How to fight back against Credit Card companies

[Zac]

Keep in mind that making partial payments on debts extends the statute of limitations (in most instances). 

How far is a credit card company willing to go to collect a judgment?  I don't know.  I guess it would vary depending on the individual and how much the judgment was.  In many cases, credit card companies assign their debts to collection agencies that work on a percentage recovered.

I have had the dubious experience of dealing with credit card companies this year over defaulted unsecured debt.  Many including Bank of America, American Express, Chase, HSBC, and sometimes Citibank will settle for a small fraction (20-25%) of the balance.  If you only have only small balances (< 2-3K), they may be less accommodating.  Bank of America has been the best of the bunch with them being the most courteous (even sympathetic), professional, and doing settlements themselves instead of farming it out to collections agencies as most of the others do. 

Banks that are far less agreeable include Capital One and Wells Fargo.  Some banks are also more litigious than others and will file suit even before the charge off date, presumably in hopes of getting an easy default judgment. 

If you send them any information as part of an application for a financial hardship program, be sure to mark such documents "for settlement purposes only" and minimize the information you provide.  I had one bank that shall remain unnamed sucker me into to sending them information when they had no intent of offering anything.  Fortunately, I was a bit suspicious and redacted/marked the documents accordingly. 

Some banks such as BofA and HSBC report settled accounts as late paying and then "settled for less than full balance" in the remarks section instead of as "charged off as bad debt".  Others such as Chase seem to report settled accounts as charged off even though they were settled before the account's chargeoff date.  And Citibank has an almost inexplicable policy of sending accounts held by the same person to different collection agencies which makes arranging settlements much more difficult if not impossible. 

[AntiSocialite]

The right way to break up with your credit card

Wow.

The article linked here is fairly mainstream and it makes some great points for people wanting to go with the flow, for now.

But, by far, the most glaring point is missed. That is the fact that the only reason for worrying about one's credit score is to facilitate going further in debt. If you aren't in debt, then you have 100% of your revolving available no matter if it totals $50,000, $10,000 or $500. So, for people who are getting their interest rates jacked up, they can opt out, take the temporary hit to their credit scores and pay down the revolving until they have 100% of it available again. Presto. Scores go back up. If you read the fine print on those notices, you have a window during which you can prevent them from jacking the rate higher than it is now, as long as you agree to the account being closed and paying down the remaining balance as agreed.

If you're unable to whittle your debt down with each paycheck, you are insolvent. The best bet is to face it and do something about the situation sooner rather than later. Negotiated settlements or bankruptcy are available options. Again, at this point, your credit score doesn't matter because you shouldn't be going deeper into debt anyway. You'll recover much quicker by getting a handle on it now.

Unsecured consumer debt, my friends, is a thing of the past for the vast majority of us. With the secondary securitization markets locked up for the foreseeable future, banks will finally have to charge rates that are realistic. This will have a natural limiting effect on creation of new credit lines.

Your FICO score is not nearly as important to your prosperity going forward as it was in the recent past. Try to remember that prosperity is *relative*. Wearing last year's Prada isn't nearly as embarrassing when everyone else is doing it too.

[Big Scotsman]

Keep in mind that making partial payments on debts extends the statute of limitations (in most instances). 

How far is a credit card company willing to go to collect a judgment?  I don't know.  I guess it would vary depending on the individual and how much the judgment was.  In many cases, credit card companies assign their debts to collection agencies that work on a percentage recovered.

I have had the dubious experience of dealing with credit card companies this year over defaulted unsecured debt.  Many including Bank of America, American Express, Chase, HSBC, and sometimes Citibank will settle for a small fraction (20-25%) of the balance.  If you only have only small balances (< 2-3K), they may be less accommodating.  Bank of America has been the best of the bunch with them being the most courteous (even sympathetic), professional, and doing settlements themselves instead of farming it out to collections agencies as most of the others do. 

Banks that are far less agreeable include Capital One and Wells Fargo.  Some banks are also more litigious than others and will file suit even before the charge off date, presumably in hopes of getting an easy default judgment. 

If you send them any information as part of an application for a financial hardship program, be sure to mark such documents "for settlement purposes only" and minimize the information you provide.  I had one bank that shall remain unnamed sucker me into to sending them information when they had no intent of offering anything.  Fortunately, I was a bit suspicious and redacted/marked the documents accordingly. 

Some banks such as BofA and HSBC report settled accounts as late paying and then "settled for less than full balance" in the remarks section instead of as "charged off as bad debt".  Others such as Chase seem to report settled accounts as charged off even though they were settled before the account's chargeoff date.  And Citibank has an almost inexplicable policy of sending accounts held by the same person to different collection agencies which makes arranging settlements much more difficult if not impossible. 

Zac, Good stuff!  How long is it from the first default until the charge off date?  I guess what I am asking is how long do you have from the first missed payment until the bank dumps the loan off to a junk collector?

Also, what is the best source of information you've found for legalities of dealing with the CC companies (books, websites, etc). 

[Zac]

Zac, Good stuff!  How long is it from the first default until the charge off date?  I guess what I am asking is how long do you have from the first missed payment until the bank dumps the loan off to a junk collector?

Also, what is the best source of information you've found for legalities of dealing with the CC companies (books, websites, etc). 

It varies between creditors, but creditors typically charge off loans after they remain unpaid for 180-210 days (6-7 months) from the date the account went past due.  I don't know how long it is until they actually sell the loans to a third party.  However, many banks with the exception of Bank of America contract with collection agencies to attempt collection of the loans "on consignment" when they become beyond 120-150 days past due.  "On consignment" means the collection agencies work the loans by phone calls and mail, but don't own them.  If they fail to collect, the loans are passed back to the bank.  Many of the collection agencies will negotiate settlements on behalf of the bank, but need to send the deals to the bank for approval.  I found most collection agencies working on behalf on of the banks on consignment will eventually accept 25% to settle. 

Also, what they offer to settle for may vary depending on their assessment of your situation.  I was also told by a lawyer with some experience in these matters that some of the larger credit card accounts (>15-20K balance) are difficult to sell to collection agencies. 

I don't know where is the best place to find info on this, but found this book to have some helpful hints:

http://www.amazon.com/Pay-Not-Insider-Secrets-Creditors/dp/158062944X/ref=sr_1_10?ie=UTF8&s=books&qid=1256855541&sr=8-10

[Big Scotsman]

Thanks Zac.

Like all of us, I have a lot of friends and family that are losing jobs all the time.  The information you are giving here is a real help, so thank you for sharing your experiences.

[ArmaGoof]

I saw this story on CNN last night and now there has been action taken:

http://www.cnn.com/2009/POLITICS/10/29/credit.card.relief/index.html

When the CC companies get called out by the MSM, they are quick to remedy the "isolated" case, but remain steadfast in defense of their overall practices.  The article mentions that some congresscritters are behind immediate freezes on CC interest rates, but we all know where THAT will end up.  But I found it encouraging that the MSM is deliberately airing and publishing that which the money boys would prefer remain hidden behind the curtain.

I can understand how a CC company with millions in default would seek to raise more money from those who do pay, but damn, they sure are idiots about it.  Throwing in a fictitious $10 charge on 10% of their customers' bills every month would probably end up being entirely missed by most, refund those who protest, net gain.  But no, they DOUBLE interest rates!  That's like a cat burglar ringing the fricking doorbell before he slips into your house! LOL

What a bunch of idiots - they don't even know how to steal without getting caught.

[roccman]

I wrote the letter vision posted for my mom.

It worked.

[BlindMansBluff]

The way to fight back is not with schemes for getting out of paying them, but by making them irrelevant in the first place. Refuse to do business with them, and use your thinking for constructive purposes instead.

[TechGuy]

II can understand how a CC company with millions in default would seek to raise more money from those who do pay, but damn, they sure are idiots about it.  Throwing in a fictitious $10 charge on 10% of their customers' bills every month would probably end up being entirely missed by most, refund those who protest, net gain.  But no, they DOUBLE interest rates!  That's like a cat burglar ringing the fricking doorbell before he slips into your house! LOL

What a bunch of idiots - they don't even know how to steal without getting caught.

FWIW: Most credit card companies issue bonds for credit card debt. As charge-offs and dequencies risks, Bond holders demand higher interest rates to offset the increased risks of lending. A significant amount of the higher interest rates is coming from the bond buyers of CC debt. The majority of Credit Card companies make money on servicing fees, not the debt.

Had the gov't not intervened with new CC regulations the banks probably would not have need to drive up interest rates so high. If your angry go yell at Washington. The more that Washington medals in the economy the worst it will get. Seems rather stupid that Congress now wants to "lock" in CC interest rates "after" the CC interest rates already soared. Yes, lets lock in the higher rates forever!

"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"
--Ronald Reagan

Call me crazy, by why would anyone want to pay interest on stuff they buy?  If you can't afford it, don't buy it! Save up your money and pay for it in full! If your not willing make a sacrifice to save money to buy it, then you really don't need it! Debt is an instrument of self-destruction as much as heroin is to a drug addict. It is the disease that is destroying america.

I really wish Credit Cards never existed, they've caused more misery than even drug abuse. There is a bright side to much higher CC interest rates. A large number of people will stop buying stuff using debt. Stuff that they can't afford in the first place.

[Zac]

FWIW: Most credit card companies issue bonds for credit card debt. As charge-offs and dequencies risks, Bond holders demand higher interest rates to offset the increased risks of lending. A significant amount of the higher interest rates is coming from the bond buyers of CC debt. The majority of Credit Card companies make money on servicing fees, not the debt.

Had the gov't not intervened with new CC regulations the banks probably would not have need to drive up interest rates so high. If your angry go yell at Washington. The more that Washington medals in the economy the worst it will get. Seems rather stupid that Congress now wants to "lock" in CC interest rates "after" the CC interest rates already soared. Yes, lets lock in the higher rates forever!

This is such nonsense.  There have been prohibitions against usury throughout history because it is harmful to society.  Nearly all states in the US prohibited usury (typically defined as interest above 10% per year) until a loophole in the early 1980s circumvented those protections.  Usury should never have been allowed in the US.  Even the recent protections enacted in congress do not restore the prohibition against usury.   

"The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"
--Ronald Reagan

The republican party is such a bunch of hypocrites and Reagan started the undoing of the US that we're seeing now.  If they hate government so much, why do they seek to "serve" in it? 

Historically, the transportation, water, sewer and school systems in the US have been public and have worked well.

Call me crazy, by why would anyone want to pay interest on stuff they buy?  If you can't afford it, don't buy it! Save up your money and pay for it in full! If your not willing make a sacrifice to save money to buy it, then you really don't need it! Debt is an instrument of self-destruction as much as heroin is to a drug addict. It is the disease that is destroying america.

I really wish Credit Cards never existed, they've caused more misery than even drug abuse. There is a bright side to much higher CC interest rates. A large number of people will stop buying stuff using debt. Stuff that they can't afford in the first place.

Debt is unavoidable when the cost of basic goods such as housing and cars exceed what a typical person could possibly pay in cash.  The problem is not the debt, but the usurious interest rates which should never have been allowed.  If banks had not been permitted to circumvent the usury limits of about 10% annually, the banks would never have extended credit to those unable to pay to chase ever higher returns.

[ArmaGoof]

Call me crazy, by why would anyone want to pay interest on stuff they buy?  If you can't afford it, don't buy it! Save up your money and pay for it in full! If your not willing make a sacrifice to save money to buy it, then you really don't need it! Debt is an instrument of self-destruction as much as heroin is to a drug addict. It is the disease that is destroying america.

I really wish Credit Cards never existed, they've caused more misery than even drug abuse. There is a bright side to much higher CC interest rates. A large number of people will stop buying stuff using debt. Stuff that they can't afford in the first place.

Just another shining example of their idiocy.  Need more money? Use the strategy of pissing people off to the point they no longer trust you and leave you hanging with what they DO owe you.  Everyone with a financial club is getting everything they can now, because they know the well is just about dry. But no matter how much they can hoard, at the end of that, they won't be able to convince anyone to open a new CC account, no more than a child will touch a hot stove twice.  I fail to see any long term survival strategy in their actions.  As such, it clearly defines a lack of confidence that they believe there will even BE a "tomorrow".

[paracelsus]

Unsecured consumer debt, my friends, is a thing of the past for the vast majority of us. With the secondary securitization markets locked up for the foreseeable future, banks will finally have to charge rates that are realistic. This will have a natural limiting effect on creation of new credit lines.

Well, this isn't quite true. I have tens of thousands of dollars of unsecured debt based on unpaid hospital and medical bills. Prior to that, I had a completely blank credit report, as I haven't had a credit card since 1985 (I knew I was just not the type of person who could resist using them, so I just didn't get one). Nevertheless, because of those debts, there are a lot of jobs I can't be hired for and apartments I can't rent. So even if you don't believe in credit and don't use it, you can still be screwed by credit reports and by debt.

A couple of people have mentioned these collection agencies that buy up outdated debt and try to collect on it. These are the most unscrupulous collectors I have ever run across. Kooks. They actually threaten to put people in jail, call them obscenities, and tell all sorts of lies.  I have made a couple of them stop harassing me after I reported them to the BBB. What they did next was to sell the same debt to another company. Then you have to report THEM. But it does slow them down.

It is true that if you tell them not to call, they won't, although they usually will start calling again in the few months. You have to tell them in writing for it to be "legal." I did have one collection agency (of the kook variety I describe above) continue to harass me after I sent them two letters denying the debt and telling them to stop contacting me; I had to file a complaint with the state attorney general's office to get them to stop. However, when you send a letter forbidding further phone calls, that also kind of gives them the go-ahead to take you to court. In my state, if they get a judgment against you, they can go back to the judge and get permission to seize your bank account. I suppose they could seize your customers' payments if you had a brick-and-mortar store and they got a judgment against you and then got a judge to say it was okay for them to seize your customers' payments, in which case you would have to declare bankruptcy to get them to stop. I have never heard of this happening, though, and I hang out with plenty of merchants.

There is such a thing as being judgment-proof. But it means you really can't own much or have any kind of easily garnished income, like a wage.

[TechGuy]

Debt is unavoidable when the cost of basic goods such as housing and cars exceed what a typical person could possibly pay in cash.  The problem is not the debt, but the usurious interest rates which should never have been allowed.  If banks had not been permitted to circumvent the usury limits of about 10% annually, the banks would never have extended credit to those unable to pay to chase ever higher returns.

You failed to explain why debt is necessary! First off, we were discussing credit card debt, which can't be used to pay for cars or for homes. It's primary used to buy crap like wide screen televisions and other plastic pumkin crap, fancy resturant meals to impress family and friends, vacations, and you name it. What exactly did you buying using your credit card that was absolutely essential to your health and welfare?

Whats wrong with buy a used car instead of a buying a brand new car that depreciates the second you drive it off the dealership lot? What is wrong with renting? I have no debt. I rent and I pay for all my purchases in full. One of the biggest reasons why prices for homes and cars are so high is because of easy credit. Look how fast and high home prices rose when credit became cheap and easy when the fed dropped interest rates. Home prices doubled or even tripled in some regions because of the cheap and easy credit. Now all those people are suffering because of their debt folly.

If credit was much harder to get and banks required home buyers to provide a 20% downpayment, there would have not been a frenzy to buy homes and home prices would have remained stable. Which entity permit this to happen: The goverment. "I am from the gov't and I am here to help!" Did they really help or did they make the problem must worse?

Historically, the transportation, water, sewer and school systems in the US have been public and have worked well.

All of which were handled by state and local gov'ts until the federal gov't muscled its way in to create a racket with croninsim, kickbacks and other types of fraud. Are you going to tell me that you really believe big gov't and central planning is necessary? You must love Mao and Stalin!

Reagan and most republicans have serious faults, but Reagon's sarcasm about the gov't was dead on right. Big gov't steals freedom and wealth from the American public. Today Washington is seated by a bunch of puppets controlled by special interest groups and greed. There is no hope, there is no justice in Washington, just a lot of hot air. Washington is nothing but a giant organization of crime, that is determined to destroy the country.

[Zac]

Debt is unavoidable when the cost of basic goods such as housing and cars exceed what a typical person could possibly pay in cash.  The problem is not the debt, but the usurious interest rates which should never have been allowed.  If banks had not been permitted to circumvent the usury limits of about 10% annually, the banks would never have extended credit to those unable to pay to chase ever higher returns.

You failed to explain why debt is necessary! First off, we were discussing credit card debt, which can't be used to pay for cars or for homes. It's primary used to buy crap like wide screen televisions and other plastic pumkin crap, fancy resturant meals to impress family and friends, vacations, and you name it. What exactly did you buying using your credit card that was absolutely essential to your health and welfare?

The largest debt most of us take on is a mortgage.  Few people can pay cash for a house. 

Whats wrong with buy a used car instead of a buying a brand new car that depreciates the second you drive it off the dealership lot? What is wrong with renting? I have no debt. I rent and I pay for all my purchases in full. One of the biggest reasons why prices for homes and cars are so high is because of easy credit. Look how fast and high home prices rose when credit became cheap and easy when the fed dropped interest rates. Home prices doubled or even tripled in some regions because of the cheap and easy credit. Now all those people are suffering because of their debt folly.

I'm not suggesting one should buy a new car over a used one.  That choice is a personal preference with many trade-offs. 

I agree the rapid increase in housing prices in the past decade was largely driven by easy credit. 

Renting or buying is a personal choice with many trade-offs.  I think buying is generally preferable though. 

If credit was much harder to get and banks required home buyers to provide a 20% downpayment, there would have not been a frenzy to buy homes and home prices would have remained stable. Which entity permit this to happen: The goverment. "I am from the gov't and I am here to help!" Did they really help or did they make the problem must worse?

The banks made credit easy because they thought it would bring them usurious profits instead of the more paltry 5-10% a year a responsible loan might yield. 

The government did not force the banks to make unwise irresponsible loans.  The banks did it in pursuit of ever higher profits.  They also specifically lobbied the congress to change the laws to allow them to do what they did. 

Historically, the transportation, water, sewer and school systems in the US have been public and have worked well.


All of which were handled by state and local gov'ts until the federal gov't muscled its way in to create a racket with croninsim, kickbacks and other types of fraud. Are you going to tell me that you really believe big gov't and central planning is necessary? You must love Mao and Stalin!

I did not suggest central planning was necessary or desirable, but I don't care who runs these things as long as it is done efficiently.  So far, I think the government whether federal, state, or local has generally done a competent job of running the road system, the water and sewer system, and the schools. 

Reagan and most republicans have serious faults, but Reagon's sarcasm about the gov't was dead on right. Big gov't steals freedom and wealth from the American public. Today Washington is seated by a bunch of puppets controlled by special interest groups and greed. There is no hope, there is no justice in Washington, just a lot of hot air. Washington is nothing but a giant organization of crime, that is determined to destroy the country.

Entitlements have become a major problem, but out of control military spending is just as bad.  Reagan drastically increased military spending in a time of peace and also drastically altered the tax structure to favor the wealthy.  While US industry had already begun to deteriorate in the 1970s, Reagan's policies pushed them over the proverbial cliff.  In other words, he concentrated wealth into the hands of the wealthy by drastically changing tax policy, dramatically increased military spending during peacetime, and instituted policies that led to the demise of US industry, particularly heavy industry and the manufacturing industries predominantly located in the midwest.  Special interests are in charge of washington and I see little chance of major change until after a major crisis as occurred in the 1930s. 

[unhappyvoter]

I'm very  sure that many cars have been purchased by using CREDIT CARDS and some houses or camps as well.