Entries in Debt (8)


NJ Hits Up Mass.Woman for 35-Year-Old $73 Debt

Hemera/Thinkstock(AMESBURY, Mass.) -- Back in 1976, when Alice Mainville received an unemployment check from the state of New Jersey, she remembers feeling elated.

In 1976, Mainville was 17 and had been working in Paterson, N.J., in a union job at Lazzara bakery. When another union, the Teamsters, which also had members employed at the bakery, went on strike,  Mainville said she and her fellow union members were told not to cross the picket line.

Out of work for a time, she was eligible to claim unemployment. It was then that the state allegedly overpaid her, but Mainville said she never had any idea there was a problem until the recent notices started coming.

Never did she think that 35 years later, long after she had moved to Massachusetts to start a new life, that New Jersey would track her down for a $73 debt, the result of a miscalculation in her unemployment check.

“You’ve got to be kidding me,” Mainville said in an interview. “They’re coming after me for $73, after 36 years, for a debt I incurred at 17?”

She first received the notice from the New Jersey Department of Labor last fall telling her that she owes the state $73 due to the state’s miscalculation.

The notice was addressed to her using her maiden name, Alice Scheller, a last name she had not used in 12 years.

Mainville initially thought that the letter was for her mother, who had passed away five years ago and had lived her life in New Jersey, as there was no social security number listed on the notice.

She replied with her mother’s death certificate. Then in March, she received another notice that included her Social Security number, ostensibly proving that the debt was indeed in her name.

Back in the 1970s, Mainville recalls, she could fill up her car’s entire gas tank for just $5. She was earning about $80 a week.

According to Brian Murray, spokesman for the New Jersey Department of Labor, Mainville’s case is hardly unprecedented. The state of New Jersey is owed $376 million in debts from people who were overpaid unemployment insurance benefits and now owe repayments and penalties.

There is no expiration date for debts like this. The department is “obligated, under the law, to follow up on these matters, regardless of the amount of the debt or the age of the case,” Murray said.

Ultimately, Mainville, single mother of three and school secretary in Amesbury, Mass., says she’ll pay back the $73, but only after checking to ensure that the notice is legitimate and factual. Only the balance of the over-payment was provided; no additional information was given. She said that she would love to contact the Department of Labor and get more information, but that there was no email address or phone number listed on the notice.

Murray says that if she gives him a call, he’ll be happy to help out.

Copyright 2012 ABC News Radio


For-Profit Colleges Target Military Personnel, Market High-Interest Private Loans

Mark Wilson/Getty Images(WASHINGTON) -- America’s students are in debt, $1 trillion in debt in fact. But while most college graduates struggle to repay loans with less than 10 percent interest, some military personnel are drowning under significantly more expensive loans.

Holly Petraeus, CIA Director David Petraeus’s wife and an advocate for military families, told a Senate panel Thursday that for-profit colleges are actively targeting military personnel and their families, marketing private loans with inflated interest rates.

“There are some real concerns, there is real aggressive marketing right now to the military and not just to military members, but to their spouses and to their children as well,” Petraeus said.

To pay for the pricey private schools, these colleges often market “expensive private student loans” to service members, said Petraeus, who as the assistant director of the Office of Service-Member Affairs at the newly-formed Consumer Financial Protection Bureau is working to protect military families from such predatory loans.

Petraeus said she spoke with an Army wife at Ft. Campbell in Kentucky who had enrolled in an online course through a college she thought was officially associated with the military. She said representatives from the school, which actually had no military affiliation, called her a dozen times per day until she agreed to register.

But help was nowhere to be found once the school received her tuition payment. The woman ended up failing her course because she had trouble logging on, Petraeus said.

While meeting with service members around the country, Petraeus said she also heard horror stories of loan companies charging crippling interest rates. One internet lender, she said, tells service members who visit their site: “We  believe that your membership in the armed forces entitles you to special treatment. We speak your language!”  That language includes a steep interest rate on their loans that far out-paces rates on government-offered loans. And when military personel fall behind in their payments, harassing debt collectors take over.

“They may call a service member’s home and unit 20 or 30 times a day, threaten them with the uniform code of military justice, and tell them they’ll get them busted in rank or have their security clearance revoked if they don’t pay up,” Petraeus said. “We’ve even heard of a debt collector harassing a surviving spouse of a service member killed in action, insisting that she had to use the money from his death gratuity to pay off a debt immediately.”

College costs aside, many military members are in debt before they even enlist. Petraeus said that on a recent trip to Texas, “We were told that the average Air Force recruit arrives at Lackland Air Force Base for basic training over $10,000 in debt.”

“A continuing issue for the military is the general issue of indebtedness,” Petraeus said. "Unfortunately there are still too many young troops learning about wise spending through hard experience and years of paying off expensive debt.”

Copyright 2011 ABC News Radio


Debt Committee’s Cuts Could Impact Younger Generation: Report

iStockPhoto/Thinkstock(WASHINGTON) -- Countless battles are being waged behind the closed doors of the Congressional deficit-reduction "super committee," which has less than a month to strike an agreement on reducing federal spending by at least $1.5 trillion over the next decade.

But while the committee members battle in secret, the automatic cuts that will take effect if the committee fails to reach an agreement would create a greater imbalance between the old and the young than between the wealthy and the poor.

“When push comes to shove they are going to cut programs for the kids,” said Ron Haskins, a senior fellow at the Brookings Institute. “Elected officials, they don’t want to mess with the elderly. Not only are they a huge constituency, but relative to many other constituencies they are well organized.” In short? Kids can't vote.

The two of the three major entitlement programs, Social Security and Medicaid, will remain untouched by the automatic cuts, which would kick in for the 2013 fiscal year budget if the super committee fails to create a deficit-reduction plan that passes through Congress.

The third big-dollar entitlement program, Medicare, would be cut a maximum of 2 percent, or about $11 billion in the fiscal year 2013 budget, according to the Bipartisan Policy Center.

The vast majority of the back-up plan cuts would fall on discretionary spending, with half of the $109 billion yearly cuts coming from defense spending.

There are few concrete details on how the remaining $55 billion would be cut, but a report by the Federal Funds Information for States, which does budget analyses for the National Governor’s Association, shows that cuts to children’s programs would likely far outpace cuts to programs for the elderly.

Taking into account likely budget reductions for public education, child welfare services, child care subsidies and the low-income infant nutrition program known as WIC, the younger generation lose about $5 billion in federal funding, according to the report.

About $250 million would be cut from programs aimed toward seniors, such as the Administration on Aging and housing for the elderly.

Copyright 2011 ABC News Radio


Obama Defends Debt Ceiling Decision to Supporters 

JIM WATSON/AFP/Getty Images(WASHINGTON) -- President Obama asked for about 140 seconds of his supporters' time Monday to explain in a video released by his re-election campaign why he did what he did to push through a deal on raising the nation's debt ceiling.

The president explained that Washington had no other choice but to avoid defaulting on the government's bills, a default that would have dealt "a devastating blow to our economy at a time when we can least afford it."

In downplaying the GOP success in getting the deal done, Obama also tried to minimize the coming $1 trillion in spending cuts that will occur over the first decade of the plan.

What the president said he's most concerned with is the second phase of the proposal, involving a special commission of 12 legislators who will recommend reductions to shrink the deficit by another $1.5 trillion by 2021.

With their recommendations due this November, Obama vowed to push for an end to tax breaks for the top two percent of American wage-earners and corporations, saying a balanced approach is the best way to replenish the nation's coffers.

Failing that, triggers are built into the plan that would mean automatic big reductions in Medicare and Pentagon spending.

Copyright 2011 ABC News Radio


Americans Await Congressional Approval of Debt Ceiling Agreement 

Gavel and American flag(WASHINGTON) -- Nervous Americans from all facets of the political spectrum have been awaiting word from Capitol Hill that the weeks of anxious waiting for a deal to raise the $14.3 trillion debt ceiling are finally over, so America can pay its bills without going into unprecedented default.

A collective sigh of relief was heard Sunday evening when President Obama announced a tentative deal on the debt ceiling.  However, things can still unravel quickly if Tea Party Republicans in the House feel the cuts don’t go far enough, or liberal Democrats feel social programs precious to them are unfairly targeted.

The country has already gone through plenty of drama.  House Republicans last Friday finally agreed to plan by House Speaker John Boehner to lower the national debt and vote on a balanced budget amendment, only to see it turned away by Senate Democrats, who also watched as their own spending reduction plan came up well short of the votes needed for passage.

With the clocking ticking closer toward August 2 and a possible disastrous default, Senate Democratic and Republican leaders seriously started heeding President Obama's urgent call for compromise.
The White House also stressed there were no guarantees that checks to retirees, veterans and American's current military personnel would be mailed after Tuesday unless an agreement was reached.

While specifics about the deal weren’t immediately available, it’s believed that the cuts totaling between $2 trillion and $3 trillion would be divided equally between defense and domestic spending.

Still, all it takes is a combination of 217 House Republicans and Democrats to scuttle the deal and potentially send the economy spiraling downward.

For now, things are looking up.  World markets Monday responded favorably to the agreement and Wall Street is expected to at least partially reverse last week's 500-point loss. Economists, however, aren't entirely sure if the nation's Triple A credit rating is still solid, even if Congress approves the deal.

Copyright 2011 ABC News Radio


NFL Owners Offer Lessons for Washington in Fiscal Problem-Solving

Adam Gault/Thinkstock(WASHINGTON) -- A tragedy was averted in Washington Monday, with a historic breakthrough between two opposing sides who’ve been deadlocked for months, with billions of dollars at stake.

That’s right: Negotiations worked -- in football, that is.

It gave New England Patriots owner Robert Kraft an idea:

"I hope we gave a little lesson to the people in Washington,” Kraft said Monday afternoon, “because the debt crisis is a lot easier to fix than this deal was.”

Actually, the NFL standoff has, by some measures, lasted longer. Football’s lockout started way back in March -- weeks before a spending clash nearly shut down the government, and months before the once-unthinkable prospect of debt default became quite thinkable.

But why can NFL players come to agreement with owners, while Republicans and Democrats are still fighting over yardage?

A few numbers may help. Football players and owners have been deadlocked on how to split up $9 billion in annual revenue. Meanwhile, on Capitol Hill, the subject is the $14.3 trillion debt limit.

Revenue in the billions vs. debt in the trillions? Which one’s easier again? Here’s throwing a flag on Kraft’s play.

Copyright 2011 ABC News Radio


Ohio Supreme Court Denies Law License for Grad with Student Debt

Photo Courtesy - Getty Images(COLUMBUS, Ohio) -- While many law school graduates are all too aware of their accumulating pile of debt, few may realize it can prevent them from practicing law and kill any hopes of paying down their loans.

Just ask recent law grad Hassan Jonathan Griffin. The highest court in Ohio denied his bar application because he didn't have a plan to pay back $170,000 in school debt.

The Ohio Supreme Court on Jan. 11 said Griffin lacked a "feasible plan to satisfy his financial obligations." Griffin's debts include $150,000 from law school, $20,000 from his undergraduate studies and $16,500 in credit card debt.

The state's Supreme Court, which regulates admission to the practice of law in Ohio, requires that an applicant be at least 21 years old, have a bachelor's degree and law degree, and pass the Ohio bar examination.

But the state's rules specify that prior to taking the bar exam, applicants must demonstrate they possess "the requisite character, fitness, and moral qualifications for admission to the practice of law."

Griffin, 40, applied in November 2009 for the February 2010 bar exam, but his mounting financial obligations led to an investigation by the state's Board of Commissioners on Character and Fitness.

According to the board's report, Griffin graduated from Arizona State University in 2004 when he was 34 and worked full-time as a stockbroker for over five years before attending The Ohio State University Mortiz College of Law.

Since completing his first year of law school, Griffin has worked 24 to 32 hours a week at the Franklin County Public Defender's Office. Though he graduated from law school in 2008, he has been unable to obtain a full-time job and still earns $12 per hour at the public defender's office.

The board recommended that the court reject Griffin but permit him to reapply for the Feb. 2011 bar exam. Griffin confirmed he is re-applying for the February exam and his attorney said his financial matters are now in better order.

Griffin and the others are apparently in good company and if high loan debt were to be a major factor for admission to state bars, few would be admitted.

The American Bar Association (ABA) reported that the average amount borrowed for law school was $91,506 for private schools and $59,324 for public schools in 2008. A committee from the ABA wrote in a report that these figures do not include debt from students' undergraduate years and an average law school student will graduate with debt "well in excess of $100,000."

The November 2009 report, "The Value Proposition of Attending Law School," stated that prior to the recession, starting salaries for associates at large firms were around $160,000 a year.

But among law graduates from the class of 2008, only 23 percent of students started with that salary level. About 42 percent of graduates had an annual salary of less than $65,000. And the ABA report said prospects are even bleaker now, with students competing for half as many jobs at top law firms.

"Far too many law students expect that earning a law degree will solve their financial problems for life," the ABA committee wrote. "In reality, however, attending law school can become a financial burden for law students who fail to consider carefully the financial implications of their decision."

Copyright 2011 ABC News Radio


State Debt Worse than Thought?

Photo Courtesy - Getty Images(WASHINGTON) -- Hidden state debts could cause an unexpected crisis as the economy continues to recover, The New York Times reported Sunday. California, Illinois, New Jersey, and New York, are some of the states accused in the article of borrowing and using financial tricks to pay their debts, adding new debts that are often off the books.

States presently have $2.8 trillion dollars worth of debt, but that number could be drastically worse with extraneous debts. Adding to fears of a worsening debt crisis, state credit ratings have gone up because investors believe the federal government backs up states financially. The concern now is how long these problems can last.

Copyright 2010 ABC News Radio

ABC News Radio