05-22-2018  12:42 pm      •     
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NEWS BRIEFS

Mississippi Avenue Giving Tuesday

On Tuesday, May 22, 10 percent of proceeds from participating Mississippi Ave. businesses will go to SEI ...

Raina Croff to Speak at Architectural Heritage Center

'When the Landmarks are Gone: Older African Americans, Place, and Change in N/NE Portland’ describes SHARP Walking Program ...

Portland Playhouse Presents August Wilson’s ‘Fences’ Through June 10

May 20 performance will include discussion on mental health; June 10 performance will be followed by discussion of fatherhood ...

Peggy Houston-Shivers Presents Benefit Concert for Allen Temple CME

Concert to take place May 20 at Maranatha Church ...

Family seeks answers after Oregon student injured on trip

RENO, Nev. (AP) — The family of an Oregon college student is searching for answers after the 22-year-old was found injured and unconscious near railroad tracks in Truckee, California.The Reno Gazette-Journal reports Aaron Salazar remains in the critical care unit at a hospital in Reno,...

Oregon mom raises awareness after baby dies from meningitis

SALEM, Ore. (AP) — Summer Poff knew something was wrong with her 7-month-old son, Blaize, early in the morning on May 11.He was fussy, feverish and wouldn't go to sleep. The Salem mom tried to soothe her baby and gave him Tylenol, but at 3 a.m, she knew she needed to take him to the...

Lawsuit says Army Corps is failing to protect marine habitat

SEATTLE (AP) — Three conservation groups have sued the U.S. Army Corps of Engineers, saying it fails to protect marine habitat because it doesn't adequately regulate seawalls and other structures built along many stretches of Puget Sound shoreline.Sound Action, Friends of the San Juans and...

Facelift of Seattle's Space Needle nears completion

SEATTLE (AP) — Tourism is booming in Seattle. Just take a look at the Space Needle.The family-owned landmark is set to unveil the biggest renovation in its 56-year history next month, a 0 million investment in a single year of construction that transformed the structure's top viewing...

OPINION

Golfing While Black Is Not a Crime

Grandview Golf Club asks five Black women to leave for golfing too slow ...

Discovering the Best of Black America in 2018

Dr. Benjamin F. Chavis discusses the DTU Journalism Fellowship & Scholarship Program ...

Will Israel’s Likud Party Ever Respect the Rights of Palestinians?

Bill Fletcher weighs in on the precarious future of the two-state solution between the Israeli government and the Palestinian people ...

The Future of Medicinal Marijuana in Pets

Dr. Jasmine Streeter says CBD-derived products show beneficial therapeutic benefits for pets ...

AFRICAN AMERICANS IN THE NEWS

Man charged with shooting at black teen waives hearing

ROCHESTER HILLS, Mich. (AP) — A white suburban Detroit homeowner accused of shooting at a black teenager who came to his door to ask for directions will stand trial.Jeffrey Zeigler was bound over Tuesday to circuit court after waiving his preliminary examination on assault with intent to...

GLAAD study finds LGBTQ representation in film fell in 2017

LOS ANGELES (AP) — Despite high-profile Oscar wins for art house films like "Call Me By Your Name" and "A Fantastic Women," LGBTQ representation in films from the seven biggest Hollywood studios fell significantly in 2017 according to a study released Tuesday by the advocacy organization...

Black man ordered to pay [scripts/homepage/home.php],000 for racist campus graffiti

ANN ARBOR, Mich. (AP) — A former Eastern Michigan University student who admitted to painting racist graffiti on campus has been ordered to pay more than [scripts/homepage/home.php],000 in restitution.The Ann Arbor News reports 29-year-old Eddie Curlin learned his punishment Monday after earlier pleading guilty to...

ENTERTAINMENT

Soccer star Brandi Chastain or Gary Busey? Fans pan plaque

SAN FRANCISCO (AP) — Social media is finding little to like about the likeness on a plaque honoring retired soccer champion Brandi Chastain.The Bay Area Sports Hall of Fame in San Francisco unveiled the plaque on Monday night. Chastain said, "It's not the most flattering. But it's nice."On...

Woman accuses R. Kelly of sexual battery, giving her herpes

NEW YORK (AP) — Singer R. Kelly sexually abused a woman, locked her in rooms and vehicles for punishment, and infected her with herpes, the woman said in a lawsuit filed in New York.Faith Rodgers said in the suit filed Monday that she met Kelly about a year ago after a concert in San...

A farewell to the road for Paul Simon

NEW YORK (AP) — Farewell tours don't always mean farewell, but are a ripe time for appreciation and appraisal. Paul Simon's concerts and a new biography offer the opportunity for both.Simon's "Homeward Bound" tour began last week in Vancouver and takes him across North America, to Europe and...

U.S. & WORLD NEWS

Soccer star Brandi Chastain or Gary Busey? Fans pan plaque

SAN FRANCISCO (AP) — Social media is finding little to like about the likeness on a plaque honoring retired...

Woman accuses R. Kelly of sexual battery, giving her herpes

NEW YORK (AP) — Singer R. Kelly sexually abused a woman, locked her in rooms and vehicles for punishment,...

APNewsbreak: Pentagon adopts new cellphone restrictions

WASHINGTON (AP) — After months of debate, the Defense Department approved Monday new restrictions for the...

Brazil leader won't seek re-election

RIO DE JANEIRO (AP) — Brazil's President Michel Temer is ending speculation that he might seek re-election...

Rights group: Rohingya insurgents massacred Myanmar Hindus

BANGKOK (AP) — Amnesty International said Wednesday that Myanmar's army was not the only group that has...

Romania court acquits Senate speaker of lying under oath

BUCHAREST, Romania (AP) — A Romanian court has acquitted the Senate speaker of making false statements...

Charlene Crowell
Charlene Crowell

You’ve probably heard the advertisements on urban radio urging consumers with at least $10,000 in debt to call a number right away for a financial rescue. Promising to end debt troubles by getting creditors to somehow accept less money than what is owed can sound really appealing. In reality, however, consumers mired in debt may often find debt settlement programs to be costly, misleading, and far less helpful than the radio ad promises.

In the newest chapter in the research series titled The State of Lending, the Center for Responsible Lending (CRL) finds that debt settlement is a risky strategy that can leave consumers more financially vulnerable and still laden with debt years after they enroll in such programs.

Regardless of how well consumers follow the instructions of their debt settlement firm, they may ultimately be unsuccessful because many creditors simply refuse to deal with debt settlement companies.

According to the report, “Debt settlement companies do not tell consumers whether creditors will work with their firms at the time of enrollment. However, even if debt-settlement companies were required to disclose whether a particular creditor routinely works with their firm, this provides no real guarantee. In many cases, the party who owns a debt changes over time, since a debt may be sold successively to multiple parties.”

Available data suggests that at least two-thirds of debts must be settled in order to achieve a net positive outcome from debt settlement. Even more debts must be settled for the consumer to achieve real savings if they end up being liable for taxes on the debt reduction.

In the end, many consumers never realize that kind of experience. Rather, they end up worse off financially. According to the American Fair Credit Council, an industry trade association, consumers must typically be enrolled in debt settlement plan for three to four years in order to complete the program. During this time, debt balances grow an average 20 percent while consumers wait for settlements to be reached. Additionally, their credit scores are negatively affected, financial instability increased, and the likelihood of creditor lawsuits loom near.

According to Leslie Parrish, co-author of the report and deputy research director at CRL, “When a consumer stops making payments on a debt, not only is she/he vulnerable to fees and an increased interest rate, the reporting of this delinquency to credit bureaus can impact credit scores for years.”

In general, the higher a consumer’s credit score is, the lower the cost of credit they will incur. Conversely, the lower one’s credit score, the higher the cost of credit and interest will be. Whether applying for a credit card, auto loan or a mortgage, bad credit histories make future credit and borrowing more expensive.

In 2010, the Federal Trade Commission (FTC) issued regulation that barred debt settlement companies from charging fees until they reached settlements with the client’s creditors. While this regulation has stopped some of the most egregious industry practices, CRL’s report finds that significant financial risks remain for debt settlement clients.

Today, the Consumer Financial Protection Bureau shares regulatory oversight of debt settlement with the FTC. Thus far, CFPB has taken multiple enforcement actions against several debt-settlement companies and one payment processor.

CRL also sees a role for states to establish meaningful limits of debt settlement fees. One recommendation is to limit the fees that can be charged and to calculate such fees on the basis of the amount of savings achieved for the consumer.

State and federal regulators could also require better screening of prospective customers to lower the risk of a bad outcome. Factors such as the amount of debt to be enrolled, creditors and the consumer’s financial circumstances would be taken into account. Additional recommendations can be found in the report located at: http://rspnsb.li/1x5lPOe.

Ellen Harnick, co-author of the report and senior policy counsel at CRL, said, “What’s clear is that more action is necessary to protect consumers.”

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.  

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