Do you think bankruptcy will end all your problems? Think again. Many big lenders have found ways to continue squeezing money out of consumers whose debts have been canceled by the courts. In fact, there is even a healthy market for such debts that have been supposedly canceled by the courts being actively bought and sold every day. Five of these companies trading debts are even publicly traded on the NASDAQ! So, how can you avoid these problems?

First, let’s take a look at how and why this practice occurs. A consumer that has $10,000 in credit card debt that was canceled may not technically owe the debt any longer; however, the credit card company may continue to report the discharged debt to credit bureaus as a live balance. This can continue to hurt the consumer’s credit rating and impact his interest rates and ability to obtain loans. And these kinds of things happen a lot more often than many people care to admit.

The practice of buying and selling discharged debts even has some judges confounded. The misconception is that discharged debt is worthless because it cannot be legally collected. However, the value lies in the creditors ability to negatively impact the consumer’s credit report long enough to force a payment just to remove the barrier. After all, the consumers only alternative is to go to court and spend money on a lengthy legal process to force change.

Many of these cases are making it to court these days with companies as notable as Capital One. However, the small number of cases brought to court keeps the strategy a profitable one for those involved in this unethical secondary market. While this may be a significant abuse in the industry, it is one that must eventually be stopped with new laws and harsh penalties for companies that do not immediately remove these debts from customers’ credit reports. Until then, it is a problem that will only persist and there is little consumers can do.

The Midwest appears to be hit the hardest when it comes to the financial fallout of the subprime and credit markets. A recent report measuring the risk of residential mortgage loan delinquencies found that nine of the nation's 10 highest-risk metropolitan areas are in Ohio, Michigan and Indiana. Those states also rank among the top six in bankruptcy filings per thousand people in the year ending June 30th despite a new law making it more difficult to file for personal bankruptcies. A report from the University of Wisconsin Milwaukee showed that the number of homeowners with mortgages in Milwaukee increased 74% in 2006 while the percentage of people paying at least 50% of their income to housing costs nearly doubled to 19%. Obviously, this is a troubling trend in that it is unsustainable. While many economists are forecasting a recover, many still believe that the worst is yet to come...

The financial markets have suffered a significant setback after more than $500 billion in value was destroyed as a result of the mortgage and credit market declines. Losses from subprime, near-prime, prime morgages, CDOs, CLOs, failed LBOs, auto loans, credit cards, and other consumer credit, commercial real estate loans, asset backed securities, and other significant financial losses have sent the USA and other markets into a decline. The subprime losses alone are expected to lead to nearly $238 billion in value being destroyed.

The stock markets are declining so rapidly because not all of these losses are marked to market yet. This means that companies have not yet posted the losses realized from these declines by updating the estimated value of their portfolios. For example, if a company purchases a $100 billion subprime portfolio in 1999, they are not required to update the value of the portfolio in realtime. Rather, they get to do it quarterly or even yearly. Compounding the problem is the fact that many of these securities are so complex that they become almost impossible to value. After all, we have seen many financial institutions suggest losses would be limited only to turn around and post larger losses. This has only compounded the fears.

So, if you are concerned by your declining 401k or stock portfolios, know that this problem may be here for some time and it may be best just to ride it out.

Paying bills online has many advantages - it can help you pay your bills on time and keep everything organized in one place. Many banks now offer free online bill paying as a part of their standard checking accounts. On the positive side, online banking offers instant access to your account without having to go to a teller to do business. Funds can be transferred free of charge and schedules can automatically be taken out. Additionally, these banks typically have insurance protections and security guarantees. Online banking can also consolidate your paperwork and make filing for taxes much easier.

There are some negative aspects to online banking, however. Fraudulent operators often try to create mock-ups of online banking websites and use these fake websites to gain access to your passwords and bank account information. The best thing you can do to protect yourself against that is to simply type in your banks URL every time you visit their website. Never click any links from websites or emails to get there unless it is a bookmark that you have created. If you follow these steps, online banking can make your life much easier!

Debit cards are considered to be a more safe alternative than credit cards, since they eliminate the risk of spending more than you are making. However, debit cards have their own set of risks that must be carefully considered before use. Here are some important facts about debit cards:

1. They are Riskier: Legally, credit card liability is limited to $50 and disputing money you owe a bank is easy since you have the money. Debit cards, however, are a different story. It can take banks 10 days or more to investigate for refund your money. More, debit card liability is set at $500 by law with the condition that you notify the bank in 60 days. If you fail to notify the bank, you could lose everything plus your maximum overdraft line of credit. And worse, you are fighting to get your money back - which is an uphill battle.
   
   
2. They are Costly: Debit cards make banks a lot of money. Credit card companies charge the merchants fees to use them, but debit cards also charge a transaction fee to you. There are also some banks that charge a monthly card rental fee and PO fees. They can charge the merchant too if you use the card with a signature!
   
   
3. They are Blocked Occasionally: Some firms regularly block a card in advance for the estimated cost of the trasnaction that may not be completed for several days. This isn't a problem for credit cards since they have lines of credit, but it can hurt your checking account if it comes unexpected.
   

What can you do about all of this? Well, the best solution is to only use your debit card or in-person transactions. Using debit cards online is risky and can open you up to potentially unlimited liability. You may also want to request an ATM card instead of a debit card as they can be much safer. Also, make sure the card is swiped in front of you since some card skimmers can illegally steal your card at restaurants.

Divorce is a lengthy, difficult process that often leaves both parties in financial distress afterwards. It can often be hard to think about money while dealing with the loss of a personal relationship, but doing so now will make it much easier to move on with your life in the future. One of the worst mistakes that divorced couples make is to drag out the process in hopes of securing more money and cause more pain to the other person. Here are five tips that you can use to make finances an easier part of your divorce:

1. Consider Selling the House - Many divorced couples try and hang onto the house at all costs so the kids won't be forced to change schools or their weekly routines. However, they fail to consider several other key factors like mortgage payments, upkeep and property taxes - all of which are substantially more difficult when income is cut in half.
   
   
2. Separate All Assets - It is very important to make a clean financial break in order to prevent any future problems. The best way to start is by ordering your credit reports to find out which accounts are in who's name. Also be sure to remove authorized users from credit card accounts, but you may want to do this over time to minimize the impact on your credit score. And finally, transfer your joint accounts to individual accounts.
   
   
3. Don't rely on your Ex - Don't count on your ex making mortgage, alimony or child support payments in order to survive. You should always assume the worst and count any extra as an added bonus for you. Suing is one option, but falling behind on payments because you were counting on them will only hurt your credit scores.
   
   
4. Remeber Taxes - It is important to realize that alimony is taxableto the recipient and deductible by the person making the payment, but child support is not. Therefore, the recipient is better off getting a large amount of child support rather than alimony and having to pay the taxes on the alimony.
   
   
5. Change Your Will - Remember to change your will or else you could be leaving your family to fight a difficult battle. Additionally, life insurance and retirement account beneficiaries should also be changed.

Consumer borrowing increased at the slowest pace in five months in September, coming in at half of what most economists expected. The slowed growth in credit card debt and car loans came in at just 1.8%, which compares to 9.3% in August. Total consumer debt rose by $3.75 billion in September, which is far lower than the $15.41 billion gain in August.

Why is consumer borrowing down? Well, a recent Fed survey found that banks tightened their lending standards following a severe credit crunch in August in the wake of rising defaults on subprime mortgages. Now that housing sales have slowed considerably, consumers are having a hard time finding lenders willing to borrow against their houses due to declining values.

This may seem like good news, but there is a downside. A slowdown in consumer borrowing will likely also lower consumer spending, which accounts for nearly 2/3 of total economic activity. A slowdown in spending within our economy could compound problems we are already facing with troubled companies hurt by borrowing restrictions themselves. This will lead to lower earnings, increased layoffs, and higher unemployment.

In the end, everything economic happens in cycles and this is simply the trough of one of the cycles. Many economists believe that these events may lead to a recession during the next couple of years following the boom that we have enjoyed since around 2005.

Here are some tips on saving money on insurance:

1. Shop around for insurance. Check out the rates of competing companies before renewing your policy each year. Your state's website may have a good starting point for this search. Lower annual premiums could save you several hundred dollars per year.
   
2. Raise your deductibles. If you are willing to pay $500 or $1,000 on a claim rather than only $100 to $250, you can reduce your annual premiums by several hundred dollars. However, before you make these changes, be sure that you can afford to pay the higher claims if an accident does occur.
   
3. Assess your need for life insurance. You may not need as much life insurance protection if your spouse works and your children are out of the house on their own. Lowering your life insurance amounts can save you hundreds of dollars per year depending on your medical conditions.
   
4. Drop credit insurance coverage on installment loans. Many consumers do not need credit insurance because they have enough assets to protect themselves in the event of a death, disability or unemployment. Terminating this coverage reduces your financing costs by three percentage points, which can save you $1,000 on a four year $20,000 loan.

Here are a few tips to help you save money on your housing costs:

1. Don't pay for space you don't need. American's have large houses and apartments compared to the rest of the civilized world. How much do you really need? Consider using space you have more efficiently or purchasing/renting an area with less square footage.
   
2. Live near where you work. It is not always possible to find a place near where you work, but the closer the better. Driving 5,000 miles less per year can lower you transportation costs by more than $1,000. And gas prices are always on the rise!
   
3. Refinance your mortgage to a lower rate. Refinancing your mortgage can save you a lot of money. A 15-year $100,000 fixed-rate mortgage that is lowered from 7% to 6.5% can save you more than $5,000 in interest charges over the life of the loan. More, for every $100,000 you borrow at 7%, you will pay over $75,000 less in interest on a 15-year versus a 30-year mortgage.
   
4. Carefully select your contractors. Contractors who have successfully performed work for you or your friends/relatives in the past are the best ones to use. Insist on a written, fixed-price bid before any work is started and don't make full payment until the work is done satisfactory and on time.

Here are four critical tips to saving:

1. Save your loose change. Even fifty cents a day put in a jar over a year will give you around $200 that you could use as an emergency or vacation fund.
   
   
2. Track your spending. Use your credit cards, checking and other records to review what you've purchased at least once a month. Then ask yourself if these purchases were all necessary or if some of this spending could be saved or invested.
   
   
3. Never impulse-buy expensive items. Hold off on making any big purchases for at least 24 hours and you can save yourself much regret about impulse purchases (and not to mention save yourself substantial sums of money).
   
   
4. Use a debit card instead of a credit card. Debit cards can never be used to spend money you don't have (unless you have a limited overdraft). Using a debit card can prevent you from incurring credit card interest and having the desire to spend more than you can afford.

US colleges and universities are doing a bad job of teaching students of the dangers of consumer debt. Some are even helping credit card companies get access to students while they are most vulnerable. Credit card companies routinely setup shop with the consent of schools in return for payments and other benefits for the institution. Many universities also provide credit card companies with mailing lists of students, who then get bombarded with campus and home junkmail.

Colleges receive a small kickback, but is it really worth the average $20,000 in student loan debt? 56 percent of students reported gettin gtheir first credit card at age 18 in their freshman year. When they reach their senior year, the number of credit cards increases to four on average for this same 56 percent. The fact is that most college students are not able to manage their debt effectively. They lack the financial discipline to postpone purchases they cannot afford and credit cards make this activity even easier. Perhaps its time that universities give up the kickbacks and credit card sponsorships.

Roth IRAs were created for middle-income tax payers who are active participants in employee-sponsored retirement plans along iwth younger taxpayers in lower brackets that prefer tax-free withdrawals over current tax savings. Basically, contributions to Roth IRAs are not tax-deductible but earnings grow tax deferred and can be withdrawn tax-free in retirement or put towards certain other assets at an earlier age. One major limit of the Roth IRA is that it adds a maximum income level while joint filers may contibute the lesser of $2,000 or 100% of their compensation (earned income) as long as their combined annual income is below $150,000. Allowable contributions above that are phased-out completely at $160,000. And for individuals, the $2,000 maximum allowable contribution begins to be phased-out at $95,000 and reaches zero at $110,000.

Debt collectors are professionals that are very skilled at the art of negotiation. Follow these tips and you may be able to come out ahead:

1. Learn your rights. Debt collectors are required to abide by the Fair Debt Collection Act put forth by the Federal Trade Commission. People that know their rights make debt collectors less likely to resort to aggressive tactics. You can get a free brochure online or by calling 617-542-9595.
   
   
2. Offer less than you can afford. Do not commit to anything that you cannot afford or do anything dangerous. Also, avoid sending postdated checks to a debt collector or agreeing to electronic payments that come directly out of your checking account. Assuming that debt collectors are good people is a mistake.
   
   
3. Keep your information private. Do not tell a debt collector personal information like where you work, where you bank, or your account numbers. Keep the conversation at a minimum and tell them only the information that they absolutely need to hear.
   
   
4. Tape any calls. Taping a phone call is the best way to keep debt collectors in line because they know they cannot use any aggressive tactics. To be on the safe side, tell the debt collectors that the call is being recorded.
   
   
5. Get it in writing. Everything you agree to should be available in writing - especially payment agreements. Send a letter to the debt collector outlining the payment agreement via certified mail and you'll receive a receipt when the letter is delivered. Also, write "Cashing this check constitutes payment in full" on each check that you send.