Are Payday Loans a Smart Way to Reduce Financial Stress?

It is now possible to get a faxless payday loan through a simple web-based application process. This effectively has made it possible for millions of working Americans to borrow against a future paycheck in order to pay bills that are due before then.

Payday loans have their critics, however. Some say the annualized interest charges (what the borrower would pay if they kept the loan for 12 months) are too high. What that fails to consider is that payday loans are to be treated as short-term stopgaps, a means to get through a financially stressful situation that can be resolved in a few weeks.

In fact, payday loans can reduce financial stress in both the short- and longer-terms. Here are three such ways they answer the question, “Can payday loans reduce financial stress?”

YES: Takes care of this month’s bills. Clearly, getting current bills paid are a first priority in most working households. This is primarily how payday loans are used.

YES: It forces the borrower to budget for next month. Any payday loan borrower needs to think through the payback plan. The shorter the loan is held, the lower the costs. If the borrower is able to restrict future expenses as a means to pay back on the loan, it might help him or her realize which expense items aren’t really necessary.

YES: Payday loans might cost less than late payments. One of the most unnecessary and maddening expenses in life are late fees. Timing is the enemy, and if a payday loan can solve the timing problem, these additional fees and interest charges can be eliminated.

As should be clear, payday loans are good for reducing the psychological burden of unpaid bills. By getting control of the current bill-paying crisis, the borrower can take time to plan for a better-managed financial future.

The slow road to recovery

The Federal Reserve has slashed interest rates and taken measures to improve liquidity in the short-term money markets and even taken over Fannie Mae and Freddie Mac.

The US government has also bought almost 80 per cent of AIG but these actions still failed to give investors confidence that American banks have revealed the full extent of losses associated with their appallingly bad lending in the US housing market.

So now it looks like the US government will be buying up to approximately US$700 billion worth of these bad loans, parking them in a special company, presumably foreclosing on people's properties at a far slower rate than commercial banks would do, and only slowly selling these discounted securities back into the marketplace.

The question now is whether these measures will convince investors it is safe again to lend to financial institutions in the United States and to a lesser degree the United Kingdom.

The answer eventually will be that yes investors have regained confidence but it could still be quite some time before the cost to banks of borrowing from investors heads down by any sizeable amount.

The sooner this happens the better whereas the longer it takes the greater will be the period in Northern Hemisphere economies when banks simply cannot undertake as much lending as they would normally do.

This means that we think it is valid to assume some downside risk still exists for the New Zealand economy over the coming 12 months as a result of relatively higher borrowing costs and downside risks to trading partner growth rates.

Thankfully though there are a good number of insulating forces in New Zealand which mean we think it is reasonable to say the worst for the recession has now passed.

As noted last week business and consumer confidence measures have improved strongly recently and while we think people are being a bit optimistic this will tend to translate into some backing away from laying-off people, slashing inventories, and delaying capital expenditure.

Perhaps it is worth clarifying one important point however.

Just because the worst for the economy's overall growth rate may have been and gone does not mean all sectors will soon be improving.

We retain a very bad outlook for residential construction as supported by recent news of major projects going into receivership.

Residential property developers have been hit extremely hard by finance company collapses and reduced pre-sales as buyers sit on their hands waiting for lower prices.

This means we are going to see further improved availability of trades people over the coming year along with continued problems for suppliers of building materials and retailers selling products normally going into new houses such as wallpaper, carpets, fridges and so on.

Just as a finishing note, my personal view is that the outlook for the New Zealand economy now is the best it has been in many decades and the amazing news this week that the United States has agreed to talks on a free-trade agreement with New Zealand and three other nations adds to that view.

Even with plans, economic recovery to take time

Even if numerous proposals in the works - such as the historic bailout sent to Congress yesterday - are enacted right away, experts interviewed for this story said long-term solutions may be difficult to implement and may not really do the trick, in large part because today's economic and financial turmoil is rooted in a widespread credit availability crisis and billions of dollars in home mortgage losses. Without credit - lending done between businesses and consumers and their banks and between the banks themselves - strong economic growth is harder to spur.
The credit crunch, combined with the extent of the troubles in the housing and mortgage market, makes these times unique, according to academic experts and economists.

Housing and credit problems could lead to tough times even after the downward spiral bottoms out, the experts said. Instead of a rebound that leads to extensive economic and job growth - as was seen after the recession of the 1990s - economists said, it's possible the economy could go through an extended period of stagnation, where no one is losing ground - but no one is gaining ground either.

Bernstein, an economist with the Economic Policy Institute, a left-leaning Washington, D.C., think tank. "It's not going to be easy."
Congressional staffers began meeting yesterday on the Bush proposal for a massive bailout - which would give the Treasury Department sweeping powers to buy and then sell up to $700 billion in mortgage debt, and could increase the national debt to as much as $11.3 trillion.
Even with all of the solutions discussed in the past week, and the Bush administration's plans unveiled yesterday, many experts think what the economy and financial systems need is simple - but yet incredibly discouraging and worrisome to investors, consumers and business owners alike: time.Making that more complicated, Malanga noted, is the host of unknowns that remain and the potential for unpredictable events that could make an uncertain environment worse.

Continued turmoil could mean that, even with potential solutions in place, a strong bounce-back may not ensue quickly.

Crunch to increase debt recovery outsourcing

More companies are expected to outsource some consumer debt management and recovery operations, even though the credit crunch hasn’t impacted the industry so far, research has revealed.
More than a quarter of respondents (26 per cent) to a survey sponsored by outsourcer Firstsource said they had not been affected by the declining economic environment.debt managers do expect to outsource to specialist collections and recovery agencies to increase their collections levels, reduce defaults, and lower their costs.

• 27 per cent of respondents said some consumers are delaying payment of bills by up to three months, and 22 per cent of debt managers reported they had increased their write offs of customer debt in the last 12 months.

1. 68 per cent of debt managers said they planned to increase their use of outsourcing within the next year and 27 per cent said they would outsource more within the UK

2. 18 per cent reported they would collect more from offshore, and 23 per cent expect to outsource more both within the UK and offshore.

Matthew Vallance, president of Firstsource, said: “Although most consumer debt managers report that they haven’t been rocked by the credit crisis, the trend amongst consumers is towards later payments which will consequently affect cash flow. “Debt managers are looking to debt collections and recovery outsourcers in the UK and offshore that have the resources to collect more debt.

Debt collector decries rate cut

Reserve Bank of Australia may have taken its foot off the interest rate brake too soon, when it cut rates earlier this week, a debt collection agency says.

Prushka Fast Debt Recovery chief executive Roger Mendelson said consumers could use the rate cut as an excuse for a spending splurge and rack up more personal debt.
Based on the evidence from our own database, it indicates there is no crisis and we are long way from that.''

The central bank cut interest rates by a quarter of a percentage point to 7% this week in a bid to boost the slowing economy.
It was the first cut to the official cash rate since December 2001, after the RBA raised rates 12 times to a 12-year high of 7.25% to curb rising demand and inflation.
Mr Mendelson said he doubted the market's forecast for many more cuts in the near future.

"I don't think there is going to be a rapid succession of rate cuts unless there is a real deterioration in the economy,'' he said.
"The Reserve Bank seems to be keeping its option open.
"It is why I believe there had to be a climate of fear around to keep consumers focus on reducing consumption, but also actually reducing debt.''
Consumer debt, though, was still too high in Australia, Mr Mendelson said.
"That is an underlying problem in the country,'' he said.

"Higher interest rates help to keep the pressure on the consumers to reduce spending.''
Consumers should use the extra cash courtesy of the recent fall in rates and any future cuts to repay their debt, Mr Mendelson said.
"Otherwise, that is going to come back to bite us,'' he said.

"That could emboldened consumers again, and we don't need that at the moment.''
There were two ways for household debt to fall, Mr Mendelson said.
"Consumers rein in their spending,'' he said.
"And they don't occur greater consumer debt to fund consumption.''

"There is evidence that consumer spending has been declining, but it has taken a very long time to get to that point.''
Retail sales data for the June quarter from the Australian Bureau of Statistics confirmed this decline with spending down 0.6%, seasonally adjusted, in the three months.
People should consult a financial adviser or accountant if they have concerns about their finances, Mr Mendelson said.

"An hour or two with a accountant would really offer helpful advice to help people budget and look at their cashflow,'' he said.
Mr Mendelson said if a person defaults, it ends up their credit file.

Big Bailout:- Puts shares on road to recovery

The world financial system's vital signs continued to show improvement yesterday in response to the US Government's US$700 billion "mother of all bailouts". Sharemarkets, including the NZSX, made welcome gains.

Next to Wall St's 4 per cent rise on Friday and the 8.8 per cent gain by Britain's FTSE Index the same day, the NZX-50's 2.11 per cent gain yesterday looked fairly modest.

Market watchers said the large international investors who could influence the local market were clearly busy elsewhere.British and American gains, and yesterday's 4.5 per cent rise by Australia's ASX 200 were partly fuelled by bans on short-selling of financial stocks in those countries. Short-selling enables investors to profit from falling stock prices, and has been cited as a factor in the collapse of Lehman Brothers last week.

The US Treasury plan will use taxpayers' dollars to buy "toxic" mortgage debt from financial institutions. In the US on Friday, Washington Mutual shares rose 42.1 per cent, Citigroup 22.7 per cent, Morgan Stanley 20.7 per cent and Goldman Sachs 20.2 per cent.

In Britain, Barclays, Lloyd TSB, HSBC, Royal Bank of Scotland, HBOS and Standard Chartered went up between 17 and 32 per cent, and in Australia, ANZ was up 8.13 per cent, National Australia Bank 5.65 per cent, Commonwealth Bank 4.45 per cent and Westpac 4.93 per cent.

Meanwhile, Wall St's two remaining big investment banks, Goldman Sachs and Morgan Stanley, yesterday received regulatory approval to turn themselves into traditional bank holding companies.The technical change will give them rights to obtain emergency funds from the US central bank, the Federal Reserve.In response, banking stocks led the sharemarket recovery.

Wolseley may have plumbed the depths but recovery is due

The stock market would seem to think so. Shares in the world’s largest plumbing supplier have risen by nearly three quarters from the eight-year low they touched in July – the day when the company announced the scrapping of its final dividend. Their latest advance, the biggest gain in the FTSE 100, came with yesterday’s full-year results – despite the mere indication that the deterioration in American and European construction markets that had brought the company so low is about to change. The best that Wolseley could offer is that US commercial and industrial markets – many of which are still benefiting from capital commitments made in better days – are expected to remain stable for the next few months. The majority of its markets – principally those exposed to housebuilding – are set to deteriorate further in the short term.

Wolseley, often touted as a rights issue candidate, said that it did not need to raise fresh equity for now. Secondly, it has begun a “fundamental review” of Stock, its loss-making US building supplies business, where it has already cut four fifths of the workforce.

The more likely option is that Wolseley retains those territories with sound longer-term growth potential – for instance California, Florida and Texas, which are forecast to benefit from continued internal migration – and jettison those, such as the upper Midwest, thought to be in steady decline. Tighter management of working capital, property disposals and a moratorium on acquisitions meant that the company was able to keep net debt steady at £2.5 billion – despite a £320 million rise in its reported borrowings from the appreciation of the euro. With Wolseley now being explicitly run for the maximisation of cash – a radical about-turn from its previous financial year, when it spent £1.7 billion on acquisitions – that burden should start to ease.

At 470p, or 12 times this year’s earnings, the shares provide a vivid illustration of the stock market’s willingness to discount more bad news: investors expect a recovery that Wolseley’s management has yet to detect.

Bank’s recovery agents thrash couple

Agents of a private bank have landed in soup for thrashing a couple to recover credit card debt.
Initially, the police hesitated to take action but when mediapersons arrived on the spot, five recovery agents — including Prabhu, Somashekhar, Mallesh and Sundar — were taken for questioning and a case was registered.
on Tuesday, the agents barged into a cloth shop run by Balu and Prameela at Seshadripuram, and beat up the couple.
By withdrawing Rs 30,000, the two had reached the limit of a credit cards they had taken from a bank. The couple has, over the past two years, been paying the minimum amount to meet interest, according to the bank.


Accused the police of being soft on the agents. “They didn’t listen to the argument that RBI and Supreme Court directives prohibit recovery agents from taking law into their hands,’’ he said.

Balu produced receipts to prove he was repaying the money for the past two years. “Whatever we pay is going towards interest and service charges.

Improved bond rating benefits taxpayers

The three major credit-rating agencies have bumped up Louisiana bond ratings a notch, which officials say will save taxpayers tens of millions of dollars in financing costs on government projects.

"We deserve the rating increase," state Treasurer John Kennedy said in an interview.

Agencies took note both of recent state ethics reforms and ongoing economic development when making the decision, Kennedy said.

"This is going to make it easier to borrow money, and it’s also a selling point for economic development for an out-of-state company," he said.

States, including Louisiana, issue bonds to borrow money, usually for big long-term projects like roads and buildings.

Like a credit rating for an individual, the bond ratings, based on the financial strength and and reliability of the entity issuing it, factor into the interest rates available for financing.

Earlier this month, Standard & Poors raised the state’s genera-obligation- and appropriations-debt ratings to A+, from its previous A rating. Moody’s Investors Service upgraded the general obligation rating to A1 from A2, and Fitch Ratings to A+ from A.

Though the agencies used different codes for those ratings, the state now enjoys the highest rating in a category deemed to be upper-medium-grade bonds. The ratings range from the very risky, CCC, to the most secure at AAA or Aaa.

Kennedy arranged a conference call two or three weeks ago with the agencies to ask them to raise the rating, which, given the result, went over well.

"We had been working for a long time" on the increase, Kennedy said.

The ratings increase will return the bond ratings to the level the state had before Hurricane Katrina, after which the rating was downgraded, Kennedy said.

"Louisiana’s economic and fiscal recovery after Katrina has been impressive," Moody’s said in opinion on the decision to upgrade the rating. The agency calling the outlook "stable" and cited the state’s $1 billion cash surplus, higher tax revenue and increased use of federal disaster-relief money.

Louisiana still trails other stated in terms of its bond ratings. Along with California, it is dead last among states in the ratings.

"It’s no different than having your credit rating improve," said Michael Ferdinand, CEO of the Terrebonne Economic Development Authority, which works with state GO Zone bonds. "By having an increased recognition of fiscal responsibility, that will allow to entities to engage more cost-effective financing ...

"It reduces the cost of doing projects, therefore you can do more projects."

Kennedy said he plans to ask for another ratings increase in six months to a year and ultimately bring up the rating two notches to be on par with top states like North Carolina.

One year in, HMV reaps benefits of recovery plan

HMV has announced that its turnaround plan is ahead of expectations, announcing a set of market-beating results. Reporting on continuing operations for the year ended April 26th, the group saw total sales growth of 11.3% including a like-for-like sales increase of 7.3%.
HMV out-performed the Waterstone’s division, with like-for-like sales at the DVD and music retailer up 11.4% compared to a 3.3% rise at the bookstore chain. Profit before tax and exceptional items for the group was up 25.2% to £56.6 million and net debt was “virtually eliminated” in the period, coming in at £0.2 million. These results exclude HMV Japan, which was disposed of during the year for £70.6 million.
The company also saw strong market share performance across all product categories in the year, with games and technology growing rapidly and now comprising 21% of all HMV UK & Ireland sales, up from 14% in 2007. A successful trial of the company’s next-generation HMV store formats will see a further roll out in 2008/09.
In a statement, chief executive Simon Fox said: “One year into our transformation plan, group profits are up by 25% and we are ahead of where we expected to be. We still have much to do, and whilst we are mindful of the challenging economic outlook, the current financial year has started in line with our expectations and I remain confident that we are building a better and stronger business that can prosper in a rapidly-changing market”.
The board also announced that non-executive chairman Carl Symon would be standing down in September after nearly three years.
Commenting, Mr Symon said: “As the foundations are firmly in place, it is an ideal time for me to pursue new interests”.

Financial Data Analyst B-Line, LLC Seattle

B-Line, LLC, a recognized industry leader in the consumer bankruptcy debt purchasing and servicing, has an opening for a Financial Data Analyst. This position will be responsible for its financial data standardization, recovery analysis, reporting in order to aid the underwriting process in its Pricing Department.

The candidate will standardize data input from clients, scrub files for pricing, conduct recovery analysis, facilitate portfolio research, maintain/improve pricing model, monitor existing portfolio performance, write up and present pricing summary with recommendation to the asset acquisition committee. Additional responsibilities include delivering process improvement, providing timely financial analysis, communicating effectively with management and peers regarding business/portfolio issues and driving business initiatives/decisions through complex modeling and analysis.

B-Line is located in downtown Seattle and offers a very competitive benefits package, including Medical/Dental, FSA, 24 Hour Fitness Gym Membership, Paid Time Off, Community Outreach opportunities and a great 401(k) Plan. This position is eligible for the employee bonus program.

MPs hit at efforts over benefit errors

The amount of benefit lost through overpayments by error has almost doubled to £2bn over the past five years, easily exceeding the amount saved from reducing benefit fraud over the same period, according to MPs.

A report published on Tuesday by the parliamentary public accounts committee criticises benefit recovery by the Department for Work and Pensions after frauds were uncovered. It warns government-imposed staff cuts will constrain the “ability to identify fraud and recover overpayments”. MPs call for more fraudsters to be prosecuted, better debt recovery and targeted training for benefit staff to cut errors.

The DWP was required by March this year to axe 30,000 jobs to save £960m a year as part of a broader efficiency drive by government. According to the committee, the department has lost 17 per cent of prosecution staff since 2003. The DWP, however, told MPs it was “compensating for the loss of staff by making more effective use of its counter-fraud resources than ever before”.

The committee welcomed the fall in reported annual levels of fraud from £2bn in 2001-02 to £800m in 2006-07, but said £700m of the reduction was due to a department decision that overpayments of disability living allowance and related benefits “should no longer be considered fraudulent”.

Edward Leigh, committee chairman, said: “Fraud is one thing, error another – although determining which is which in the case of claimants can be difficult. The estimated amount of benefit lost each year to error by customers and officials has nearly doubled over five years to almost £2bn a year. This is not acceptable.

“The DWP must direct its training and compliance checks on those local offices and benefits which prove to have the highest error rates.” The complexity of benefit schemes encourages errors, says the report.

Mr Leigh welcomed the fact that the department was “working more closely with the police and local authorities to frustrate fraudsters” but said there were areas for improvement. Only £22m out of £339m “known fraud debt” was recovered in 2006-07, and only 7,500 fraud cases went to court out of 200,000 “where the department considered there to be a high probability of prosecution”.

Mr Leigh said: “Where it [the DWP] detects attacks by organised crime it must take a firm and co-ordinated approach. It must get a lot better at tracking down and recovering fraud debt. It must get a firm understanding of the cost-effectiveness of its counter-fraud activities, otherwise it cannot know that it is targeting its resources to best effect. And it should increase the deterrent effect of its investigation work by taking a much higher proportion of cases of potential fraud to court.”

5-Star Stocks Ready to Pop: Portfolio Recovery Associates

Based on the aggregated intelligence of 110,000 investors participating in Motley Fool CAPS, the Fool's free investing community, bad-debt collector Portfolio Recovery Associates (Nasdaq: PRAA) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Portfolio Recovery's business, and see what CAPS investors are saying about the stock right now.

Portfolio Recovery facts

Headquarters (Founded)	Norfolk, Virginia (1996)
Market Cap	$585.91M
Industry	Specialized finance
TTM Revenue	$230.84M
Management	Co-Founder/CEO Steven Frederickson Co-Founder/CFO Kevin Stevenson
Return on Equity (avg. last three years)	19.7%
CAPS players bullish on PRAA also bullish on	Nuance Communications (Nasdaq: NUAN), First Marblehead (NYSE: FMD), Middleby (Nasdaq: MIDD)
CAPS players bearish on PRAA also bearish on	General Motors (NYSE: GM), Citigroup (NYSE: C), Netflix (Nasdaq: NFLX)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 885 of 922 of the All-Star players who have rated Portfolio Recovery -- some 96% -- believe the stock will outperform the S&P 500 going forward. These All-Star bulls include TMFOrangeblood and pjani06, both of whom are ranked in the top 10% of our community.

In June 2007, TMFOrangeblood said Portfolio Recovery is "the best company, by far, in a booming industry. Management is talented, dedicated, and disciplined. I believe investors with a long-term outlook will not be disappointed."

A more recent pitch by pjani06 last month agrees with that bullish attitude, highlighting the stock's current levels:

Great entry point for a company turning cheap debt paper into real cash earnings. ... especially when you can buy the debt pennies on the dollar. financial companies themselves are on firesale today... this company is well positioned to purchase the 'worthless' debt these banks are desperate to get rid of to keep favorable capital levels in the eyes of lenders, regulatory agencies, and the investor community. PRAA is in the right place, at the right time, and at today's valuations, at the right price.

A Goldman Sachs fund, a recovery in LBO market

Goldman Sachs (NYSE:GS) has raised $10 billion to invest in existing LBO loans. According to the FT, the investment house plans to make money by "taking advantage of a gap in the financing markets created by the credit crisis." In other words, Goldman believes that the problems in the lending market have driven leveraged buy-out loans below their logical values. Panic has created opportunity.

While the news may be good for banks that hold some of these loans and do not want to write them off if they fail, Goldman is making a bet beyond the fact that LBO loans may be selling at a discount now. Goldman is essentially betting the economy will get better in the fairly near-term.

For many of these loans to perform well, the economy has to avoid a deep recession. Even loans with reasonable credit ratings, debt in companies with strong prospects and earnings, could fail if the general business conditions deteriorate into a prolonged period of negative growth. Under such circumstances, Goldman could pick relatively safe debt and still get burned.

JBW awarded largest ever debt recovery company contract

Debt management and enforcement organisation JBW has won the biggest contract ever awarded to a debt recovery company.

The prestigious contract is with the Department for Work and Pensions, with JBW focusing on Child Support debt collection.

In addition to the DWP appointment, JBW has also been awarded six further key new contracts in recent months, to include:

London Borough of Barnet - a 4-year Road Traffic debt collection contract

London Borough of Sutton - a high profile 2-year Group debt contract concerning Council Tax, Business Rates and Road Traffic debt

London Borough of Tower Hamlets - a 3-year high profile Group debt contract in respect of Council Tax, Business Rates and Road Traffic debt

Mole Valley District Council in Surrey, the London Borough of Bromley and Southend Borough Council - full parking-related debt recovery services


About JBW
JBW is a leading debt management organisation with a high regard for the community it serves. Working to strict ethical and professional principles, the organisation provides its clients with effective debt management and enforcement services that at the same time support debtors’ social and financial wellbeing.

Working in partnership with its clients, the organisation’s uniformed office and field-based staff are courteous, efficient, accessible and fair, which, in conjunction with an innovative approach to training, management and execution, ensure a highly proficient and professional operation.

Services include:
Debt management for the commercial sector, investigation and process serving, and enforcement and debt management for local authorities including for road traffic-related offences, council tax and NNDR.

Charitable work
JBW’s Chairman, Jamie Waller, is Chairman of The Imps Start Trust - a non-profit-making organisation that educates young people through a challenging programme of activities. www.impsonline.com

Accreditations
ISO 9001; ISO 14001; ISO 27001

Memberships
Association of Civil Enforcement Agencies
Enforcement Services Association
The ESA (Certificated Bailiffs Association)
Credit Services Association
British Parking Association

jbw.co.uk

BBB Connecticut Reports Rogue Debt Collectors Breaking the Law

Consumers’ most common complaints concern rude telephone calls, threats to have them arrested, using other forms of intimidation and violating federal law by ignoring the Do Not Call Registry. Some victims have even received repeated telephone calls on their cellular and home telephones.

According to Connecticut Better Business Bureau President Paulette Hotton, so-called third party debt collectors are going far beyond what the law permits them to do.

“Legitimate debt collection agencies know the rules and follow them, but some debt is sold to other companies which use threats and intimidation, and disregard an industry code of ethics that prohibits these kinds of behaviors.”

Under the Fair Debt Collection Practices Act, debt collection companies are prohibited from abusive tactics to frighten people in debt, and obliged to treat debtors fairly.

Some of the worst cases involve collectors calling neighbors, friends and employers in an effort to shame debtors into paying up.

A federal court recently entered an order against a Florida debt collection agency for sending misleading letters and making abusive telephone calls falsely claiming consumers would be sued, their wages garnished and property seized unless they paid up.

Consumers have a right to a written notice within five days after being contacted by a debt collector spelling out the name of the company, how much money you owe and how you can contest their claim if you believe you don’t owe the amount stated in the document.

Though such a letter does not protect you from being sued for the debt, collectors are not allowed to contact you after receiving a letter asking them to stop, though they may still inform you what action they intend to take.

The Fair Debt Collection Practices Act protects consumers from rogue debt collectors in several ways, prohibiting them from:

1.Calling you before 8:00 a.m. or after 9:00 p.m. unless you consent.

2.Misrepresenting the amount of money you owe.

3.Using vulgarity or threats, such as claiming they will put a lien on your property or file a lawsuit, unless they intend to do so through legitimate procedure.

4.Contacting you at work if they know your employer disapproves.

5.Claiming they will confiscate your federal benefits such as Social Security or retirement accounts.

Some debt has a statute of limitations. In Connecticut, it is 6 years.

The debt is still collectible but the collector loses the right to sue consumers over money owed. A cautionary note however: If you make any payment within that period, the statute of limitations is renewed for another 6 years, giving the collector the right to sue for payment once again.

If you feel you are being harassed or treated unfairly by a debt collector, file a complaint with the Federal Trade Commission (FTC) at 877-HELP (877-4357) or visit www.ftc.gov.

You should also contact the Connecticut Attorney General’s office at (860) 808-5030 or online at www.ct.gov/ag, and file a report with your Better Business Bureau so other consumers can verify if complaints have been filed about a particular debt collection company.

Truth-telling is the secret to recovery

Despite some recent relief for financial stocks, Oppenheimer & Co. analyst Meredith Whitney says the financial markets won't be able to stabilize until there is more truth-telling.

Rather than trickling out write-downs and sour news, Whitney says, banks need to "get real" about their "true asset values."

She thinks they are still embracing an overly cheerful outlook and valuing their mortgage-related assets too high. As a declining housing market takes its toll on their mortgages, she expects "bank stocks to head lower."

It looks as if home prices could fall 33 percent from their peak if the futures market is reflecting the future correctly. The futures, based on the Case-Shiller housing index, already show home prices down 15 percent. But Whitney, who has been ahead of many of her peers in detecting financial troubles, thinks homes will fall even more than 33 percent before they ultimately bottom.

That's because a dangerous spiral is now fully in force - pulling at the strength of banks, housing, and the economy as a whole. Critical in the picture is the fact that almost a $3 trillion part of the housing funding system has all but disappeared. It's called securitization, or the process Wall Street previously used to buy mortgages from banks, bundle the loan payments into bonds, and sell the bonds to investors.

The bonds were popular with investors until the housing bubble burst in 2007. Then, investors discovered that Wall Street had done a shoddy job - bundling together loans that couldn't be repaid. As a result, the bonds have plunged in value, and investors won't buy new ones.

Without that $3 trillion funding system available for mortgages, home buyers and banks are deprived of funds they need. The securitization market provided close to 85 percent of U.S. mortgages over the last decade.

"Since 70 percent of U.S. homes are mortgaged, a shutdown in such a crucial part of the lending market has enormous consequences," Whitney said.

Last spring, Treasury Undersecretary David McCormick and Federal Deposit Insurance Corp. Chairwoman Sheila Bair said in interviews that they thought the housing market would need a healthy securitization market again so housing could recover. They thought that with time, investors would buy the bonds again.

The issue is so serious that the Federal Reserve sought insight into the problem at a Chicago conference on the credit crunch recently.

A panelist, Drexel University finance professor Joseph Mason, said that in the interest of repairing the housing system, it would be essential to restore the securitization system. To do that, however, Wall Street would have to change. Instead of keeping information about mortgages in bonds confidential, Wall Street would have to disclose information continually to investors so they felt confident about buying the bonds. The industry refers to this as "transparency."

At credit-and-debt conference in March in New York, Richard Field, founder of TYI L.L.C., of Needham, Mass., explained a system that would tell investors daily how many mortgage payments were being made on time. Current information is available monthly - too slow with housing declining so quickly.

Meanwhile, banks are left with troubled mortgages and mortgage-related securities on their books.

Each has its own expectations for the housing price declines, and Whitney says they are underestimating the declines.

USA - insideARM.com Launches Nationwide Search for the Best Places to Work in Collections Industry

the worldwide leader in providing electronic news and information to the accounts receivable management industry, announced today that it will partner with the Best Companies Group to determine the Best Places to Work in Collections. insideARM’s Best Places to Work program recognizes employers that have the most engaged and satisfied employees.

Applications are now being accepted from U.S. collection agencies, collection law firms, and vendors that provide technology and services to these groups. Companies must have at least 15 U.S.-based employees, and nominations must be received by August 15. Learn more about the program and nominate your company at www.bestplacestoworkcollections.com.

The top companies will be determined through employer reports and comprehensive employee surveys and will be selected from three categories: small companies of 15-25 employees, medium-sized companies of between 25 and 249 employees, and large-sized companies consisting of 250 or more employees.

The Best Companies Group, which has overseen similar programs in other industries, as well as many states, is responsible for the selection process. The basis for this initiative is Fortune magazine’s noted “100 Best Companies to Work for in America.”

“Numerous studies show a strong correlation between profitability and creating a good place to work,” says Peter B. Burke, President of Best Companies Group. “In addition to the positive effect the award has on their employee relations and recruitment, the driving force for companies to join in this program is the remarkable effect that workplace improvements can have on their bottom line.”

“Given our long history of involvement in this industry, we know that the collections community has many first-rate employers. The Best Places to Work in Collections program is one way we can recognize them for their important efforts,” states insideARM.com Publisher Stephanie Eidelman.

All companies participating in the program receive a free overview report, and have the opportunity to purchase an evaluation identifying strengths and weaknesses according to their employees. In turn, this report can be used in developing or enhancing employee retention and recruitment programs.
The winning companies will be announced online and in insideARM.com newsletters in January 2009.

Stalled projects hamper flood recovery

Two years after the floods of 2006 devastated the Tier, a number of items designed to reduce the chance of a similar catastrophe sit unfinished -- and in some cases, not started.

In most cases, officials blame a lack of money. In another case: timing. In a third, a bad computer set a project back months.

Any way you slice it, several projects have yet to come to fruition, despite having been touted shortly after the region began digging out from the catastrophe that killed four people, destroyed 1,100 homes and caused at least $175 million in damage.

In Broome County alone:

* Residents of Union's Fairmont Park neighborhood have known for years that one of the levees standing between them and the next flood is shorter than it needs to be. But the town has been unable to get $350,000 or so to fix the problem.

* More than a dozen low-income families in Vestal, Conklin and two other towns still need buyouts of their flood-ravaged homes. But it's unclear if the money in a new state program will meet the need.

* People to the north and south of the Susquehanna River near Washington and State streets in Binghamton are no better protected by their floodwalls than they were in 2006. The sealing of cracked concrete, delayed last year while officials waited for answers on a grant application, hasn't started.

* A floodwall that needs raising near Binghamton's Crowley Foods remains untouched. An Army Corps of Engineers study conducted in 2006 recommended the work.

"Some of this should be a no-brainer," Union Town Supervisor John Bernardo said. "To the people who've been affected by the floods, protection is priceless."

HMV recovery on track thanks to games

HMV has told investors that its recovery in on track as Britain's biggest music retailer reported a jump in pre-tax profits.

The company, which also owns book chain Waterstones, said this morning that strong demand for video games helped drive pre-tax profits up about 25pc to £56.6m for the 12 months to April 26. Sales climbed to £1.87bn from £1.68bn.

Analysts at Panmure Gordon welcomed the results, saying "the second year of recovery starts from a good place, with a debt-free balance sheet and strong market share growth.It's going to be difficult, given the challenging markets that it operates in, but we do believe that there is substantial self help opportunity here."

HMV UK and Ireland saw like-for-like sales up 11.4pc while Waterstones' sales increased by 3.3pc.

Games and technology sales soaerd 21pc as the British appetite for computer games showed no sign of abating, with Grand Theft Auto and the Nintendo Wii proving popular amongst gamers.

Despite the group facing stiff competition from music downloads online sales from HMV.com increased by 42pc.

Last year, HMV launched a three-year turnaround plan which it hoped would allow it to successfully compete against Internet retailers and supermarkets.

Simon Fox, Chief Executive, said: "One year into our transformation plan group profits are up by 25pc and we are ahead of where we expected to be.

"We still have much to do, and whilst we are mindful of the challenging economic outlook, the current financial year has started in line with our expectations and I remain confident that we are building a better and stronger business that can prosper in a rapidly changing market."

The group also said its debt had virtually been eliminated by the sale of its Japanese business.

A final dividend of 5.6p will be paid on 10 October making a total dividend of 7.4p and is unchanged from the previous year.