The COUNSELING DEPARTMENT at Novadebt - Minimum Payments Are Going Up

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					                  The                                                                                        Connection
                            A Garden State Consumer Credit Counseling Organization                                         November 2005

             What Our                                                   Community Impact
         Clients Are Saying...                                       Source: Becky Winters—Education Specialist for Novadebt

                                                          Fall is officially here and with it brings   November also begins our
                                                          falling leaves, cooler temperatures          involvement in the United
                                                          and the approaching holidays with            Way of Monmouth County’s
                                                          family and friends. There are many           Snowflake Wishes efforts.
 “For me, this was a big step. From                       who feel financial strain at this time of    Each participating Novadebt
 the outset, the representative I spoke                   year, so the employees here at No-           employee selects a person
                                                          vadebt try and reach out to bring a          who will hopefully have their Christ-
 with made me feel very comfortable                       little warmth and sense of compas-           mas holiday made a little brighter by
 and, subsequently, everyone I’ve spo-                    sion to those in need. November              a gift selected by their adoptive
 ken with has been very patient, kind                     finds Novadebt employees donating            “Santa”. Last year over 25 employ-
                                                          non perishable food items, along with        ees had a great time shopping and
 and professional. If there are any                       frozen turkeys, to “Freehold Area            this year, we know that number will
 changes made to my payment con-                          Open Door Food Pantry”. Freehold             be exceeded. Gifts will be collected
 tract, I’m notified in a timely manner                   Area Open Door, Inc. (Open Door) is          until the first week of December and
                                                          a non-profit 501(c)(3) interfaith            delivery of the gifts is coordinated
 and asked to call if I have any ques-                    agency that provides emergency               through the United Way, for arrival
 tions. In addition, I’m required to                      food, emergency funding, mentoring           by the holidays. December’s news-
 read a book on managing money,                           and scholarships to those in need            letter will provide an update of our
                                                          from the Freehold area. Open Door            efforts.
 which, for me, is a step in the right                    provides the following 5 programs: a
 direction. I’m very fortu-                               Food Pantry Program, a Lunch Pro-            Not to be forgotten is our “Adoptive
 nate to have made the con-                               gram, an Emergency Funding/                  Platoon”, still serving in Iraq. Boxes
                                                          Advocacy Program, an After School            filled with Thanksgiving treats will be
 nection with Novadebt and                                Program and a Scholarship Program.           shipped to hope-
 I look forward to paying                                 Collections are made on an ongoing           fully bring a smile
 off my debts and ‘getting                                basis in the three weeks before              to those who fight
                                                          Thanksgiving. While delivering the           day in and day out
 the monkey off my back’.”                                food to the pantry, we gain a true           for the freedom of
                                                          understanding of the good that               others.
 MV, New York                                             comes from our teamwork.

              The COUNSELING DEPARTMENT at Novadebt...
Novadebt is shining the spotlight on the-     vadebt as one of the best agencies   has to offer such as: counseling,
COUNSELING DEPARTMENT in the industry.                                             money management advice, Credit
for November.                                                                      Report Review, housing counseling,
                                              The Counseling Department is re-     Personal Financial Program, finan-
The Counseling Department at                  sponsible for providing caring, pro- cial education, access to hundreds
Novadebt consistently strives to              fessional service to community
uphold the mission of the organi-                                                  of community resources and work-
                                              members throughout the country       shops and community outreach,
zation “to provide financial educa-           who are in need of counseling, fi-
tion to the public including free                                                  without the devotion of the Counsel-
                                              nancial education and resources. It ing Department.
housing and credit counseling                 is with great passion that our coun-
services to families and individu-            selors serve the community each      Thank you to all of our
als in need”. The experience,                 and every day!                       counselors for being a
knowledge and dedication of our                                                    part of Novadebt’s
counselors helps designate No-                We would not be able to provide      team!
                                              the helpful programs that Novadebt
       If you have any comments, questions, or suggestions for future news bulletins, please email
                  BANKRUPTCY LAW REFORM...What Does It Mean??
                                          Source: Becky Winters—Education Specialist for Novadebt

Changes to bankruptcy law, as a result        Chapter 13. Under Chapter 13, the     and alimony take priority over any
of the Bankruptcy Abuse and Con-              debtor enters into a five year repay- other creditor. Lastly, after bankruptcy
sumer Protection Act of 2005, became          ment plan in which he or she must pay proceedings are completed, no debt
effective on October 17, 2005. This                                                 can be discharged until the bankruptcy
                                              a certain amount of money to creditors,
reform is designed to prevent debtors         based on a strict expenses-to-income  debtor participates in a government
from using the system as a way to             formula.                              approved financial management edu-
avoid their creditors. Bankruptcy filing                                            cation program. We are pleased to
is one that should not be taken lightly   Previously filed federal tax returns are announce that Novadebt has been
and key changes in the law now re-        required to show proof that any tax       approved to provide the education
quire that each individual review their   liability has been paid prior to proceed- component. As with the approved
financial situation in detail.            ing with bankruptcy filing. Some of the credit counseling agencies, you can
                                          traditional immediate protections from refer to the U.S. Trustee Program for a
Most applicants must now undergo          creditors, including most debt collec-    list of approved education providers.
credit counseling in a government ap- tion and lawsuit actions have been
proved program prior to filing. A list of eliminated. For example, filing for       Incorporating counseling and educa-
approved credit counseling agencies       bankruptcy no longer delays or stops      tion in the bankruptcy process will pro-
may be obtained from the U.S. Trus-       eviction actions, driver’s license sus-   vide the tools for financial stability for
tees. Additionally, bankruptcy appli-     pensions, or legal actions for child sup- the debtor. Should you have any
cants must meet certain eligibility re-   port or divorce proceedings.              questions regarding this law reform,
quirements under a “means test”. This New guidelines have been established call our offices at 1-866-254-2660.
means test determines whether you         where a system of re-payment priority
can file bankruptcy under Chapter 7 or has been revised, so that child support

                             Minimum Payments Are Going Up
                                     Source: Sandy Shore—Senior Counselor for Novadebt

 If you are struggling to make your credit card payments now, you may be in for a shock. Banks will be in-
 creasing the minimum payments required, under pressure from federal regulators. Currently the minimum
 payment is set at about 2.5% of the balance each month. The new payment will be about 4%.

 Why would they do that, when many consumers are already struggling? Actually, it will help consumers get
 out of debt. Consider these numbers: If you have a $10,000 debt at 28%, with the current 2.5% or $250
 minimum payment, you will be paying for 170 years and pay over $130,000 in interest. If you are not plan-
 ning to live that long, don’t will have paid the debt many times over, so the credit card company
 won’t be too unhappy. If your interest rates are more reasonable, let’s say 10%, you will only have to pay
 for 20 years. Your interest will be over $13,000.

 With the new regulations, your payment will be 4% or $400. With the 28% interest rate, you will get out of
 debt in 20 years and pay about $4,900 in interest. With the 10% rate, when the payment goes up to $400,
 the debt will be paid off in less than 12 years. The interest will be about $2,600. This is still a lot of money,
 but not as bad as with the lower minimum payments.

 If you are in a Debt Management Plan, this will not affect you since your payment is set to get you out of
 debt in about 5 years. If you have been paying on the same debt for years, this should be a wake up call.
 Call us at 1-800-992-4557. We can help.

                                  “The Novadebt Connection” does not assume responsibility for any advice given.
                               It is up to the reader to determine if advice is safe and suitable for their own situation.