Extension Report

Baldwin County Extension Office

302A Byrne Street

Bay Minette, AL  36507

Telephone (251) 937-7176 or

928-0860/943-5061 ext. 2222

FAX (251) 937-7285

Rick Zapata

Regional Extension Agent

Consumer Science & Personal Financial Management

August 10, 2010

It sure does seem like the Gulf Coast just cannot catch a break. We had hurricanes Ivan, Katrina; then the worst recession in decades, and then the oil spill happened.  There is never a good time for an oil spill, but this oil spill could not have happened at a worse time for the people in Baldwin and Mobile Counties. So much of our local economy is derived from the tourist trade and when the tourist saw oil washing up on our beaches; the tourist trade dried up. It also came at a time when businesses were getting geared up for the summer vacation season. Businesses had stocked up on inventory and employees anticipating the increased traffic flow from a busy tourist season. Now employees are seeing more and more lay-offs and the increased inventory sits idle on store owners’ shelves. When this happens, bills start to pile up for the employees and the business owners and along with the bills come a higher degree of stress and stress related problems.

When bills start piling up families will need to start to prioritize their debts. Housing and basic needs will have to be paid first. When other bills cannot be paid you will need to call the creditors and let them know that you will not be able to pay them and give them an approximate date when they should expect a payment. There are some creditors that will allow you to miss payments. They simply move the payments to the end of the loan, which will result in an increase in the amount of interest that you will pay. Even though you will pay more interest, this may be a viable alternative to a complete default on the loan. The key is to make that phone call and ask them to help you until you can get back on your feet. In the case of claims filed with BP, it would be wise to develop a plan B.

Credit cards are a different problem. They are generally unsecured debts that are not attached to any collateral. When you call them, ask for a supervisor up front. The clerks that answer the phone do not have the authority to grant any relief from payments. Some credit card companies will not even discuss payment adjustments until the account is assigned to collection. Until it is assigned to collection, most companies will not accept anything less than the minimum payment.  When the collection division of the credit card company can no longer collect money from you, they will sell the rights to collect the debt to an outside collection company.

When your account is sold, the collection has one way of getting you to pay the account; they harass you by phone, over and over. You need to know that you still have rights under the law. New laws on the books prevent the collection company from calling you before 8am and later than 9pm. Those times are in your time zone, not their time zone. They may threaten you with seizing assets or other threats, but for them to seize any of your assets, they would have to go to court and be awarded a judgment. If you become overwhelmed with these phone calls every day, you can stop them by sending the collection company a letter which states that they are to stop calling you and request that they contact you only in writing. Please do not hesitate to seek legal advice if things get too far advanced with these collection agencies. Another good source for help is the Consumer Credit Counseling Service in Mobile. Their phone number is 251-602-0011 and their web site is www.cccsmobile.org . They have professional counselors that are available to help you for little or no costs.

If you owe the I.R.S. for prior taxes, you can ask them to suspend collection on your account. They will suspend collection if you do not have the ability to pay them after you pay necessary living expenses. You can go by their office at 1110 Montlimar Drive in Mobile and ask for help. Please be aware that money received from BP or the new government claims service will be taxable and that tax liability will be for income taxes, social security tax and medicare tax. The SSI and Medicare taxes are around 15% and state and federal income taxes are around 15% for most working folks. You will need to save 30% or so of the amount you receive from BP to pay these tax liabilities. You can make estimated tax payments to both the IRS and State Dept. of Revenue in Alabama.

Folks in Baldwin County are going through a tough time right now. The Alabama Cooperative Extension System is holding educational programs to help folks with financial and stress problems. On Tuesday, August 10th, there is a special workshop being held at the Gulf Shores United Methodist Church classroom across from the church in the Winn Dixie shopping center. The class is being held from 6-8 pm. We will teach on financial subjects and how to deal with these phone calls and the stress that comes from financial problems. On August 23rd, we will have a workshop for the unemployed at the Fairhope Library from 6-8 p.m . Another Unemployment workshop will be held at the Gulf Shores United Methodist Church on August 24th, from 6-8 p.m.  Al l these workshops are free to the public and are designed to help folks with real solutions to financial problems.

If you are having financial problems; whether they are a result of the oil spill or not, you will benefit greatly from attending these workshops. When BP leaves and the media moves on to covering other topics, the Alabama Cooperative Extension System will be here to help folks with these financial difficulties.

Phone: 937-7176 or 943-5061, 928-0860, ext. 2222

The Alabama Cooperative Extension System (Alabama A&M and Auburn Universities) in cooperation with the U.S. Department of Agriculture is an equal opportunity educator and employer.