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Posts Tagged ‘Credit Cards’

Credit Card WHYs

Thursday, August 5th, 2010

I’ve been asked more than once WHY credit cards do what they do.

  • Why do they raise interest rates on clients that have been paying faithfully for years?
  • Why won’t they work with me?
  • Why do they call me every 3 minutes when I’ve paid all I can?
  • Why do they send my dead dog credit card offers?
  • Why are they sending me new card offers in the mail when they know I can’t pay?

After meeting with literally tens of thousands of clients as a bankruptcy law firm, putting together our over 200 years of bankruptcy law experience and reading voraciously on the subject, our answer to WHY is:  We have no idea.

If the credit card companies asked our opinion, we’d tell them that many people would eat cat food to be able to pay them if only they’d stop raising the rate and minimum payment.  Every one of our bankruptcy attorneys would tell them  if they worked with their customers in these tough economic times it would be a win-win .  We’d tell them that the multi-million dollar bailout of our tax money means they have a moral obligation to work toward a solution for customers that have lost jobs, suffered a medical or family crisis.  Our pleas fall on deaf corporate ears.

If credit card companies acted responsibly and not like 3-year-olds in a sand box with only one shovel, we could perhaps guess the answer to WHY.  Until then, bankruptcy remains a very viable and wise response to out of control credit card companies.

You Should Consider Bankruptcy if… (Part 2 of 2)

Friday, July 16th, 2010

-  You don’t have an emergency fund. Without an emergency fund, you’re living paycheck to paycheck and are vulnerable to any setback, small or large, like a cut-back in hours, furlough days, an across the board pay cut or a job loss.  All of these events are out of your control and any one of them will throw a major wrench into your financial picture and can send you seeking the shelter of the bankruptcy court.

-  You’ve maxed out your credit cards or are charging more than you can pay off each month. Maxing you’re your credit cards means that you are using them for living expenses.  Charging more than you can pay off means you’re going backwards, losing traction, and it’s just a matter of time until you’re maxed out.  Keep in mind credit cards can do pretty much anything they want under their cardholder agreements including unilaterally cutting off credit and raising interest rates, so a card that’s not maxed out today could certainly be tomorrow.

-  You pay the minimum balance on your credit cards. When you can pay the minimum balance on your credit cards you feel ok, even as you’re serving up another helping of Top Roman.  You’re paying your bills, but the truth is you are one interest rate hike away from total annihilation and the credit cards frankly don’t care.  When you call to tell them the hike from 9 to 32% interest makes you unable to make the minimum payment even after you take a paper route before work, they will be less than sympathetic.

-  Your business has failed. Most bankruptcies can be traced back to 1 of 3 events, a failed business, medical crisis or family crisis. Some have experienced all 3.  If you closed a business, you might be surprised to find how many of the businesses’ obligations you took on personally, even if you had a corporation.  Your closed business may haunt you for years as your business landlord, suppliers, partners and creditors show up wanting payment, plus interest and fees.

-  You have no health insurance or inadequate coverage. As we noted above, bankruptcies can be traced back to 1 of 3 events, a failed business, medical crisis or family crisis.  Having no health insurance or inadequate coverage is a big warning sign because one ambulance ride or one hospital admission can change your entire financial world.  If you think health insurance is expensive, take a look at health care itself; absolutely prohibitive.

If any of these warning signs above exist for you, please call Doan Law Firm for a free, no obligation consultation to see how bankruptcy can help alleviate financial stress and give you a fresh start.

Points to Ponder – Have you repaid your debt despite what your credit card statement says?

Monday, May 17th, 2010

Often clients will come into my office struggling under a weight of debt.  Even though they struggle, they are uncomfortable with the idea of failing to repay their creditors.  They feel honor-bound to repay the money they borrowed.

When we delve into the substance of the matter, the truth is often much different than what the statement reflects.  Take for example a husband and wife who bought a washer/dryer set and refrigerator in 2006 for a total of $3,784.74.  Husband and wife pay on that credit card debt every month for 4 years and now find the balance is $5,784.74.  They discover that for 4 years, according to the bank, they have been paying only interest, no principle, but calculating the amount of monthly payments they have made, they have totally repaid the original $3,784.74, despite the bank’s assertion they now owe $5,784.74.  At this rate the washer/dryer and refrigerator will be in the dump long before they are paid off.

Banks are legally permitted to increase interest rates and lower available credit at any time; a right they use liberally.  From the consumer’s perspective, monthly payments increase while the balance continues to climb as the bank adds exorbitant late and over-limit fees.  It doesn’t take long until the consumer has paid many times the original balance.

Don’t feel you are failing to honor your agreements by filing Orange County Bankruptcy, you most likely have honored them several times over.

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