Last month, employers only added 115,000 new jobs, which was significantly lower than the number of jobs created the month before.

And sources observe that the flagging employment numbers could pose political trouble for President Barack Obama, who is hoping to get re-elected this fall.

Unemployment Rate Remains Dangerously High

According to a report from Reuters that analyzed data collected by the Labor Department, April’s employment numbers were not pretty:

• Stagnant rate. The employment rate actually went down by a tenth of a point to 8.1, which represents a three-year low, but sources say the rate dipped only because thousands of people decided to stop looking for jobs. Employers only added 115,000 new jobs in April, which is not enough to sustain prolonged growth.
• Bad trend. April marked the third straight month in which the total number of new jobs declined, sources say. John Doyle, a currency strategist in Washington echoed most analysts’ views by saying that the numbers show “sluggish growth.”
• Positive news. Not all the news was bad. Sources indicate that the government revised its prior estimates for payroll growth in February and March by more than 50,000 jobs. So, while this doesn’t explain the bad April numbers, it does show that previous months saw more employment growth than expected.

Presidential Election May Hinge on Employment Numbers

Sources suggest that the high level of unemployment, which pushes many American into Chapter 7 bankruptcy, could spell trouble for President Obama in his re-election campaign this fall.

Obama, entered office during one of the worst recessions in recent American history, but his Republican opponent, Mitt Romney, will waste no time in pinning the figures on the President if the economic numbers remain anemic.

In response, Obama will probably observe that the unemployment rate was as high as 10 percent during the height of the recession, so the job figures could certainly be worse.

Still, sources say that the unemployment rate is at least 2 percentage points than its historical average over the past half century. And, even more troubling, the Federal Reserve does not expect the jobless rate to rebound for several years.

Experts expect the Federal Reserve to maintain its current policies, but economist Sean Incremona told Reuters that it will “obviously” be “on guard now that employment growth is not picking up and is more likely to slow.”

For those of us who want to stay away from using our plastic in times of need, there are options.

The Wall Street Journal’s SmartMoney section recently acknowledged a surprising source that may be able to help you retrieve funds and pay a small interest rate in doing so.

Their suggestion: Uncle Sam.

It is a little known fact that the IRS can be a source of funds in times of need or instances where extra funds are needed in the short-term.

Who Is Eligible?

This little-known services isn’t available to everyone. Here is a list of the requirements needed to be eligible.

People living off of:

• Social Security benefits
• pension payments
• retirement account withdrawals
• any similar source of income (varies)

Salaried employees are required to pay federal income tax through payroll withholding. The eligibility of salaried employees borrowing from the IRS is non-existent at this time.

Experts suggest contacting your local IRS office to confirm your eligibility before making any financial decisions.

How It Works

The source of the income wouldn’t exactly come from the IRS; instead what you would do to collect the money is postpone some estimated tax payments that you would otherwise be making to the IRS.

Permission from the government is not needed in performing this procedure. You will have to make up the difference of the missed payments later and the IRS will put a interest on the difference.

The current interest rate is at 3%, well under what current loans and credit cards are charging in interest. It is important to note that the interest rate is subject to change every quarter but experts suggest the rate will most likely stay favorable in the immediate future.

Individuals who meet the requirements are generally instructed to make tax payments every quarter to fulfill their tax obligations. They are not required to withhold income in order to pay the IRS on a regular basis, but are required to make payments this year on April 17, June 15, Sept. 17, and Jan. 15 of 2013.

Experts warn that this borrowing system is for short-term purposes only and must be reconciled by April 15, 2013. The sooner you reconcile the difference in payments from one pay period to the next, the less interest you will end up owing.

However, if you fall behind after that deadline the IRS will charge you an extra half a percent per month which equates to a 6% interest rate. That will be added on to the current rate of 3%, causing the delinquent borrower to pay 9% interest rate on the borrowed funds and past missed payments.

Is It Right For You?

This lesser known form of borrowing can be a great tool for people in dire need of an extra kick of cash but be warned, experts suggest being diligent in repaying the borrowed funds as soon as possible to avoid paying unnecessary amounts of interest.

More patients are facing the difficulty of paying their medical bills, especially as more Americans are subjected to more of the share than in the recent past.

About 10 years ago, medical providers collected no more than 8 percent of their revenue from patients. According to The New York Times, that number is now closer to 20 or 30 percent of revenue stemming from the actual patients in some markets.

Hospitals and medical providers are turning your debt over to collection agencies faster than ever before, causing an alarming trend of “dings” on subsequent credit reports.

Many times, medical bills can be convoluted with errors. Over billing, insurance providers under-covering patients and long wait times for answers pertaining to your medical bills are all reasons why your credit score can be negatively affected.

This maniacal web of a mess that is created is hard to figure out and uncover. Adding fuel to the fire, all of these factors are time sensitive and if they are not dealt within a certain period of time, your credit score drops. Consumers have 30 days to dispute any debt, especially debt related to medical bills.

Consumers can request the credit bureaus to eliminate the “delinquent” debt from their credit reports if the debt is invalid.

Ruthless Reputations

Recently, collection agencies have come under heavy fire for their practices within the medical debt collection industry.

Accretive, one of the nation’s largest debt collection agencies that deals with medical bills, was chastised for their reportedly aggressive tactics in recovering debt from medical bills. It was reported by The New York Times that the company would pursue medical debt from patients that were convalescing after surgery or waiting in emergency rooms while still at the hospitals where they received treatment.

Bloomberg News reported that the company strongly denies those claims.

Claims ranged from patients being pressured before treatments were issued to bedside pressure after treatments were administered.

Whether the report is accurate or not, the fact is that collection agencies will go to great lengths to collect their debt for their clients. Experts say to protect yourself by checking your credit score on a regular basis and to dispute any errors or debt reports that are inaccurate.

A 2010 Commonwealth fund report stated that an estimated 9.2 million out of the 20 million people contacted over an unpaid medical bill were contacted because of a billing mistake.

Experts say that by doing your due diligence when it comes to medical bills, you can avoid unnecessary marks on your credit score.

In addition, the foreclosure of more than five million homes since 2007 has had a negative impact on people who were able to keep their homes, as their home values plummeted thanks to neighborhoods gutted by creditors.

And, despite news that the foreclosure crisis may be dissipating, experts still expect three to five million foreclosures in the next few years.

Children Suffer from Home Foreclosure

According to a recent report from the Center for Responsible Lending, one out of every 10 homeowners in the United States is seriously delinquent or facing foreclosure. This has had a terrible impact on the country’s children for several reasons:

• Displacement of families. Sources indicate that eight million children will ultimately be affected by the foreclosure crisis. This figure includes both children of homeowners who lost their homes and children of renters who were evicted when they weren’t able to afford their rent. The state with the biggest problem is Nevada, where almost 20 percent of children have been adversely affected by foreclosure.
• Effects of foreclosure on kids. According to Julia Isaacs, an analyst at the Brookings Institution, children are the “invisible victims” of the foreclosure crisis because the loss of their homes can foster emotional trauma, missed days at school, a loss of nutrition, and fewer trips to a family doctor.
• Other effects. In addition to the developmental difficulties faced by children during foreclosure, shuttered homes can increase crime in their neighborhoods, and the loss of home equity can force many parents to dip into their kids’ college savings plans in order to find a new place to live.

Stopping Home Foreclosure Through Chapter 13 Bankruptcy

So, stopping your home from being foreclosed could offer a wealth of benefits to young children. The trick, however, is to stop the foreclosure in the first place.

By filing for Chapter 13 bankruptcy, many homeowners have been able to stop the foreclosure process and keep their homes out of the hands of creditors.

In Chapter 13, homeowners are given a set period of time in which they can attempt to catch up on their mortgage payments. If, at the end of the three to five year payment program, the homeowners have made consistent payments, the remainder of their debt may be forgiven.

The Associate Press reports that Orman’s card is the first of its kind in assessing the millions of Americans who fall outside of the traditional financial system currently in place in the United States.

Past celebrity-endorsed debit cards have been chastised for their exorbitant activation and annual fees.

Prepaid Criticism

Russel Simmons of Run DMC fame and socialite television personalities The Kardashians have both introduced prepaid debit cards to the market in recent years.

However, the cards are criticized for not serving as a long term credit builder but rather as a quick fix for the millions of Americans dealing with tough financial situations. Orman’s card is not immune to this criticism either.

Fee’s for such things as pay by check features and over-the-counter cash withdrawals have emerged as possible hidden fees associated with Orman’s prepaid debit cards.

These cards are generally marketed to lower income households that cannot secure a debit card through financial institutions such as a bank or credit union.

Many financial institutions require customers to have a certain credit score to open checking accounts that can be linked to a debit card.

Prepaid debit cards require no credit check but do charge fees for activation, overages, and operating costs.

Suze Orman plans to change this.

Buying Your Way To A Better Credit Score

In an attempt to rival the largely successful Walmart MoneyCard, Orman only charges a $3 activation fee to obtain a card and a $3 annual fee, according to the Associated Press.

What makes her card different than the past celebrity-backed prepaid debit card is the potential to build crucial credit resulting from the responsible use of the cards.

Orman is working with TransUnion, a major credit reporting agency, to create a new kind of credit score that assesses a customer’s spending habits.

According to MSNBC, currently the card does not affect your credit score but the information from the purchases on the cards is being sent to TransUnion for research into developing a future system of assessing the data in hopes to implement a credit building platform.

In addition to potentially building credit, Orman’s card offers free perks such as unlimited access to personal credit scores through TransUnion as well as unlimited free use of Allpoint ATMs which are positioned in national retailers such as Walgreens, Target, and Costco.

Changing The Way Credit Is Assessed

Suze Orman’s card could potentially change the way all credit reporting agencies and banks assess consumer credit scores.

According to the Associated Press, an estimated 60 million consumers do most of their transactions by using cash or cash alternatives such as prepaid and bank issued debit cards.

In 2011, an estimated $70.7 billion was spent using prepaid debit cards compared to the $2.7 billion spent in 2005, according to the Mercator Advisory Group. They also predict that spending on prepaid cards will top $120 billion in 2012 if the trend continues.

Sources say that prom night will cost the average American family with a teenager bound for the big event more than $1,000 this year, and many families will go into serious credit card debt in order to afford the affair.

And, perhaps more disturbingly, families in the lowest income brackets tend to spend far more on prom night than the average family.

Prom Night Creates Debt for Many Families

According to a report from Fox Business, prom night has turned into a financial disaster for many American families:

• High costs. This year, the average American teenager’s family will spend $1,078 on prom night, which is an increase of almost 34 percent over the cost of prom ($807) in 2011, according to a survey by Visa.
• Regional disparity. Interestingly, parents in the Northeast will spend the most, at an average of $1,944, while parents in the Midwest will spend the least, at an average of only $696. Of course, despite their frugality, even Midwestern parents will be spending more than they probably should.
• Income disparity. Perhaps most bizarre are the statistics showing that low-income families will spend more than the average family. Sources say that parents who make less than 20,000 annually will spend an average of $1,200 on prom night, while parents who make between $20,000 and $29,000 will spend more than $2,600. Oddly, parents with incomes of greater than $75,000 will only spend $900 or less, on average.
• Greatest expense. Not surprisingly, the greatest expense reported by parents is the dress. The cost of prom dresses rose by 25 percent in the last year alone. And parents don’t seem eager to avoid the cost of this all-important accessory. According to one industry insider, “[i]f parents are going to skimp, it’s not going to be on the dress. They buy the dress first and plan everything else around that.”

In addition to the dresses, parents of teenagers also invest hundreds of dollars in other prom accessories, such as limos, hotel rooms, and entertainment for parties that occur after the prom.

Parents with tight finances ought to take heed of these staggering statistics, and set a significantly lower budget for their children’s prom nights, lest the special night send the family into debt, forcing them to file for bankruptcy to fund a single dance.

This study merely confirms a suspicion that bankruptcy experts have long held about the proliferation of bankruptcy filings immediately after consumers receive their tax refunds.

According to a report from USA Today, during the first part of each year, there is usually dramatic jump in the number of people filing for bankruptcy due to the sudden infusion of cash from the federal government.

Tax Refunds and Bankruptcy are a Happy Match

According to USA Today, the trend of people filing for bankruptcy after receiving their tax refunds has become even more pronounced over the last couple years:

• Change in laws. After the government made significant changes to U.S. bankruptcy laws in 2005, the costs of filing bankruptcy rose by a substantial margin. And while these costs are still often well worth the initial investment, many individuals have had to delay filing as they wait for their tax refunds.
• Filing fees. According to the U.S. Government Accountability Office, the average cost of the filing and legal fees that are typically associated with a bankruptcy filing are roughly $1,500, which is a big jump from the average cost (about $920) in 2005. Still, though, if consumers are thousands of dollars in debt, paying a bit of money for bankruptcy relief may be well worth the investment.

So, the changes to bankruptcy law in 2005 have shrunk the potential pool of bankruptcy applicants by a modest amount, which forces many people to wait for cash infusions, such as a tax refund, in order to pay for bankruptcy.

Social Justice and the Costs of Bankruptcy

Many observers have criticized the 2005 bankruptcy law amendments because they have shut off bankruptcy access for some Americans with limited assets.

While the changes to the law were intended to prevent abuse of the bankruptcy system, some critics argue that the new law may be doing more harm than good.

According to Jialan Wang, an assistant professor of finance at Washington University, “[t]he people who really need bankruptcy are the ones who will be unable to pay for the fees.”

To be fair, this isn’t always true. Many filers have been able to reach creative financing agreements with their attorneys so they can afford filing for bankruptcy. But the overall trends suggest that lower-income consumers, particularly those facing unemployment, may face unfair hurdles in their efforts to seek debt relief.