Is that a zombie in your wallet?
January 4, 2012 5:34 PM Subscribe
Bringing Expired Debt Back to Life. A controversial and growing partnership between debt collectors and banks brings back subprime lending through the revival of legally expired debt.
How it works: once a debt has legally expired, you have no obligation to make any payments on it, but if you can be induced to make any further payment, the clock starts over again, and the debt is live. One way to induce desperate customers is to offer them a new credit card, under the condition that they make a payment on the old debt. Once they do that, they are then stuck with paying back part or the entirety of the old debt with high interest rates. 'The cards, born a decade ago, are gaining new momentum as debt-collection firms look for new ways to collect, said William Weinstein, chief executive of Weinstein & Riley, a Seattle debt collector. No one knows how many of these credit cards, usually stamped with the MasterCard logo, are in people's wallets. MasterCard declined to comment.'
'CompuCredit, a leader in the business, collected about $15 million in newly resurrected debts and fees by issuing credit cards to people with banged-up credit in the first nine months of this year, according to a securities filing. It also has drawn scrutiny by federal authorities for allegedly deceptive practices.
Many U.S. banks, hungry for new revenue streams, are eager partners. They receive fees and higher-than-average interest rates by granting debt collectors access to their license with MasterCard. The debt companies typically agree to cover losses to banks if borrowers stop paying.
Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible. Others are leery about subprime borrowers. But the debt-driven credit cards show some banks tiptoeing back into subprime lending after suffering big losses during the financial crisis.'
'Genesis Financial Solutions, of Beaverton, Ore., said it was opening about 100,000 new accounts a year in its "Balance Transfer Program." Unlike typical balance-transfer offers, where consumers are lured with low interest rates to move credit balances, Genesis borrowers move expired debts onto the new card.'
'Last year, West Virginia Attorney General Darrell McGraw barred Jefferson Capital Systems, the debt-collection unit of CompuCredit, from offering state residents an Emblem credit card through the company's "Fresh Start Solution Program."
Mr. McGraw said the program was "abusive" because people didn't realize they were agreeing to pay debt that had expired. Other issuers still can do business in West Virginia. Some companies are concerned regulatory scrutiny could slow growth.'
How it works: once a debt has legally expired, you have no obligation to make any payments on it, but if you can be induced to make any further payment, the clock starts over again, and the debt is live. One way to induce desperate customers is to offer them a new credit card, under the condition that they make a payment on the old debt. Once they do that, they are then stuck with paying back part or the entirety of the old debt with high interest rates. 'The cards, born a decade ago, are gaining new momentum as debt-collection firms look for new ways to collect, said William Weinstein, chief executive of Weinstein & Riley, a Seattle debt collector. No one knows how many of these credit cards, usually stamped with the MasterCard logo, are in people's wallets. MasterCard declined to comment.'
'CompuCredit, a leader in the business, collected about $15 million in newly resurrected debts and fees by issuing credit cards to people with banged-up credit in the first nine months of this year, according to a securities filing. It also has drawn scrutiny by federal authorities for allegedly deceptive practices.
Many U.S. banks, hungry for new revenue streams, are eager partners. They receive fees and higher-than-average interest rates by granting debt collectors access to their license with MasterCard. The debt companies typically agree to cover losses to banks if borrowers stop paying.
Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible. Others are leery about subprime borrowers. But the debt-driven credit cards show some banks tiptoeing back into subprime lending after suffering big losses during the financial crisis.'
'Genesis Financial Solutions, of Beaverton, Ore., said it was opening about 100,000 new accounts a year in its "Balance Transfer Program." Unlike typical balance-transfer offers, where consumers are lured with low interest rates to move credit balances, Genesis borrowers move expired debts onto the new card.'
'Last year, West Virginia Attorney General Darrell McGraw barred Jefferson Capital Systems, the debt-collection unit of CompuCredit, from offering state residents an Emblem credit card through the company's "Fresh Start Solution Program."
Mr. McGraw said the program was "abusive" because people didn't realize they were agreeing to pay debt that had expired. Other issuers still can do business in West Virginia. Some companies are concerned regulatory scrutiny could slow growth.'
Some companies are concerned regulatory scrutiny could slow growth.'
Amazing, how a shred of human decency might somehow adversely affect profits.
posted by Dark Messiah at 5:43 PM on January 4, 2012 [15 favorites]
Amazing, how a shred of human decency might somehow adversely affect profits.
posted by Dark Messiah at 5:43 PM on January 4, 2012 [15 favorites]
But the debt-driven credit cards show some banks tiptoeing back into subprime lending after suffering big losses during the financial crisis.
I'm going to need to see more data on exactly what the big losses are these banks are suffering under before I go any further.
posted by hippybear at 5:43 PM on January 4, 2012 [6 favorites]
I'm going to need to see more data on exactly what the big losses are these banks are suffering under before I go any further.
posted by hippybear at 5:43 PM on January 4, 2012 [6 favorites]
Tell Me No Lies: "But if a debtor agrees to make even a single payment on an expired debt, the clock starts anew on some part of the old obligation, a process called "re-aging."
So if borrowers again fall behind on their payments, debt collectors can turn to their usual tools: letters, phone calls and lawsuits. By restarting a debt's statute of limitations, the collectors have years to retrieve payments."
posted by davidjmcgee at 5:44 PM on January 4, 2012
So if borrowers again fall behind on their payments, debt collectors can turn to their usual tools: letters, phone calls and lawsuits. By restarting a debt's statute of limitations, the collectors have years to retrieve payments."
posted by davidjmcgee at 5:44 PM on January 4, 2012
Does it mean you can be sued for the remaining balance on the old debts?
It means you are now again fully liable for the debt (whereas before you were not, since it expired). And yes, suing you for the balance is one of the options.
posted by VikingSword at 5:46 PM on January 4, 2012 [1 favorite]
It means you are now again fully liable for the debt (whereas before you were not, since it expired). And yes, suing you for the balance is one of the options.
posted by VikingSword at 5:46 PM on January 4, 2012 [1 favorite]
Maybe now that the CFPB has a director, they'll step in and slap this absurd practice down.
posted by hippybear at 5:49 PM on January 4, 2012 [2 favorites]
posted by hippybear at 5:49 PM on January 4, 2012 [2 favorites]
And so it come to this. The vampires have figured out how to raise zombies.
posted by never used baby shoes at 5:53 PM on January 4, 2012 [33 favorites]
posted by never used baby shoes at 5:53 PM on January 4, 2012 [33 favorites]
Soon, you'll be pre-charged for the future theoretical use of loans and products.
posted by The Whelk at 5:56 PM on January 4, 2012 [7 favorites]
posted by The Whelk at 5:56 PM on January 4, 2012 [7 favorites]
I like the appeal to morality from the article:
It's also sad that these people -- or at least, the one fellow featured in the article -- whose debt has already expired, and may not even be reportable on a credit statement (after seven years), stand to have their credit crushed even further by this practice.
posted by twooster at 6:04 PM on January 4, 2012 [1 favorite]
Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible.Which, while being a statement I generally agree with, comes off more than a little hollow.
It's also sad that these people -- or at least, the one fellow featured in the article -- whose debt has already expired, and may not even be reportable on a credit statement (after seven years), stand to have their credit crushed even further by this practice.
posted by twooster at 6:04 PM on January 4, 2012 [1 favorite]
the clock starts anew on some part of the old obligation
That was the part that confused me, specifically.
posted by Tell Me No Lies at 6:06 PM on January 4, 2012
That was the part that confused me, specifically.
posted by Tell Me No Lies at 6:06 PM on January 4, 2012
Christ. They just can't stop risking things for greed, can they?
Their greed helps fuck the economy, our tax dollars save them and their jobs, and they are right back at it like nothing happened. At this point, I think we need to close the books, take their toys away, and make them sit in the corner... Quiet time until they know what they did wrong.
posted by Samizdata at 6:06 PM on January 4, 2012 [2 favorites]
Their greed helps fuck the economy, our tax dollars save them and their jobs, and they are right back at it like nothing happened. At this point, I think we need to close the books, take their toys away, and make them sit in the corner... Quiet time until they know what they did wrong.
posted by Samizdata at 6:06 PM on January 4, 2012 [2 favorites]
Re-aging debt.
So it appears to be more related to credit reporting?
posted by Tell Me No Lies at 6:09 PM on January 4, 2012 [1 favorite]
So it appears to be more related to credit reporting?
posted by Tell Me No Lies at 6:09 PM on January 4, 2012 [1 favorite]
For the life of me, I am constantly amazed that this kind of continual greedy shit doesn't engender gunfire.
posted by Thorzdad at 6:12 PM on January 4, 2012 [12 favorites]
posted by Thorzdad at 6:12 PM on January 4, 2012 [12 favorites]
I suppose this means we're allowed to say moral hazard again
posted by fullerine at 6:14 PM on January 4, 2012
posted by fullerine at 6:14 PM on January 4, 2012
It's shit like this that makes me paranoid about debt of any kind. Well, that, and the complete understanding that anyone working in any industry having to do with credit must have all traces of compassion, humanity, or anything resembling a soul surgically removed before they get their job.
posted by Ghidorah at 6:18 PM on January 4, 2012 [1 favorite]
posted by Ghidorah at 6:18 PM on January 4, 2012 [1 favorite]
Which, while being a statement I generally agree with, comes off more than a little hollow.
I don't think there is anything really controversial about the validity of permitting debt to expire, even from an ethical standpoint: it's just plain common sense. If I borrowed a cup of sugar from you and you asked for it back the next time I went to the supermarket, and then showed up a week later, I'd feel obligated to give it to you. If you showed up asking for it ten years later, after I'd moved three times, I'd laugh and close the door.
If the full brunt of the legal system is brought to bear on a person and after 5-7 years they still haven't paid the debt, they probably can't be made to do so, and it's a waste of time to allow it to be pursued further. Simlarly, if a company fails to collect on a debt for many years, they probably didn't value it in the first place. (Which is exactly why they sell it for pennies on the dollar to vultures such as these.)
posted by mek at 6:21 PM on January 4, 2012 [2 favorites]
I don't think there is anything really controversial about the validity of permitting debt to expire, even from an ethical standpoint: it's just plain common sense. If I borrowed a cup of sugar from you and you asked for it back the next time I went to the supermarket, and then showed up a week later, I'd feel obligated to give it to you. If you showed up asking for it ten years later, after I'd moved three times, I'd laugh and close the door.
If the full brunt of the legal system is brought to bear on a person and after 5-7 years they still haven't paid the debt, they probably can't be made to do so, and it's a waste of time to allow it to be pursued further. Simlarly, if a company fails to collect on a debt for many years, they probably didn't value it in the first place. (Which is exactly why they sell it for pennies on the dollar to vultures such as these.)
posted by mek at 6:21 PM on January 4, 2012 [2 favorites]
Anyone remember Bank Transfer Day? Still Going! And credit unions offer credit cards too!
posted by jeffburdges at 6:23 PM on January 4, 2012 [4 favorites]
posted by jeffburdges at 6:23 PM on January 4, 2012 [4 favorites]
I'm hoping progressive Christians start loudly discussing jubilee as the solution to the financial crisis, a credible threat might help reign in the insanity.
posted by jeffburdges at 6:27 PM on January 4, 2012 [11 favorites]
posted by jeffburdges at 6:27 PM on January 4, 2012 [11 favorites]
Some companies are concerned regulatory scrutiny could slow growth.
GROWTH FOR THE GROWTH GOD
posted by mkb at 6:32 PM on January 4, 2012 [40 favorites]
GROWTH FOR THE GROWTH GOD
posted by mkb at 6:32 PM on January 4, 2012 [40 favorites]
bankruptcy is the only debt jubilee anyone's gonna get. use it. and then live your life without debt. it might be painful, but it's also real freedom.
moral hazard. hahahahaha. hahahahaha.
read things you sign.
growth is over.
posted by ninjew at 6:41 PM on January 4, 2012
moral hazard. hahahahaha. hahahahaha.
read things you sign.
growth is over.
posted by ninjew at 6:41 PM on January 4, 2012
Fuck these people.
posted by beaucoupkevin at 6:50 PM on January 4, 2012 [6 favorites]
posted by beaucoupkevin at 6:50 PM on January 4, 2012 [6 favorites]
Some companies are concerned regulatory scrutiny could slow growthland them in jail.
posted by Thorzdad at 6:51 PM on January 4, 2012 [5 favorites]
posted by Thorzdad at 6:51 PM on January 4, 2012 [5 favorites]
It would be nice if, somehow, expressing the sentiment that "regulatory scruitny could slow [the] growth" of your business automatically resulted in said regulatory scrutiny, which let's be honest, probably never existed as a real threat in the first place.
posted by feloniousmonk at 6:54 PM on January 4, 2012 [8 favorites]
posted by feloniousmonk at 6:54 PM on January 4, 2012 [8 favorites]
Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible.
There is always a risk of lack of repayment. That's why interest rates are high on unsecured debt. Trying to make unsecured debt permanent, but continuing to charge as though it's unsecured, is deeply unscrupulous.
posted by Malor at 7:00 PM on January 4, 2012 [34 favorites]
There is always a risk of lack of repayment. That's why interest rates are high on unsecured debt. Trying to make unsecured debt permanent, but continuing to charge as though it's unsecured, is deeply unscrupulous.
posted by Malor at 7:00 PM on January 4, 2012 [34 favorites]
I have an old credit card debt that I would agree to do this with, even though it's past the statute of limitations, but only if they let me pay it off for pennies on the dollar, in one payment and clear off my credit statement. Then I would just tear up the card. I wonder how the negotiation would go for that.
posted by empath at 7:27 PM on January 4, 2012
posted by empath at 7:27 PM on January 4, 2012
"Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible."
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
posted by Kraftmatic Adjustable Cheese at 7:31 PM on January 4, 2012 [18 favorites]
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
posted by Kraftmatic Adjustable Cheese at 7:31 PM on January 4, 2012 [18 favorites]
OK, so I see why the banks/credit card companies are motivated to do this. The question I'm asking is, how did the law come to be this way in the first place? It sounds almost something out of Grimm's - if you pay even one penny on this debt any time after it expires, you can be held liable for the entire unpaid debt all over again? Who thought that was fair or a good way to run things?
Like, how far in the future could this work? Sixty years later, if you could somehow be tricked or forgetfully pay any amount of money to any branch of a bank, or its successors, this could still happen to you? The whole point of a statute of limitations is so that something ends.
What about after you die? Are your successors non-liable in the same way that you were?
posted by newdaddy at 7:36 PM on January 4, 2012 [1 favorite]
Like, how far in the future could this work? Sixty years later, if you could somehow be tricked or forgetfully pay any amount of money to any branch of a bank, or its successors, this could still happen to you? The whole point of a statute of limitations is so that something ends.
What about after you die? Are your successors non-liable in the same way that you were?
posted by newdaddy at 7:36 PM on January 4, 2012 [1 favorite]
Christ. They just can't stop risking things for greed, can they?
Their greed helps fuck the economy, our tax dollars save them and their jobs, and they are right back at it like nothing happened. At this point, I think we need to close the books, take their toys away, and make them sit in the corner... Quiet time until they know what they did wrong.
I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
Then they shouldn't have borrowed the money in the first place.
posted by gjc at 7:37 PM on January 4, 2012
Their greed helps fuck the economy, our tax dollars save them and their jobs, and they are right back at it like nothing happened. At this point, I think we need to close the books, take their toys away, and make them sit in the corner... Quiet time until they know what they did wrong.
I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
Then they shouldn't have borrowed the money in the first place.
posted by gjc at 7:37 PM on January 4, 2012
Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible.
Oddly enough, my belief that is is morally right to hunt down those who use deceit to prey upon the poor and the weak with fire and the sword is also hampered by these silly laws.
Maybe we should just agree to call it even.
posted by Kid Charlemagne at 7:39 PM on January 4, 2012 [13 favorites]
Oddly enough, my belief that is is morally right to hunt down those who use deceit to prey upon the poor and the weak with fire and the sword is also hampered by these silly laws.
Maybe we should just agree to call it even.
posted by Kid Charlemagne at 7:39 PM on January 4, 2012 [13 favorites]
Oh, fuck these guys in the ear with a spoon. Cordray's appointment could not come soon enough... one bright spot in Obama's recent resume, especially after the NDAA fiasco.
posted by Slap*Happy at 7:46 PM on January 4, 2012
posted by Slap*Happy at 7:46 PM on January 4, 2012
What about after you die? Are your successors non-liable in the same way that you were?
Sure, why not? (NYT)
posted by ThePinkSuperhero at 7:48 PM on January 4, 2012
Sure, why not? (NYT)
posted by ThePinkSuperhero at 7:48 PM on January 4, 2012
Will somebody think of the interest!!
moral...something, something... usur?
posted by BlueHorse at 7:54 PM on January 4, 2012
moral...something, something... usur?
posted by BlueHorse at 7:54 PM on January 4, 2012
"Some lenders say borrowers have a moral obligation to pay their debts even if they are no longer legally responsible."
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
I was just wondering about this. What's the logic by which I have any moral obligation, of any kind, to any corporate entity? I understand moral obligations -- such as paying back debt -- to people, but morally (as opposed to legally) owing something to a corporate entity seems almost like owing payment to the weather gods for a good season.
I suppose I understand the moral necessity of honoring contracts, even with abstract entities like corporations, in order for modern society to function. But we don't really need the honor or morality part -- we have laws to force us to comply, after all. The entities themselves manage to function without morality, so clearly it can be done with law alone. So what's the logic for "should" when it comes to relations with corporations?
The flip side, I suppose, is that we are often full of moral opprobrium for corporations that do terrible things like pollute, use child labor, etc. And this makes sense, inasmuch as we direct it to officers and board members who could stop the abuses if they wanted to. But part of viewing corporations as abstract entities with whom we have no moral relations would be realizing that they are just amoral machines who do evil when it profits them unless prevented. But I'm not sure we'd want to give up that sense of moral injustice, directed at the organization and not just the individuals running it, even if it may be, in a sense, misdirected. Hm. Clearly I need to think about this more ... perhaps starting with Corporations and Morality, by the philosopher Thomas Donaldson, which digs into this stuff...
posted by chortly at 7:59 PM on January 4, 2012 [7 favorites]
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
I was just wondering about this. What's the logic by which I have any moral obligation, of any kind, to any corporate entity? I understand moral obligations -- such as paying back debt -- to people, but morally (as opposed to legally) owing something to a corporate entity seems almost like owing payment to the weather gods for a good season.
I suppose I understand the moral necessity of honoring contracts, even with abstract entities like corporations, in order for modern society to function. But we don't really need the honor or morality part -- we have laws to force us to comply, after all. The entities themselves manage to function without morality, so clearly it can be done with law alone. So what's the logic for "should" when it comes to relations with corporations?
The flip side, I suppose, is that we are often full of moral opprobrium for corporations that do terrible things like pollute, use child labor, etc. And this makes sense, inasmuch as we direct it to officers and board members who could stop the abuses if they wanted to. But part of viewing corporations as abstract entities with whom we have no moral relations would be realizing that they are just amoral machines who do evil when it profits them unless prevented. But I'm not sure we'd want to give up that sense of moral injustice, directed at the organization and not just the individuals running it, even if it may be, in a sense, misdirected. Hm. Clearly I need to think about this more ... perhaps starting with Corporations and Morality, by the philosopher Thomas Donaldson, which digs into this stuff...
posted by chortly at 7:59 PM on January 4, 2012 [7 favorites]
The flip side, I suppose, is that we are often full of moral opprobrium for corporations that do terrible things like pollute, use child labor, etc. And this makes sense, inasmuch as we direct it to officers and board members who could stop the abuses if they wanted to.
Funny, I just read something about that earlier today.
posted by hippybear at 8:07 PM on January 4, 2012
Funny, I just read something about that earlier today.
posted by hippybear at 8:07 PM on January 4, 2012
Jobs is a relatively easy case, since we could just blame him for anything the corporation did wrong. But in most cases, there's no such leader -- and even with Jobs, my EULA is with Apple, not Jobs. Do I have a moral, and not just legal, obligation to honor that contract? Similarly if I owe Apple money. Hanging it all on the CEO doesn't really work, since even with Apple so many of the actions and responsibilities are diffused throughout the organization.
posted by chortly at 8:36 PM on January 4, 2012
posted by chortly at 8:36 PM on January 4, 2012
Debt collection is about as rational and amoral a business as I can think of. It's only a hair shy of pure arbitrage. You purchase bad debts at a discount knowing some percentage are collectible/noncollectable, then you inflate the original debt such that your expected collections are above your cost to acquire the debt.
But then, science crosses over into the reprehensible art of collecting. Poor drones using scripts to con you into paying on your honor and moral sense. I had one of these sharks try to talk me into paying a family member's debt. Hilarious!
Do I feel a moral obligation to a company that bought a written-off/written-down debt at pennies on the dollar and then pumped that debt up to 10 to 100 times the original amount?
Not at all. This country needs more debt forgiveness, not more debt collection.
posted by borges at 8:40 PM on January 4, 2012 [1 favorite]
But then, science crosses over into the reprehensible art of collecting. Poor drones using scripts to con you into paying on your honor and moral sense. I had one of these sharks try to talk me into paying a family member's debt. Hilarious!
Do I feel a moral obligation to a company that bought a written-off/written-down debt at pennies on the dollar and then pumped that debt up to 10 to 100 times the original amount?
Not at all. This country needs more debt forgiveness, not more debt collection.
posted by borges at 8:40 PM on January 4, 2012 [1 favorite]
I've never heard of a debt collector inflating the debt in the way you describe. Where do you get that information?
posted by hippybear at 8:45 PM on January 4, 2012
posted by hippybear at 8:45 PM on January 4, 2012
After one has filed for Bankruptcy, and following a judgment (validating the bankruptcy), the person who files is not permitted to pay any part of a debt to any one (or more) creditors. Doing so will invalidate the protections one gets from filing, and/or the judgement - meaning that if one does this, the bankruptcy is effectively null, and void. Also, if one tries to "prepay" a specific creditor prior to filing, the bankruptcy filing could be removed.
Sadly, it's easy for scumbag parasites to get some people to bite on expired debt. Just imagine someone who has gone bankrupt and lost her car. Compucredit calls her and says that they can get her credit to buy a new car of she agrees to pay back a small amount - even a few hundred $$, or less - on a prior debt. As soon as she agrees to the contract, she's back where she started, before the bankruptcy. At that point, technically, she owes EVERYTHING she had forgiven in bankruptcy.
posted by Vibrissae at 8:54 PM on January 4, 2012 [1 favorite]
Sadly, it's easy for scumbag parasites to get some people to bite on expired debt. Just imagine someone who has gone bankrupt and lost her car. Compucredit calls her and says that they can get her credit to buy a new car of she agrees to pay back a small amount - even a few hundred $$, or less - on a prior debt. As soon as she agrees to the contract, she's back where she started, before the bankruptcy. At that point, technically, she owes EVERYTHING she had forgiven in bankruptcy.
posted by Vibrissae at 8:54 PM on January 4, 2012 [1 favorite]
This is a great deal for the debt collectors: not only do they receive payment on an old debt purchased "for pennies on the dollar" but they sign the borrower up to a new credit card with a minuscule credit limit and an inflated rate of interest. You can bet someone with a bad credit record will leave an outstanding balance on the card, so that credit limit will be earning money for the bank every month.
posted by Joe in Australia at 8:56 PM on January 4, 2012 [1 favorite]
posted by Joe in Australia at 8:56 PM on January 4, 2012 [1 favorite]
hippybear, I don't know if that's what borges meant, but a debt frequently keeps accumulating interest (at least when it's active), so you can easily end up owing multiples of the original debt, depending on interest rates applied and special tricks credit card companies play with penalties - for example, they can treat each missed payment as another opportunity to assess a penalty, which in turn gets rolled into the overall debt raising its level and the accumulated interest etc. - there are many, many such tricks. This is actually a terrible trap for many, and it's quite routine for debtors to have already repaid their original debt many times over, but they keep being in debt because of interest.
Basically, the business model here is to somehow get the person to make any payment at all on the debt to re-activate it, and make the debtor lose recourse. Often it's disguised as f.ex. 'the opening fee' on the new credit card, and unless you are a very skilled small print reader, you'll never realize that this new credit card that miraculously comes to you, really is a trojan horse bearing the old massively accumulated debt back to life, and once you pay even a penny, you are in a merciless vise, and you will now be sinking without recourse. But desperate people sometimes have no options. What are you going to do, if for example you need medication for your child and you have no other means? That's when these guys appear.
posted by VikingSword at 9:04 PM on January 4, 2012 [9 favorites]
Basically, the business model here is to somehow get the person to make any payment at all on the debt to re-activate it, and make the debtor lose recourse. Often it's disguised as f.ex. 'the opening fee' on the new credit card, and unless you are a very skilled small print reader, you'll never realize that this new credit card that miraculously comes to you, really is a trojan horse bearing the old massively accumulated debt back to life, and once you pay even a penny, you are in a merciless vise, and you will now be sinking without recourse. But desperate people sometimes have no options. What are you going to do, if for example you need medication for your child and you have no other means? That's when these guys appear.
posted by VikingSword at 9:04 PM on January 4, 2012 [9 favorites]
I've never heard of a debt collector inflating the debt in the way you describe. Where do you get that information?
What is being referred to is that the debt collector buys the debt for pennies on the dollar (really, as low as 1.5% of the original amount owed) and then attempts to collect on the full original debt in often very punishing ways... eg. we'll let you pay it off with monthly payments at 15% interest, so you end up paying much more than was originally owed, to a debt collector who paid a tiny fraction of what was originally owed. These prices are justified because these debts have a very low collection rate; so the rare person who actually does pay, gets squeezed for every penny.
posted by mek at 9:05 PM on January 4, 2012 [2 favorites]
What is being referred to is that the debt collector buys the debt for pennies on the dollar (really, as low as 1.5% of the original amount owed) and then attempts to collect on the full original debt in often very punishing ways... eg. we'll let you pay it off with monthly payments at 15% interest, so you end up paying much more than was originally owed, to a debt collector who paid a tiny fraction of what was originally owed. These prices are justified because these debts have a very low collection rate; so the rare person who actually does pay, gets squeezed for every penny.
posted by mek at 9:05 PM on January 4, 2012 [2 favorites]
What's the logic by which I have any moral obligation, of any kind, to any corporate entity?
Well, see, they prey upon the poor and the...oh, TO any corporate entity. My bad.
posted by Kid Charlemagne at 9:42 PM on January 4, 2012
Well, see, they prey upon the poor and the...oh, TO any corporate entity. My bad.
posted by Kid Charlemagne at 9:42 PM on January 4, 2012
Hah, I got to the "moral obligation" statement, and my irony meter went "sproing!!!" from the overload.
It the mark of a shyster, a grifter, a thief, and a liar to refer to the moral obligations of others.
posted by Xoebe at 10:33 PM on January 4, 2012 [7 favorites]
It the mark of a shyster, a grifter, a thief, and a liar to refer to the moral obligations of others.
posted by Xoebe at 10:33 PM on January 4, 2012 [7 favorites]
Some lenders say borrowers have a moral obligation
I hate phases like this. Collection agencies use this one all the time or some variant.
Concepts of finance and morality used in the same sentence fall into non sequitur land. It is almost in red herring land too. The whole point is to shame a person into paying a debt by insinuating they have a moral failing. The more likely scenario is that the lender is the issue and should have never extended credit to the person in the first place, but got greedy. They threw out a bunch of money to people who had no history of responisble re-payment and wouldn't you know, the debt is defaulted on. Imagine that?
There is nothing moral about it, you either are able to pay your debt off or not. Either you can manage credit given to you or not. Some people are just not able to manage being lent money and to pay it back consistently. They should not borrow money as a rule and if provided the opportunity to borrow, it should be in limited amounts. But greedy financial institutions get into this lending frenzy, give out money like candy then cry foul when people can't pay it back. And when they can't get a person to pay or the statute of limitations draws near, out come the "morality" phrases as a last ditch effort.
The loan should have never happened in the first place.
This is just another buzz word phrase from the same type of people who like to call themselves job creators, then fire half the work staff, cut benefits of the rest and raise prices resulting in greater profit for a few limited individuals.
hmmm...if only people could see this and then band together to say something about it. I wonder what would happen? hmmmm
posted by lampshade at 11:49 PM on January 4, 2012 [4 favorites]
I hate phases like this. Collection agencies use this one all the time or some variant.
Concepts of finance and morality used in the same sentence fall into non sequitur land. It is almost in red herring land too. The whole point is to shame a person into paying a debt by insinuating they have a moral failing. The more likely scenario is that the lender is the issue and should have never extended credit to the person in the first place, but got greedy. They threw out a bunch of money to people who had no history of responisble re-payment and wouldn't you know, the debt is defaulted on. Imagine that?
There is nothing moral about it, you either are able to pay your debt off or not. Either you can manage credit given to you or not. Some people are just not able to manage being lent money and to pay it back consistently. They should not borrow money as a rule and if provided the opportunity to borrow, it should be in limited amounts. But greedy financial institutions get into this lending frenzy, give out money like candy then cry foul when people can't pay it back. And when they can't get a person to pay or the statute of limitations draws near, out come the "morality" phrases as a last ditch effort.
The loan should have never happened in the first place.
This is just another buzz word phrase from the same type of people who like to call themselves job creators, then fire half the work staff, cut benefits of the rest and raise prices resulting in greater profit for a few limited individuals.
hmmm...if only people could see this and then band together to say something about it. I wonder what would happen? hmmmm
posted by lampshade at 11:49 PM on January 4, 2012 [4 favorites]
Makes you wonder how much they owe. Most of them are on the run. Don't even use their fucking social security numbers. If there was just some way to find out how much the motherfuckers owe and making them pay.
posted by clarknova at 12:17 AM on January 5, 2012
posted by clarknova at 12:17 AM on January 5, 2012
Next up, passing debts unto the seventh generation.
posted by benzenedream at 12:55 AM on January 5, 2012 [1 favorite]
posted by benzenedream at 12:55 AM on January 5, 2012 [1 favorite]
Most of them are on the run.
And you know this how? Did John Walsh feature them recently? Who is them?
The MF predatory lenders know exactly how much the MF recipients owe. They know this because while they are incompetent and greedy when approving credit, they are also very good at keeping records of the money they paid out. Money that they should not have lent in the first place. But the easy profit dollar signs obscured good judgment.
Don't get me wrong, both sides are at fault here. There also is no shortage of scammers who took advantage of easily acquired loans and had absolutely no intention of ever paying it back. But there are also is a large contingent of people who were wooed by the thought of getting what the Jones had with a loan they previously would have never qualified for.
That doesn't make a person immoral, just a bit unwise about the realities of credit, lending and repayment.
posted by lampshade at 1:03 AM on January 5, 2012 [2 favorites]
And you know this how? Did John Walsh feature them recently? Who is them?
The MF predatory lenders know exactly how much the MF recipients owe. They know this because while they are incompetent and greedy when approving credit, they are also very good at keeping records of the money they paid out. Money that they should not have lent in the first place. But the easy profit dollar signs obscured good judgment.
Don't get me wrong, both sides are at fault here. There also is no shortage of scammers who took advantage of easily acquired loans and had absolutely no intention of ever paying it back. But there are also is a large contingent of people who were wooed by the thought of getting what the Jones had with a loan they previously would have never qualified for.
That doesn't make a person immoral, just a bit unwise about the realities of credit, lending and repayment.
posted by lampshade at 1:03 AM on January 5, 2012 [2 favorites]
And when these shit loans are sliced, packaged up and resold, and when they later are discovered to be worth nothing, well then at that totally unexpected and unpredictable junction the taxpayers will have to pay for this.
posted by CautionToTheWind at 2:27 AM on January 5, 2012 [2 favorites]
posted by CautionToTheWind at 2:27 AM on January 5, 2012 [2 favorites]
A strange game. The only winning move is not to play.
posted by Vetinari at 3:24 AM on January 5, 2012 [6 favorites]
posted by Vetinari at 3:24 AM on January 5, 2012 [6 favorites]
I was just wondering about this. What's the logic by which I have any moral obligation, of any kind, to any corporate entity? I understand moral obligations -- such as paying back debt -- to people, but morally (as opposed to legally) owing something to a corporate entity seems almost like owing payment to the weather gods for a good season.
Morality and ethics aren't things that change depending on who the beneficiary/victim is. They are codes of personal behavior that one has for themselves. They are how you (strive to) behave even when nobody is looking.
Never has the "it's OK to do X to Y, because we don't like Y" argument ended well.
posted by gjc at 5:24 AM on January 5, 2012
Morality and ethics aren't things that change depending on who the beneficiary/victim is. They are codes of personal behavior that one has for themselves. They are how you (strive to) behave even when nobody is looking.
Never has the "it's OK to do X to Y, because we don't like Y" argument ended well.
posted by gjc at 5:24 AM on January 5, 2012
I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
It is greediness to charge that someone a premium based on the risk you are taking that they will not repay you, and then also to change the rules so that you are actually taking no risk at all.
posted by fightorflight at 5:40 AM on January 5, 2012 [3 favorites]
It is greediness to charge that someone a premium based on the risk you are taking that they will not repay you, and then also to change the rules so that you are actually taking no risk at all.
posted by fightorflight at 5:40 AM on January 5, 2012 [3 favorites]
1) This is scummy.
2) The FTC is already taking action against this sort of thing.
3) Bankruptcy exists. It's there for a reason. If you've got a debt so old it's passed the statute of limitations you are almost certainly entitled to file for bankruptcy, even if you've filed before, as the SOL for bad debts is almost always longer than the seven years that has to go between bankruptcies.
So calls for debt reform, etc. don't strike me as being all that well put.* I'm all for reform of lending practices, but once the debt is out there, there's already a way of making it go away. To the extent that there is a reduced obligation to pay one's debt to corporations, I'd say it still includes the obligation to take care of the thing properly rather than just defaulting and walking away. Filing for bankruptcy clears the decks for everyone, you and the bank, and it's specifically created to deal with situations where a debtor is insolvent.
For the life of me, I don't know why more people don't declare bankruptcy, especially since there's plenty of pro bono help out there. I volunteer for a legal aid clinic that processes dozens of files a year with just two lawyers, and the county bar association probably does at least a hundred or so. And those numbers are limited less by capacity than by demand, i.e. both groups would do more if more people asked them to.
So rather than getting up in arms about jubilee concepts or statutory debt retirement, neither of which could be made to work all that well, I think we should probably just work on educating people about bankruptcy and credit counseling. The solution is already out there, and it works.
*With the exception of student loans, which are exempt from bankruptcy.
posted by valkyryn at 6:03 AM on January 5, 2012
2) The FTC is already taking action against this sort of thing.
3) Bankruptcy exists. It's there for a reason. If you've got a debt so old it's passed the statute of limitations you are almost certainly entitled to file for bankruptcy, even if you've filed before, as the SOL for bad debts is almost always longer than the seven years that has to go between bankruptcies.
So calls for debt reform, etc. don't strike me as being all that well put.* I'm all for reform of lending practices, but once the debt is out there, there's already a way of making it go away. To the extent that there is a reduced obligation to pay one's debt to corporations, I'd say it still includes the obligation to take care of the thing properly rather than just defaulting and walking away. Filing for bankruptcy clears the decks for everyone, you and the bank, and it's specifically created to deal with situations where a debtor is insolvent.
For the life of me, I don't know why more people don't declare bankruptcy, especially since there's plenty of pro bono help out there. I volunteer for a legal aid clinic that processes dozens of files a year with just two lawyers, and the county bar association probably does at least a hundred or so. And those numbers are limited less by capacity than by demand, i.e. both groups would do more if more people asked them to.
So rather than getting up in arms about jubilee concepts or statutory debt retirement, neither of which could be made to work all that well, I think we should probably just work on educating people about bankruptcy and credit counseling. The solution is already out there, and it works.
*With the exception of student loans, which are exempt from bankruptcy.
posted by valkyryn at 6:03 AM on January 5, 2012
So rather than getting up in arms about jubilee concepts or statutory debt retirement, neither of which could be made to work all that well, I think we should probably just work on educating people about bankruptcy and credit counseling
Heh. I went to credit counseling about 6 years ago after i missed a couple of payments and they jacked my rates up to some obscene amount, and the deal the credit card companies gave me would have had me living in a cardboard box for 10 years. They ended up getting exactly nothing from me.
posted by empath at 6:17 AM on January 5, 2012 [1 favorite]
Heh. I went to credit counseling about 6 years ago after i missed a couple of payments and they jacked my rates up to some obscene amount, and the deal the credit card companies gave me would have had me living in a cardboard box for 10 years. They ended up getting exactly nothing from me.
posted by empath at 6:17 AM on January 5, 2012 [1 favorite]
Which was stupid for them, btw, because they could have given me some reasonable amount to pay at the time, and I could have easily paid off the entire debt by now, since my job situation improved a great deal a couple of years later. Hell. I could almost pay the whole original debt off in one check right now.
posted by empath at 6:19 AM on January 5, 2012
posted by empath at 6:19 AM on January 5, 2012
lampshade - the "if only there were some way to find out how much they owe" comment is a quote from the film Repo Man - it's made in reference to street derelicts, and it is obviously absurd, in the film.
posted by thelonius at 6:28 AM on January 5, 2012 [1 favorite]
posted by thelonius at 6:28 AM on January 5, 2012 [1 favorite]
valkyrn, I totally agree. I think the reasons more people don't file could include both the social embarrassment factor and, more importantly, the fact that bk imposes pain on the debtor as well as the creditor, which people often don't want to face up to despite the fact that filing could help many of their other problems.
posted by Aizkolari at 6:52 AM on January 5, 2012
posted by Aizkolari at 6:52 AM on January 5, 2012
It is greediness to charge that someone a premium based on the risk you are taking that they will not repay you, and then also to change the rules so that you are actually taking no risk at all.
The risk calculation isn't just a binary pay or not pay, but that when all legal avenues of collection have been exhausted, X% of the money they lend out won't be paid pack. They aren't changing the rules, they are just using the full breadth of the existing rules to try and get their money back.
posted by gjc at 7:02 AM on January 5, 2012
The risk calculation isn't just a binary pay or not pay, but that when all legal avenues of collection have been exhausted, X% of the money they lend out won't be paid pack. They aren't changing the rules, they are just using the full breadth of the existing rules to try and get their money back.
posted by gjc at 7:02 AM on January 5, 2012
Why is it that debt collectors are able to buy debts for pennies on the dollar, but the debtors aren't offered the same deal? I realize that practically speaking it's much easier for Mastercard to sell off old debts in bulk rather than trying to cut individual deals with the debtors, but on an ethical/moral level it doesn't seem right. They should pass a law saying that a debt can't be sold without giving the debtor right of refusal on the same terms.
posted by sevenyearlurk at 7:13 AM on January 5, 2012 [13 favorites]
posted by sevenyearlurk at 7:13 AM on January 5, 2012 [13 favorites]
I came pretty close to bankruptcy a few years back due to unemployment. I didn't pursue it because I have a (relatively small) shared line of credit with my parents and I didn't want to get them involved. Practically speaking though, I would have been better off -- I'd have a shitty credit rating, but three years of savings in the bank, instead of a crummy credit rating and no savings like I do now.
posted by sevenyearlurk at 7:18 AM on January 5, 2012
posted by sevenyearlurk at 7:18 AM on January 5, 2012
Why is it that debt collectors are able to buy debts for pennies on the dollar, but the debtors aren't offered the same deal?
It's interesting that you mentioned that, because back when I had some debt problems about five years ago, I actually did have collectors call and tell me that they'd accept 50% as total payment up front, or 100% in instalments, I assume under the theory that people who were being called by debt collectors would often default on later instalments, and hey, they paid less than 50% of it anyhow.
posted by jaymzjulian at 7:27 AM on January 5, 2012 [1 favorite]
It's interesting that you mentioned that, because back when I had some debt problems about five years ago, I actually did have collectors call and tell me that they'd accept 50% as total payment up front, or 100% in instalments, I assume under the theory that people who were being called by debt collectors would often default on later instalments, and hey, they paid less than 50% of it anyhow.
posted by jaymzjulian at 7:27 AM on January 5, 2012 [1 favorite]
the fact that bk imposes pain on the debtor as well as the creditor, which people often don't want to face up to despite the fact that filing could help many of their other problems.
But it's rarely financial pain. Just bureaucratic and logistical pain, most of the time. Getting a consumer bankruptcy done is cheap, usually no more than a few hundred bucks, and there are plenty of agencies out there that will help you do it for free. The only real burden on the debtor is the effort to collect all your paperwork to your attorney. That and having your credit rating trashed, but if you're to the point where bankruptcy is a good idea 1) your credit rating is already trashed, and 2) borrowing money probably isn't something you should be doing anyway.
So you want to stiff your creditors? Fine. Be a grown up and file for bankruptcy.
posted by valkyryn at 7:35 AM on January 5, 2012
But it's rarely financial pain. Just bureaucratic and logistical pain, most of the time. Getting a consumer bankruptcy done is cheap, usually no more than a few hundred bucks, and there are plenty of agencies out there that will help you do it for free. The only real burden on the debtor is the effort to collect all your paperwork to your attorney. That and having your credit rating trashed, but if you're to the point where bankruptcy is a good idea 1) your credit rating is already trashed, and 2) borrowing money probably isn't something you should be doing anyway.
So you want to stiff your creditors? Fine. Be a grown up and file for bankruptcy.
posted by valkyryn at 7:35 AM on January 5, 2012
Bankruptcy is embarrassing, but it's the best thing I ever did. I ran up a ton of debt in my early 20s because i was fucking stupid and the credit card companies kept upping my credit limit instead of saying "Hey, maybe this 23 year old guy making 25k a year shouldn't have 30k in credit available."
I was looking at a lifetime of debt and basically poverty based on my income and minimum payments at the time. Once I had a thousand dollars in the bank from not making any credit card payments, it became really easy to just pay for everything in cash, and I've never missed having a credit card (I have a debit card). I was able to keep my car because I was only 12 months away from paying it off and it was secured debt. I made double payments on the car and had it paid off in 6 months, then I piled away savings, and I haven't used a credit card in 5 years now.
Seriously, if you're looking at your bills in despair right now, just do it. It instantly takes a tremendous load off your shoulders. And the credit card companies are evil incarnate, so you shouldn't even feel a twinge of guilt about it.
posted by empath at 7:46 AM on January 5, 2012 [6 favorites]
I was looking at a lifetime of debt and basically poverty based on my income and minimum payments at the time. Once I had a thousand dollars in the bank from not making any credit card payments, it became really easy to just pay for everything in cash, and I've never missed having a credit card (I have a debit card). I was able to keep my car because I was only 12 months away from paying it off and it was secured debt. I made double payments on the car and had it paid off in 6 months, then I piled away savings, and I haven't used a credit card in 5 years now.
Seriously, if you're looking at your bills in despair right now, just do it. It instantly takes a tremendous load off your shoulders. And the credit card companies are evil incarnate, so you shouldn't even feel a twinge of guilt about it.
posted by empath at 7:46 AM on January 5, 2012 [6 favorites]
Oh, and to pay for the lawyer for bankruptcy -- just stop paying your bills and use that money to hire the lawyer. As soon as you file, he's going to send letters to everyone demanding that they stop calling you anyway.
posted by empath at 8:10 AM on January 5, 2012
posted by empath at 8:10 AM on January 5, 2012
A strange game. The only winning move is not to play.
Except that never using credit for anything can actually significantly harm your credit score, and a lot of employers check credit scores as a preemployment screening mechanism (I guess to evaluate a candidate's personal reputation) when they perform background checks.
So even making "the only winning move" is a losing move under the current credit system.
posted by saulgoodman at 9:05 AM on January 5, 2012 [1 favorite]
Except that never using credit for anything can actually significantly harm your credit score, and a lot of employers check credit scores as a preemployment screening mechanism (I guess to evaluate a candidate's personal reputation) when they perform background checks.
So even making "the only winning move" is a losing move under the current credit system.
posted by saulgoodman at 9:05 AM on January 5, 2012 [1 favorite]
I saw your great comment posted to twitter phalane and looked at the page not logged in--- underneath it were a bunch of google ads for credit cards and loan consolidation companies. They seemed peeved.
Maybe this'll scare them away:
RAINBOWS MERLIN OWLS WIZARDS DOGS CATS CHIMPS FRIENDS GOOD TIMES BIRDS MORE DOGS AND CATS CANDY SMILE CHILDHOOD MEMORIES EVERYDAY FRESH BRIGHT BLUE SKY SWEET CHILD OF MINE WOAH
posted by Potomac Avenue at 9:32 AM on January 5, 2012 [1 favorite]
Maybe this'll scare them away:
RAINBOWS MERLIN OWLS WIZARDS DOGS CATS CHIMPS FRIENDS GOOD TIMES BIRDS MORE DOGS AND CATS CANDY SMILE CHILDHOOD MEMORIES EVERYDAY FRESH BRIGHT BLUE SKY SWEET CHILD OF MINE WOAH
posted by Potomac Avenue at 9:32 AM on January 5, 2012 [1 favorite]
The Wall Street Journal really buried the lede on this article. I skimmed it after the MeFi link and came away with thinking this wasn't so bad. "Oh, pay $400 once to clear your bad credit, then get credit cards again. That's a fair trade". The bit about tricking people into resurrecting old debts that they then owe is buried way down in paragraph 12 or so. And they never provide an example of someone who was really screwed by this trick; the examples are someone paying $400 and someone else paying $300.
To be fair to the reporter, the middle of the article is all about how the leading companies in this type of credit have settled fraud investigations. But it's hidden in the middle of the article. Almost like the WSJ editor wanted to give this story a different spin.
posted by Nelson at 10:23 AM on January 5, 2012
To be fair to the reporter, the middle of the article is all about how the leading companies in this type of credit have settled fraud investigations. But it's hidden in the middle of the article. Almost like the WSJ editor wanted to give this story a different spin.
posted by Nelson at 10:23 AM on January 5, 2012
gjc: "Christ. They just can't stop risking things for greed, can they?
Their greed helps fuck the economy, our tax dollars save them and their jobs, and they are right back at it like nothing happened. At this point, I think we need to close the books, take their toys away, and make them sit in the corner... Quiet time until they know what they did wrong.
I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
Then they shouldn't have borrowed the money in the first place."
All I am saying is...well...Do you loan money to absolutely anyone who asks you?
I doubt you do, as you know some people that are bad risks. These bankers allowed their greed and presumed command of the law to loan money willynilly figuring they could get blood from a stone by legal means, with a rapacious interest rate to salve their fears.
Then they learned you can't get blood from a stone.
posted by Samizdata at 10:41 AM on January 5, 2012
Their greed helps fuck the economy, our tax dollars save them and their jobs, and they are right back at it like nothing happened. At this point, I think we need to close the books, take their toys away, and make them sit in the corner... Quiet time until they know what they did wrong.
I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
NO ONE has a moral obligation to repay their debts from lending institutions. The institutions follow no moral code, so it follows that their borrowers need not either.
Then they shouldn't have borrowed the money in the first place."
All I am saying is...well...Do you loan money to absolutely anyone who asks you?
I doubt you do, as you know some people that are bad risks. These bankers allowed their greed and presumed command of the law to loan money willynilly figuring they could get blood from a stone by legal means, with a rapacious interest rate to salve their fears.
Then they learned you can't get blood from a stone.
posted by Samizdata at 10:41 AM on January 5, 2012
gjc wrote: I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
Of course, chances are that you aren't out much, at least on pre-crisis period debt, which was mostly securitized. Yes, banks securitized unsecured credit card debt. How the hell do you think they could afford all those 0.9% for the life of the balance offers?
posted by wierdo at 10:56 AM on January 5, 2012
Of course, chances are that you aren't out much, at least on pre-crisis period debt, which was mostly securitized. Yes, banks securitized unsecured credit card debt. How the hell do you think they could afford all those 0.9% for the life of the balance offers?
posted by wierdo at 10:56 AM on January 5, 2012
I'm all for humane debt laws, but it isn't greediness to want money back that you loaned to someone.
It is when you're charging someone you know damn well can't afford it 20% interest. You've already got most of your money back just in interest alone.
posted by empath at 10:58 AM on January 5, 2012 [2 favorites]
It is when you're charging someone you know damn well can't afford it 20% interest. You've already got most of your money back just in interest alone.
posted by empath at 10:58 AM on January 5, 2012 [2 favorites]
Also, fuck CompuCredit. They are some of the biggest and oldest scammers in the business. They were among the first to charge 35% interest and were also one of the first to charge fees equivalent to most of the credit line to open an account. And they were one of the first to charge money for making an online payment.
CompuCredit: First in every scam.
Remember, it's not just interest, it's also fees. When they're only exposing themselves to $500 in risk, it's very easy for them to make that up just in payment fees, late payment fees (which they generate by holding checks for days), annual/monthly fees, and on and on.
posted by wierdo at 11:00 AM on January 5, 2012
CompuCredit: First in every scam.
Remember, it's not just interest, it's also fees. When they're only exposing themselves to $500 in risk, it's very easy for them to make that up just in payment fees, late payment fees (which they generate by holding checks for days), annual/monthly fees, and on and on.
posted by wierdo at 11:00 AM on January 5, 2012
Except that never using credit for anything can actually significantly harm your credit score, and a lot of employers check credit scores as a preemployment screening mechanism (I guess to evaluate a candidate's personal reputation) when they perform background checks.
Er. Wow. Think about how deeply, deeply fucking broken that is for a moment, that America has managed to evolve indebtedness into a reputation system. If you're not owned, you're not trustworthy. That's the thinking of a prison gang, not a healthy society.
posted by Vetinari at 11:27 AM on January 5, 2012 [1 favorite]
Er. Wow. Think about how deeply, deeply fucking broken that is for a moment, that America has managed to evolve indebtedness into a reputation system. If you're not owned, you're not trustworthy. That's the thinking of a prison gang, not a healthy society.
posted by Vetinari at 11:27 AM on January 5, 2012 [1 favorite]
Nice purple prose, vetinari, but one can get a good credit rating without being "owned", or even owing anything. But there is no question that the credit system is set up to capitalize on mistakes and misfortunes. Just like prisons nowadays.
posted by telstar at 11:44 AM on January 5, 2012
posted by telstar at 11:44 AM on January 5, 2012
Not just America, I (in the UK) have somehow managed to avoid getting any credit record at all, last time I got a copy of it all they had was my address, prior to that, nada. It does seem to mean I am persona non-grata for quite a few things: can't get a credit card, a pay-monthly mobile phone, or even a bank account other than the cash only type... (presumably loans and mortgages and the like as well).
The bank account thing is particularly ridiculous, I've had a business account with the bank I tried to get a personal account with for 13 years, my lack of a credit record counts for more than all those years of evidence of earnings...
Not that I really mind, apart from feeling a little aggrieved at the system itself and its sheer fickleness. I reckon it's good not to have the temptation of debt....
posted by titus-g at 11:48 AM on January 5, 2012 [1 favorite]
The bank account thing is particularly ridiculous, I've had a business account with the bank I tried to get a personal account with for 13 years, my lack of a credit record counts for more than all those years of evidence of earnings...
Not that I really mind, apart from feeling a little aggrieved at the system itself and its sheer fickleness. I reckon it's good not to have the temptation of debt....
Neither a borrower nor a lender be;As the dude with the big arras said.
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
posted by titus-g at 11:48 AM on January 5, 2012 [1 favorite]
Nice purple prose, vetinari, but one can get a good credit rating without being "owned", or even owing anything.
You can't get the kind of credit score that allows you to take out a home mortgage (for example) without a history of previous credit. I literally had to get a credit card and spend money on it for no reason--netting the credit card companies a couple of nickels and dimes in profit in interest and fees--to get my credit rating up enough to get a mortgage without a co-signer before my wife and I bought our house.
And it's certainly true that employers are more and more frequently using credit scores to evaluate potential employment candidates, as this MSNBC article discusses.
posted by saulgoodman at 12:22 PM on January 5, 2012 [1 favorite]
You can't get the kind of credit score that allows you to take out a home mortgage (for example) without a history of previous credit. I literally had to get a credit card and spend money on it for no reason--netting the credit card companies a couple of nickels and dimes in profit in interest and fees--to get my credit rating up enough to get a mortgage without a co-signer before my wife and I bought our house.
And it's certainly true that employers are more and more frequently using credit scores to evaluate potential employment candidates, as this MSNBC article discusses.
posted by saulgoodman at 12:22 PM on January 5, 2012 [1 favorite]
And it's certainly true that employers are more and more frequently using credit scores to evaluate potential employment candidates, as this MSNBC article discusses.
As the article discusses, there's actually a fair bit of CYA going on here. If an employee steals money and the employer didn't run a credit check, someone may well wind up arguing that they didn't do due diligence in the hiring and are thus liable for the theft. And juries buy that. Further, insurance companies sometimes require this of employers as a condition of coverage, or at least as a condition of certain premium discounts, as they'll be the ones that wind up paying for losses due to employee dishonesty.
Also, what's being looked for in these checks is less one's credit score (which is basically arbitrary and involves consideration of things employers don't care about at all) as such as much as it is one's level of indebtedness and debt-to-income ratio. The thinking goes that someone with a bunch of bills they can't pay is going to be more likely to be tempted to do things they shouldn't. This is why credit checks are part of security clearances too, and why things like bankruptcies can make it difficult to be admitted to practice law.
This practice may well and probably does have pernicious effects, but it's not being done, at least not entirely, for bad reasons.
posted by valkyryn at 12:44 PM on January 5, 2012
As the article discusses, there's actually a fair bit of CYA going on here. If an employee steals money and the employer didn't run a credit check, someone may well wind up arguing that they didn't do due diligence in the hiring and are thus liable for the theft. And juries buy that. Further, insurance companies sometimes require this of employers as a condition of coverage, or at least as a condition of certain premium discounts, as they'll be the ones that wind up paying for losses due to employee dishonesty.
Also, what's being looked for in these checks is less one's credit score (which is basically arbitrary and involves consideration of things employers don't care about at all) as such as much as it is one's level of indebtedness and debt-to-income ratio. The thinking goes that someone with a bunch of bills they can't pay is going to be more likely to be tempted to do things they shouldn't. This is why credit checks are part of security clearances too, and why things like bankruptcies can make it difficult to be admitted to practice law.
This practice may well and probably does have pernicious effects, but it's not being done, at least not entirely, for bad reasons.
posted by valkyryn at 12:44 PM on January 5, 2012
Verizon and I had a bit of a pissing match 8 years ago. The customer service rep agreed that the charges from MCI/Worldcomm were bogus, but Verizon's system didn't allow them to chargeback to MCI/Worldcomm after some period of time. She recommended that I complain to the state utilities commission and the FCC. So, I paid the part I thought was legit, and said screw it to the rest. I wondered why I was still getting mail about it.
Corporations claim a requirement to get maximum profit for shareholders, with no regard for ethics, morality or community. Or common human decency. Why shouldn't individuals reciprocate? If I owe the local hardware store money, I'm gonna see Frank at the grocery, I'm gonna see his wife at school council meetings, etc. If I have a problem with a product or service or bill, the hardware store will probably try to make it right. Notice how many corporations barely have a physical presence. Hey, buy our product, pay promptly and shut up. There's no office where you can go complain. MegaMassiveCorp won't answer your email with anything more than a form response, and that's if you're lucky. You call, fight through the barriers of phone system hell, talk to a customer (disservice) rep who says Yeah, that doesn't seem very good, but policy says blah blah. and I don't have that authority; I'll put you on hold for a manager. I hope you have some knitting and a good book, cause it's gonna be a while. Your call is important to us. please continue to hold, and listen to our perky ads. Your call will be answered by the next available spawn of satan.
There's no social contract with MegaMassiveBofACorp. They have an algorithm for making money. They will trick you, give you poor service, ding you with service charges, sell your personal data, and ding your credit rating because they have no sense that there's a partnership between consumer and producer. Why should I teat them with more honor than they treat me, to say nothing of the damage wrought on our economy by loan shills and sharks.
Stop giving people credit, or shoving credit at people who can't afford it. Provide a good product at a fair price. Stand behind the product. Treat customers and employees like people who have intrinsic value. Just a thought.
posted by theora55 at 4:46 PM on January 5, 2012 [5 favorites]
Corporations claim a requirement to get maximum profit for shareholders, with no regard for ethics, morality or community. Or common human decency. Why shouldn't individuals reciprocate? If I owe the local hardware store money, I'm gonna see Frank at the grocery, I'm gonna see his wife at school council meetings, etc. If I have a problem with a product or service or bill, the hardware store will probably try to make it right. Notice how many corporations barely have a physical presence. Hey, buy our product, pay promptly and shut up. There's no office where you can go complain. MegaMassiveCorp won't answer your email with anything more than a form response, and that's if you're lucky. You call, fight through the barriers of phone system hell, talk to a customer (disservice) rep who says Yeah, that doesn't seem very good, but policy says blah blah. and I don't have that authority; I'll put you on hold for a manager. I hope you have some knitting and a good book, cause it's gonna be a while. Your call is important to us. please continue to hold, and listen to our perky ads. Your call will be answered by the next available spawn of satan.
There's no social contract with MegaMassiveBofACorp. They have an algorithm for making money. They will trick you, give you poor service, ding you with service charges, sell your personal data, and ding your credit rating because they have no sense that there's a partnership between consumer and producer. Why should I teat them with more honor than they treat me, to say nothing of the damage wrought on our economy by loan shills and sharks.
Stop giving people credit, or shoving credit at people who can't afford it. Provide a good product at a fair price. Stand behind the product. Treat customers and employees like people who have intrinsic value. Just a thought.
posted by theora55 at 4:46 PM on January 5, 2012 [5 favorites]
Wow. Think about how deeply, deeply fucking broken that is for a moment, that America has managed to evolve indebtedness into a reputation system. If you're not owned, you're not trustworthy.
Most companies only hire people who have been consistently owned by other companies over their careers. Any gaps in employment must be accounted for. It has nothing at all to do with skills or experience, because skills can be tested and experience can be gauged by total number of years. It has to do with wanting make sure that employees didn't get too much of a taste of freedom. That they didn't have too much time to relax, think about things, and use their time in a self-directed way. I have always found this horrifying. I'm not sure why so many people get why it's horrifying to be forced to have credit cards if one wants a job, but most people totally accept as valid the idea that their employment history should be continuous, and that they must "explain" any periods when they actually controlled their own time, as though the only valid thing to do with one's and only life on earth is to work for an employer.
posted by parrot_person at 9:24 PM on January 5, 2012 [4 favorites]
Most companies only hire people who have been consistently owned by other companies over their careers. Any gaps in employment must be accounted for. It has nothing at all to do with skills or experience, because skills can be tested and experience can be gauged by total number of years. It has to do with wanting make sure that employees didn't get too much of a taste of freedom. That they didn't have too much time to relax, think about things, and use their time in a self-directed way. I have always found this horrifying. I'm not sure why so many people get why it's horrifying to be forced to have credit cards if one wants a job, but most people totally accept as valid the idea that their employment history should be continuous, and that they must "explain" any periods when they actually controlled their own time, as though the only valid thing to do with one's and only life on earth is to work for an employer.
posted by parrot_person at 9:24 PM on January 5, 2012 [4 favorites]
um, that should be "one's one and only life".
posted by parrot_person at 9:25 PM on January 5, 2012
posted by parrot_person at 9:25 PM on January 5, 2012
Also, for all the folks arguing that the credit companies were stupid and greedy for extending credit to folks who ended up defaulting: nice that you've lead such a charmed life that you can ASSume the only reason someone would default is because they are incompetent. For many of us, life happens. One serious illness with insufficient insurance (and most insurance DOES end up being insufficient!!) and most of you could easily find yourself using credit cards as an alternative to STARVING OR ENDING UP HOMELESS. It really irks me that people so easily attribute poor outcomes to poor personal character. Just World Theory, I hate you. You are possibly the worst thing about humans.
posted by parrot_person at 9:27 PM on January 5, 2012 [4 favorites]
posted by parrot_person at 9:27 PM on January 5, 2012 [4 favorites]
I couldn't find it in the article or the thread, so how long is the time period for debt to expire?
posted by BurnChao at 1:31 AM on January 6, 2012
posted by BurnChao at 1:31 AM on January 6, 2012
Depends on your state, and the nature of the debt. USA. Canada.
disclaimer: may not be accurate or up to date, check with your local government to be certain.
posted by mek at 2:37 AM on January 6, 2012 [1 favorite]
disclaimer: may not be accurate or up to date, check with your local government to be certain.
posted by mek at 2:37 AM on January 6, 2012 [1 favorite]
In general, it's 3-7 years if you don't leave the state in which you incurred the debt, which will toll the statute of limitations until you move back in some states. It often matters whether it's credit card debt or something with a signed contract like an auto loan. (with a credit card, you sign an application, not a contract) Some states even differentiate between credit/charge cards issued by merchants directly and third parties, so it can be difficult to figure out.
Generally, credit card debt is toward the lower end, but there are states that have a 7 year statute of limitations even on that.
The reporting period for almost all debt is no more than 7 years since the date of last activity, however, so even if the statute of limitations runs longer, it is unlawful under FCRA for those accounts to show up on your report. The payment contemplated in the article unfortunately resets both the date of last activity (by making the payment, thus giving the account activity) and the statute of limitations (by reaffirming the debt).
posted by wierdo at 11:29 AM on January 6, 2012 [1 favorite]
Generally, credit card debt is toward the lower end, but there are states that have a 7 year statute of limitations even on that.
The reporting period for almost all debt is no more than 7 years since the date of last activity, however, so even if the statute of limitations runs longer, it is unlawful under FCRA for those accounts to show up on your report. The payment contemplated in the article unfortunately resets both the date of last activity (by making the payment, thus giving the account activity) and the statute of limitations (by reaffirming the debt).
posted by wierdo at 11:29 AM on January 6, 2012 [1 favorite]
Oh, and you should know that what constitutes an "open account" is not settled law in every state. Most put credit cards in that category, but not all of them and the law is not always applied correctly.
posted by wierdo at 11:31 AM on January 6, 2012
posted by wierdo at 11:31 AM on January 6, 2012
It often matters whether it's credit card debt or something with a signed contract like an auto loan.
Aren't auto loans secured debt, and they can repossess the car and thus end the contract?
posted by hippybear at 6:20 PM on January 6, 2012
Aren't auto loans secured debt, and they can repossess the car and thus end the contract?
posted by hippybear at 6:20 PM on January 6, 2012
hippybear wrote: Aren't auto loans secured debt, and they can repossess the car and thus end the contract?
There could still be money owed after the repossession, to take the obvious out. Pretend I said auto lease, if your state has non-recourse auto loans (does that even exist?).
posted by wierdo at 6:46 PM on January 7, 2012
There could still be money owed after the repossession, to take the obvious out. Pretend I said auto lease, if your state has non-recourse auto loans (does that even exist?).
posted by wierdo at 6:46 PM on January 7, 2012
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posted by Tell Me No Lies at 5:42 PM on January 4, 2012