example, have “negative wealth” compared to their assets. A share of households in the U.S. have total debt that exceeds their assets, known as “negative wealth.” Researchers from the Federal Reserve Bank of New York asked consumers about their household finances in conjunction with the Survey of Consumer Expectations in August 2015. The Survey of Consumer Finances is conducted monthly and there have been two household finance surveys to supplement it, including in August 2014. The researchers, from the Fed’s Research and Statistics Group, Senior Vice President Wilbert van der Klaauw, Senior Economist Giacomo De Giorgi, Assistant Vice President Olivier Armantier and former senior research analyst Luis Armona estimated overall that “15.1 percent of the households in the U.S. population have net wealth less than or equal to zero, while 14 percent have strictly negative wealth.” More info here.

Breaking News: CFPB Releases Outline of Proposals for Debt Collection Rulemaking

The outline provides the first public glimpse of what the CFPB is thinking as it moves forward in the debt collection rule-making process. In coordination with its field hearing on debt collection being held today in Sacramento, Calif., the Consumer Financial Protection Bureau has released an outline of proposals under consideration for the long-awaited debt collection rule-making. The proposals are a core part of the materials used by the CFPB as part of the small business panel process required by the Small Business Regulatory Enforcement Fairness Act. The outline provides the first public glimpse of what the CFPB is thinking as it moves forward in the debt collection rule-making process. More info here.

Three-Month Debt Collection Complaint Average Continues to Decline

The latest Consumer Financial Protection Bureau's monthly complaint snapshot focused on credit card complaints, which increased from May to June 2016.The three-month average for debt collection complaints declined for the second month in a row, according to the Consumer Financial Protection Bureau’s latest monthly complaint snapshot released on July 27, 2016. The three-month average of debt collection complaints from April to June 2016 declined 3 percent to 7,063, compared to 7,265 in April to June 2015. The average recorded in the May report also declined. The three-month average for debt collection complaints from March to May this year was 7,415, compared to 7,442 this time last year, ACA International previously reported. According to the report, the CFPB received 7,032 debt collection complaints in June. Debt collection represented 29 percent of the approximately 24,500 complaints submitted in June–the same percentage as reported in May. Overall, the CFPB has handled a total of approximately 930,700 complaints as of July 1, 2016, according to the report; the CFPB has received a total of 248,278 complaints on debt collection. More info here.

Consumers’ Credit Market Experiences Improve; Expectations for Future Credit Approval Dip

The Federal Reserve Bank of New York’s latest survey on credit access shows credit card application rates increased over the last several months while rejection rates declined. Consumers’ overall experiences in the credit market, including applications for credit and acceptance rates, improved since February. Application rejection rates for all credit types, except housing-related debt, approached the series low of 19.2 percent reached in June 2015. The per applicant rejection rate for all credit types, including credit cards, auto loans and mortgages, dropped from 20.9 percent in February 2016 to 19.3 percent in June 2016. 

For credit cards, the application rate increased from 28.5 percent in February to 30.6 percent in June, marking the highest result since the Fed started the survey. The rejection rate for credit card applications also declined from 17.3 percent in February to 15 percent in June. More info here.

Healthcare Spending Expected to Increase as Share of Economy

The Affordable Care Act continues to influence health spending growth and consumers’ out-of-pocket medical costs are also increasing.National health spending, including Medicare, medical price growth and prescription drugs, is expected to grow over the next decade, but at a rate lower than the average of the last two decades.The national health spending is projected to increase at an average rate of 5.8 percent per year from 2015-2025. The Affordable Care Act continues to keep overall health spending growth at a modest level and at a lower growth rate than the previous two decades. This progress is occurring while also helping more Americans get coverage, often for the first time. More info here.

Time for a Commonsense Approach to the Telephone Consumer Protection Act

In an opinion piece for The Hill, former Federal Communications Commission chief of staff and legal advisor Adonis Hoffman explains the impact of the Telephone Consumer Protection Act on businesses as a “strict liability statute.” The FCC has tried to clarify the uncertainty about liability under the TCPA, but those efforts have created more confusion, according to Hoffman. Businesses’ uncertainty is resulting in avoidance of establishing compliance oversight programs with third-party providers, “out of fear that such oversight would be used against them in litigation.” The response should be a commonsense approach to the TCPA, such as one effort by U.S. Sen. Steve Daines, (R-Mont.), to amend the TCPA with incentives for voluntary compliance programs, according to Hoffman. “Compliance programs that are recognized and protected in the law would move us closer to the intersection of consumer protection and corporate responsibility and alleviate costly litigation which hurts corporations and consumers alike.”

Read the article here.

Student Loan Debt Has Ripple Effect for Borrowers Across Income Levels

According to a new report from Consumer Reports and The Center for Investigative Reporting, 42 million consumers owe a combined $1.3 trillion in student loan debt, and many of those consumers say their college education wasn’t worth the expense based upon factors such as the amount of debt, income and employment status.
Consumer Reports conducted a survey of 1,500 consumers with student loan debt. Overall, 45 percent of respondents who are no longer in college and paying student loans say it wasn’t worth it, according to a news release.
Of those respondents:

• 38 percent didn’t graduate from their college;
• 69 percent reported trouble paying their loans;
• 78 percent have income of less than $50,000 per year; and
• 43 percent didn’t have their parents’ input on financial aid decisions.

More than half of the respondents (51 percent) said they have had a problem making a monthly payment at least once. That group is more likely to have higher student debt and a lower annual salary.  Also, 76 percent of consumers with debt who said they did not graduate said they had problems keeping up with payments, according to the survey. More info here.

Department of Education Proposes Banning Arbitration Agreements Between Schools, Student Loan Borrowers

The proposal is part of a larger rulemaking to protect student borrowers and taxpayers from “predatory” practices by postsecondary institutions.The U.S. Department of Education has proposed new regulations to strengthen its existing rule on student loan forgiveness, including a ban on the use of mandatory pre-dispute arbitration clauses and class action waivers.Under the proposed regulations, schools participating in the Direct Loan Program would be prohibited from requiring, through the use of contractual provisions or other agreements, arbitration to resolve claims brought by a borrower against the school, as well as from obtaining agreement that a borrower waive his or her right to initiate or participate in a class action lawsuit regarding such claims. In addition, Ed is also proposing to impose certain notification and disclosure requirements on a school regarding claims that are voluntarily submitted to arbitration after a dispute has arisen. More info here: http://bit.ly/1YwSbAT

FCC Consumer Advisory Committee Reviews TCPA Proposed Rule

The committee discussed that from a consumer perspective the Notice of Proposed Rulemaking contains strong proposals to regulate federal debt collection calls and that it supports the NPRM overall.The Federal Communications Commission’s Consumer Advisory Committee reviewed the FCC’s proposed rule on government debt collection calls during a meeting June 10 and made recommendations to inform the current rulemaking to implement amendments to the Telephone Consumer Protection Act. More info here: http://bit.ly/1W3ER6q

Research Shows Medicaid Expansion Reduces Debt Sent to Collections

Researchers from the Federal Reserve Bank of New York find sharp decreases in collection balances in counties with high uninsured rates and Medicaid expansion, as well as some impact on credit card balances. U.S. counties that expanded Medicaid since the implementation of the Affordable Care Act in the first quarter of 2014, and had a high uninsured rate before that time, experienced a decrease in debt sent to collection agencies. More info here: http://bit.ly/1QbTH9P

Economists Predict Overall Financial Rebound This Year

Consumer spending growth is expected to slow down slightly, but it will still have a positive impact on the economy. More info here: http://bit.ly/1RXiOqM

Credit Card Rewards Can Slash Student Loans

Some student loan borrowers have found they can use reward points from credit card purchases toward their education bills, but consumers should be sure to check with their student loan servicers to see if they accept the form of payment.

More info here:  http://bit.ly/22vyoBX

BBB of Central New England Reports Fake Debt Collection Calls

Consumers say callers respond with threats of arrest to garnish their wages if they do not pay or question the bill. Legitimate debt collectors do not take such actions and should know about the fake calls in the New England area.

More info here: http://go.bbb.org/1Pgh1xf