The New York Times recently published an article about the race bias  in bankruptcy filing.    According to the article, a recent study reports that:

Blacks are about twice as likely as whites to wind up in the more onerous and costly form of consumer bankruptcy as they try to dig out from their debts, a new study has found.

 The disparity persisted even when the researchers adjusted for income, homeownership, assets and education. The evidence suggested that lawyers were disproportionately steering blacks into a process that was not as good for them financially, in part because of biases, whether conscious or unconscious.

“Unfortunately I’m not surprised with these results. The same underlying issues that created the problem in mortgage lending, with minorities paying higher interest rates than their white counterparts having the same loan qualifications, are present in all financial fields.”

If a debtor chooses an inappropriate chapter, there can be serious implications. Chapter 13 plans, for instance, are more likely to fail than a Chapter 7. Nearly two of every three Chapter 13 plans are not completed, which means the filers’ remaining debts are not discharged, leaving them right where they started. One bankruptcy judge, who sees filers once they can no longer make the required payments in the plans, said the debtors usually do not have enough income to stick with the budget.

Ellington believes that there is a solution that will combat the issue.  “It’s the new age of discrimination, from salaries, to services, it’s the same story. The key to stopping this type of behavior is Financial Education.” 

Are you wondering how you can save a chunk of money in the New Year? MSN Money recently posted an outstanding article on How to save $5000 in 2012 linking to CESI’s site following an interview with CESI’s Director of Outreach – Tracy East.

Some of the ideas you might want to try:

1. Analyze your spending and figure out where your money is going. It’s easier to make cuts when you know what you are spending on.
2. Consider your expenses for utilities such as cable, phone and electricity. There are many ways to save when you give them individual scrutiny.
3. Take a look at your insurance policies – switching could save you a lot.
4. Examine your food costs – cutting back on eating out, switching from name brand products to store brands and eliminating extras such as bottled water can make a huge difference.

There are a lot of ways to save when you get in the mindset of scrutinizing your expenses. Make 2012 a year to build your savings with small cutbacks that can add up to huge results!

Majority of parents believe children should be required to take course on how to use credit cards

Raleigh, NC-December, 2011 – It is every parent’s wish for their children to learn from their mistakes.

A recent survey of parents with credit card debt found that when it comes to the lessons learned from the Great Recession, caused in part by a sea of red ink in the budgets of households and nations, parents want their children to get the financial education they did not.

The survey found that:

• 66% of parents believe parents with credit card debt believe that children should be required to take a class on how to use credit cards.

• Of those surveyed, only 5% had ever taken a class on how to use credit cards themselves.

The survey of 355 parents with $1000 or more in credit card debt, was commissioned by the nonprofit organization Consumer Education Services, Inc.  Respondents had no affiliation with CESI and were recruited online by a third party research company. 

“With an eye on children becoming the nation’s future political and business leaders as well as parents, people overwhelmingly see education as key to preventing future crisis,” says Neil Ellington, executive vice president of Consumer Education Services.

“Mandating credit card education courses in high schools would be ideal, since the legal age to use credit cards is 18,” suggests Ellington.

What Now?
Until credit card education is required, Ellington offers these tips for parents to use to educate the nation’s future consumers and leaders about debt.

• Start young. It’s much easier to develop solid life-long habits when you start young. Open a savings account and have children contribute money from birthday and holiday gifts as well as allowances so they get used to it.
• Talk about money and spending. It’s great to explain early and often the realities of budgets and limited resources as well as the difference between needs and wants. Don’t be afraid to tell a child that you can’t afford a particular luxury because the money is needed for something important that is needed right away (food, gas, repairs, etc). That makes a perfect teaching moment to explain about saving money for something you want instead of using credit in an unhealthy way.
• Kids get a better understanding of the value of money and what things really cost when they use their own money to buy something.

Consumers ARE Confident – Just Not in the Government!

CESI’s recent consumer survey was featured on a recent post by CNBC’s Cindy Perman. The CNBC post states

a recent survey shows that consumers — specifically consumers struggling with personal debt — are actually pretty confident in their ability to pay off their own debt. In the government’s ability? Not so much.

A whopping 83 percent of consumers currently struggling with credit-card debt said they believe they are more capable of paying off their debts than the federal government, according to a survey by CESI Debt Solutions, a debt-counseling organization.

The full survey results used in the post can be found here.

CESI’s own Neil Ellington recently spent time talking to Gerri Detweiler of  Talk Credit Radio about how Credit Counseling and Debt Consolidation work.

Gerri reports “Over the years, I’ve received numerous emails asking me, “Does debt consolidation work?” Or, “What’s the best way to consolidate my debt?”

Neil Ellington of CESI Debt Solutions joined me September 23rd, 2011 to explain how credit counseling works. He explained what debt consolidation really is, and how a debt management program (DMP) through a credit counseling agency works.

He also shared some surprising advice; failure in a DMP can be a good thing, for example.

You’ll also understand the real effect of credit counseling and debt consolidation on your credit. (It’s probably not what you think!)

After listening to my interview with Neil, you’ll be able to make an intelligent decision about whether debt consolidation through a credit counseling agency may be right for you.

You can listen to the full interview using the player below or download the MP3.