New Concerns Over Credit Card Debt Collection
http://thedianerehmshow.org/shows/2012-08-21/new-concerns-over-credit-card-debt-collection
Americans are $21 billion dollars behind on their credit card debt. Banks are increasingly taking borrowers to court, suing them for payments owed. In many cases, these lawsuits rely on false documents, incomplete records and generic testimony from witnesses. State judges report that some lenders try to collect money that has already been paid or increase the size of the debt by adding fees and interest. Banks defend their procedures and insist their court filings are accurate. But consumer groups warn these cases are reminiscent of the mortgage foreclosure crisis with outcomes just as devastating. Diane and guests discuss new concerns over credit card debt collection in the U.S.
Guests
Thomas Pahl
assistant director, Division of Financial Practices, Federal Trade Commission
Peter Holland
director, Consumer Protection Clinic at the University of Maryland Carey School of Law
Kathy Kristof
contributing editor, Kiplinger's Personal Finance
Steve Bartlett
president and chief executive officer, The Financial Services Roundtable
Comments
Please familiarize yourself with our Code of Conduct and Terms of Use before posting your comments.
I'm not concerned, go get em! I'm tired of paying for the irresponsible dregs of society, particularly the federal government.
Here's a chance for people to learn a lesson about personal responsibility. There are a number of reasons why it is important that people pay up when they use credit. Chief among them being the rest of us will pay for it in the long run when we let people skate on their debt.
Dear fool me:
I'm always impressed by people who think they can comment on a show before it airs.
Negatively impressed!
That goes for you too, mnemecek.
I didn't comment on the show I commented on the topic. So if your going to comment on what I say, do me the honor of reading, not knee-jerk reaction.
Etaoin Shrdlu wrote: Dear fool me:I'm always impressed by people who think they can comment on a show before it airs.Negatively impressed!
Explain why they allow or more accurately encourage commentary before the show by permitting early posting. Just like your Rand rants, your threatened by anything you can't control and seek to undermine it with vainglorious dishonest analysis.
After Capital One sent the vikings through my wallet in 2008 by lowering my credit limit to $1000 under my balance, then socking me with hundreds of dollars in penalties and a 3x jump in my interest rate, I learned my lesson. Mind you, this was done despite a stellar payment history and a FICO score above 720.
Since then, I have moved away from big banks for loans, credit cards, etc. and to a local credit union.
It should be noted, if you use a local credit union for your credit card, they have to follow your state's usury laws - not the criminal usury laws exported by South Dakota or Delaware.
I recently settled a credit card debt with American Express. I tried settle the debt over a year ago and all they would say "pay the debt or we going to sue you" and they did! After reaching the settlement they tried to offer me another credit card. Who is really irresponsible in this situtation!
Unable to make ends meet I have met people in their 80's who used credit cards to make ends meet. What percentage of these people struggling with credit card debt are in the winter of their lives? I have read that many of these people are walking away from their debts and are difficult to collect from
My twenty-year old nephew just had his savings account garnished due to his parents' credit debt here in Texas. His parents incurred the debt when he was a minor. The bank account was also opened when he was a minor – with his mother’s signature as co-signer on the account. The debt was in his father’s name. Parents divorced about a year ago. Recently the creditor/collector contacted Dad looking for payment (this is after a default judgment was obtained by Equitable Ascent Financial). Dad claims debt was incurred for Mom’s personal business and gave them her information. The collector used this information to find my nephew’s bank account and wipe out all his hard-earned savings. Is this legal? It seems so wrong.
I have a fairly common name. I no longer file a change of address with the post office, as when I have in the past, I get demands for payment from debt collectors for debts that are not mine. I don't want the harassment.
Fascism rears its ugly head in credit card prison....
When I got my credit card I had a very successful business, always paid on time and always extra than the minimum. Then the economy imploded, I lost my business, and long story short I could not find work, I could no longer physically do the work I used to do (painting contractor) I had no choice, I had to live off my card just 1 card. It came to the point where I could no longer make the payments. I could not find work no one hires 60 year old women with no job skills, can't blame them. I TRIED to work with citi bank, I asked them to close and freeze the account at the current rate. They said they couldn't, I had to choose between being homeless or pay my card bill. I chose not being homeless, my minimum payment per month now is $3,000.00. In 3 weeks I will be homeless. I would love to pay my bill but I can't. and they wont work with me and I can't file for bankruptcy because I have only one bad card. I am paying my student loans on time, tried to get retraining to get back in the workforce. I am very scared and I am not the "dregs" of society, circumstances change and sometimes not for the good.
Credit cards are small potatoes in comparison to private student loans.
Pay your bills, avoid the whole situation.
The buying and selling of debt as the basis for economic "growth" is not healthy for us as a society. It invites fraud -- I filed a complaint with the FTC when one collector claimed I still owed money to a satellite tv company with whom I had severed my business relationship. The debt was not owed -- I had returned the hardware months before I ever started receiving notices. It took a lot of work on my part to get the company to call off their collectors - and they refused to notify the credit bureaus that the collection had been a mistake.
Do yourselves a favor and settle or use a reputable settlment company ( not debt counselor or consolidation ) if you can't make ends meet, like reduction in income or other unforseen event when you incurred the debt. Just stop paying and then most of the time they will settle for quite a bit less. Their business model accepts the risk of default and prices it in, so don't sweat it.
I just completed a settlement program and it was just what I needed, really worked great, and avoided bankruptcy.
I know that my credit score took a hit, but I don't care. I avoid credit now like the plague anyway. And the score will come back up shortly, especially since income to debt ratio is higher now. Keep in mind that they know that settling is in their interest over bankruptcy because they get some money and they hope they can get you on the hook again in the future, and it is better for the economy.
My son in college just got some ccard offers in mail although he has no income and is in second year. They really want to get you hooked.
I have several questions, but I'll focus on this one...when the very clear statement provides a warning regarding late fees...why does it say "up to" such and such amount? Do they ever not assess the full amount? If yes, what are the criteria? We pay the balance of our card every month and have done so for over a decade. We have been late 5 times in that decade and have always been assessed the full late fee. I had inquired...to no avail...to understand why an on time full balance pay off account did not meet some type of criteria for a lesser late fee due to hundreds of on time full balance payments. I only say this because of the language "up to" used in the late warning.
I encourage banks to go after dead beat borrowers. If they didn't we the responsible bill payers will just end up with higher user fees and that hurts everyone, businesses and consumers. I have had many lines of credit over the years and never had any trouble worth mentioning. I have dealt with people that don't pay their bills in the apartment management business, the excuses are always ridiculous and the logic behind the excuses if from another reality.
Rony, I sympathize with your circumstance but you were out of money before you decided to use the credit card, you should have faced reality then instead of postponing it. It is not the responsibility of the bank to act as a welfare program.
@hainc
How's the view up there on your high horse? Let's hope your trusty steed doesn't break a leg... It's hard to look down your nose when you land face first in the mud.
Dear Diane
The credit card companies are feathermerchants. We had issues with CC companies due to the economy. Every time we tried to cantact the credit departments to try to get a lower payment, etc. We were told to wait until account went into default. That was not acceptable to us so we filed a Chapter 13 and pay on a setteled amount and our lives were better for it.
This brakes my heart. We have families living on credit card because they have been DOWNSIZED. Some Captilist with nothing but greed in his heart did not like the bottom line of the pay role account. The jerk screwed these poor people and guess what, they are in debt up over there heads and both Mom and Dad are working two jobs just to keep a roof over their families heads.
In my county in one school system alone there are over 600 homeless children. Is this right no but the greed mongers do not care. they just keep shuveling durt over the top of these poor people. The Govener of this state cut a lot of the program so that he could give more money to his rich friends. "We the People" must do something about heinous crime being waged on the small folk ot this once great country. We have let the rich crawl over the top of us and take all of what is good about this country away. This crime must be fought by all of us the small folk of this country, do not let the money people win. Vote that is your power. If yo see something that is wrong let everyone know speek up for your self and those that have no voice. Please.
amen-same story as usual, banks socializing losses (taxpayer bailouts to and free court protection for these lawsuits ) and privatising profits. Banks unethical behavior caused much of this current misery in the first place.
I got a credit card during my first year of college...didn't need a co-signer. Ended up going to credit counseling and paying off the debit 5 years later - $3000. Recently received a notice that I owed $15,000 to a company that had bought the original debit. That company had no record of my past payment actions, nor did they engage in fair credit collection practices (extremely abusive), they could not provide the name of the original collector or the year of acquired debit or the exact amount originally owed.
However, I was threatened with a law suit, jail time and wage garnishment. Additionally, the individual called my mother in law, my spouse threatening their financial security - but refused to have any contact with me. I ended up doing a person search and discovered he was posing as an attorney at a debt collection agency but indeed was not. The BBB had no record of his business and I found 3 formal complaints against his pseudo business.
I left a message indicating my rights according to the fair debit act & he ceased harassment.
In college I worked for a large chain store. Though I knew I could not afford or qualify for a credit account, my employer absolutely insisted I apply for their credit ... and was summarily denied (duh, told 'em so). Much later a friend begged me to sign up for a card at his employer's bank ....as a favor, to help him with a high pressure marketing campaign - it became my first card. As a bank contractor/employee I was aggressively "encouraged" to have a card there. I receive many solicitations weekly via mail, phone, spam, and even in various stores, even in an amusement park. We get offers pre-printed - our own names & many details in place. Also such offers with bogus names (some database manipulates combinations of our names, ex spouse name, adult children who have long since moved away, and combos of names that never existed). I have always paid off my accounts on time (except for when my ex put items on a closed account WITHOUT even having a card in her possession). It's been many years since I paid a finance charge on such accounts.
But it IS a fact that the credit industry has gone hog wild with pushing credit down the public's throats. And fraudulent activity is insanely rampant. Much blame goes to the lending industry ...... AGAIN (as in the mortgage debacle).
AND it is NOT a political issue !!!
I think the majority of people having problems with creditors is due to "ignoring" demands for repayment. You don't return calls, you don't write letters, you don't email. And then before you know it, a collection agency has their teeth sunk in you. Collection agencies in their various forms are the big offenders here with their threatening letters and pesky phone calls. OOOHHHHH, I'm so scared and threatened! lol! At least it's not like the good ole days when "shylocks" just sent some thugs to your house to remind you of your debts. And then you incured some more debts getting your broken bones reset.
Human nature being what it is, most folks think ignoring the problem will make it go away. I would bet that hasn't worked even once!
Money doesn't grow on trees, learn to live within your means before you turn your life into a trainwreck! Sounds like good advice that our elected leaders could use as well.
To those commenters, who are saying people should simply pay their bills, do you not see the stories of people who are erroneously or unjustly pursued for debts not owed? I posted an earlier comment on this story about my nephew having his bank account garnished for his parents’ debt. My husband is being dunned by collectors for a twenty-year old debt that was paid in full. We were dunned by Linebarger, Goggan, Blair & Sampson, LLP for back property taxes for an auto repair shop we never owned. When I was first trying to establish a credit record for myself, I opened an account with one of the few credit card companies that would give me a card. Somehow I was always ending up with late fees even though I mailed my payments (in the days before paying online was an option) with plenty of time to spare before the due date. Years later I got notice that I could participate in a class action settlement against that credit card company because they had been deliberately holding timely payments and posting them late so they could add fraudulent late fees onto customers’ accounts. We are not all deadbeats or "the dregs of society." A lot of creditors and collectors behave very badly. And there are a lot of honest, hardworking people who fall behind when bad luck strikes. Then the sharks start circling making a bad situation even worse.
bluebirdohappy, Just wanted to let you know that I am sympathetic to those who are being harrassed by collection agencies and the like. Especially those who fall on hard times and can't make payments. I also have a few other comments:
Your nephew should of removed his mother from his savings account when he turned 18. I started savings accounts for all 4 of my children and when they turned 18, I went and got my name taken off them. When a creditor gets a judgement against someone in a court of law, they can garnish or take funds from existing accounts (that's the law). At best, your nephew could claim ignorance of the law, but it's not the fault of the bank, the credit card industry, or anyone else.
Creditors who you owe money, and those who are just using "gestapo tactics" to strongarm you, still have to go to court and get a judgement against you. Write a letter and rebut the debt if that's the case. Creditors may still put stuff on your credit report, but you have the right to post a reponse in your credit report as to why you don't owe it.
Not everyone "refuses" to pay debt. Some cannot after job loss, illness, or other life events that can happen to anyone at any time. If you get a CC company that will not work with you and sells your debt for pennies on the dollars, you can be assured that the collection company will use an array of scare tactics to get whatever they can. Debt collectors are scum, plain and simple. They count on you being scared and just handing over money without knowing what - or if - you really owe.
If you incur a debt, you are obligated to pay it. I think everyone agrees with that.
But for one reason, I can certainly criticize the banks. For quite a few years, up until the financial crash, my mailbox was inundated day after day with credit card offers. I suppose I would trash at least 20 every week.
This is totally irresponsible on the part of the credit card companies. They should have known that this would encourage some people to go over their heads in debt, and this certainly happened. The credit card companies are guilty of tempting people to do something that might not be good for them. It is quite simply wrong to do this, even though it probably isn't illegal.