For everyone who has to pay bills

Reports from Reuters show demand for home loans surged as 30-year fixed-rate mortgages, excluding fees, averaged 5.82 percent, down from the previous week and its lowest since the week ended September 16, 2005. Full Story.

With the sub-prime mortgage melt down threatening a larger credit crisis, the Federal Reserve is searching for ideas to lessen the blow to the economy.

One idea being floated is to freeze the teaser rates on the “2 and 28 mortgage loans and extend the initial low rate for 5 to 7 years - discussed in billpayersguide.com, Chapter 4.8.

No doubt there will be many forces resisting this move, not the least of which are the lenders holding the bag on some of these loans that were obtained by no-doc applications. The freeze may require ignoring the underlying mortgage fraud issue.

The problem is huge: “Estimates of mortgage resets vary. Federal Reserve officials estimate that 2 million mortgages face resets and as many as 500,000 of these could lose their homes” (from Reuters News service)

If you have a student loan, you have questions.

When does the payment period begin? What is the interest rate? Are student loans dischargeable in bankruptcy?

Check this web site for answers to these and other questions.

Senator Chris Dodd has proposed amending the current Bankruptcy law to allow homeowners to “cram down” the unsecured portion of their mortgage debt. Full story.

For example, John and Mary have a $500,000 mortgage on their residence. The home’s fair market value is only $400,000. The $100,000 difference is technically unsecured debt.

Under present bankruptcy law, John and Mary could abandon their home and owe nothing, but they couldn’t stay in the home unless they honored the entire $500,000 mortgage as secured debt.

Under Senator Dodd’s proposal, the couple could, in bankruptcy, reduce the mortgage to $400,000 and discharge the remaining $100,000. The Senator has several other suggested changes that are viewable on line at the Senator’s web site.

Do you use a debit card? Seems like a good idea, right? Your bank likes it too; and that should be a warning in itself.

The problem is that the bank wants to make money from its association with you. If it can squeeze an extra $30 or $40 per month on fees, that’s fine with them.

How does this happen with a debit card? It’s because the banks will allow you to overdraw your account using the debit card. This will cause you to incur a bank charge.

But, you say, “I know my balance. How will I overdraw my account?” The answer is a “Block.”  A block is explained in section 2.3 of Bill Payer’s Guide.

If you have used a credit card, you are all right. However, if you have used a debit card, you may have $1.50 cup of coffee subject you to a bank charge of $30 to $40.

If you don’t think this is fair, use a credit card rather than a debit card.

I was called by a 77 years old widow on Social Security who panicked worried that she was facing either starvation or jail.

Even through she had made all payments timely and for the correct amount, the credit card company had raised her interest rate from 9.9% to 29.9% making it impossible for her to make the minimum payment. She called me for a bankruptcy since the card company’s collector had threatened her with jail if she didn’t make her minimum monthly payment.

However, she didn’t need a bankruptcy, she only needed to know the law and let the collector understand that she knew her rights. This tired and broken soul was judgment proof. When I explained this concept to her, I realized that the same information should be public knowledge - but how?

This incident compelled me to write Bill Payer’s Guide. The term “judgment proof” is explained in section 10.3 of the Guide.

Congress has proposed bills HR 3648 to offer relief to homeowners.

Welcome to the Bill Payer’s Guide .

In this blog Attorney Ed Dechant discusses credit and bill paying topics and provides information as well as feedback to selected questions from the book’s readers.