Wednesday, April 8, 2009

Stay, FICO, stay!

I recently received a notice from one of my creditors that my interest rate was set to go up in a few months. It went on to explain that all cardholders (with this particular card) were subject to this rate hike and I had a certain amount of days to opt out and close my account. This particular creditor is HSBC.
What does this mean?
One way or another, my credit is about to be affected and the only reason is because I am a customer. Nevermind that I've never made late payments. It wouldn't matter if I'm current on all other credit lines, never miss payments, or if I have been a great customer for a lengthy amount of time.
Unfortunately, this is not unique to me. This is happening to millions of other people in our country.

What about people who keep that one credit card for emergency purposes only? No real emergencies in the last 6 months? Or the last year?
You could be at risk of losing that account. Well known creditor Discover recently reported that they closed 3 million inactive accounts in 2008 alone.

Is this fair? No.

How do they get away with affecting the credit of tons of undeserving people? Because of the terms and conditions of the credit agreement, that's how! You agreed to the CREDITOR'S Terms and Conditions, also known as their total whim, when you filled out the application.

With so many people clinging to their credit scores for dear life, it seems that all that hard work may not play out the way we thought it would.

Thursday, January 29, 2009

If at first you don't succeed...

If you are truly willing to commit to a debt settlement program, you must understand that maintaining communication with your creditors will hinder the process. What did you hire the debt settlement companies for? To stop the calls? To help you resolve the accounts?
If you want the calls to stop, you might consider not answering the phone anymore. Your debt settlement company cannot tell you that you may not speak with your creditors. Often in life we hear the saying, 'Keep your friends close and your enemies closer.'
This DOES NOT apply to your financial situation with creditors. I've said it before and I will say it again: **Creditor calls will begin quite amicably while the process of gathering information takes place. You had better believe they are going to turn on you and become quite aggressive.

Remember the creditor's mentality: If at first you don't succeed, try, try again.
They don't necessarily even need to reach you. Calling your family that may live out of state with still eventually get the message that someone at an 800 number is looking for you. It may be so embarrassing that you return the call with the hope that they will honor your request for them to stop calling your family or distant relatives. They may even call an ex-spouse.

If you've hired a debt settlement company to help you resolve your debts and are willing to truly commit to your plan, you are doing yourself a disservice by maintaining any kind of contact. Let your settlement company do their job.

Saturday, January 17, 2009

Creditor harassment and phone calls

For those of you in debt and delinquent long enough to have been receiving calls from your creditors, you may have noticed that they start out very nice and compassionate. One to two phone calls later, they are now hardened and uncaring. There's a strategy behind this. It's not just that Johnny Callsalot is now frustrated because the nice approach didn't coerce a payment from you.
It's because Johnny wants to talk to you and find out how you got into the debt. Not only that, he wants to find out more personal details to figure out what kind of person you are. Have you been hiding this debt from your family? Talking to Johnny about how you hide your situation from your family because you don't want to worry or upset them could be used as ammunition later. He'll call you and tell you if you don't pay this debt, your family WILL find out. Maybe the entire community.
He will potentially try to use information gathered in the initial conversations to turn against you with threats, scare, and humiliation tactics.

COLLECTORS ARE PAID ON COMMISSION! Every time a collector picks up that phone and dials your phone number, they are not trying to be your friend, they are not trying to be understanding or compassionate of your situation. They are TRYING TO GET PAID! And the sooner you understand that, the better off you will be.

Friday, December 19, 2008

In response...

Justafactoflife posted a comment to the previous blog that I would like to respond to.

First things first...
The most important thing to do before going with any debt settlement company is RESEARCH. Research what debt settlement is, how it works, and more importantly --what are the risks associated with it? Once you have a basic understanding, determine how the risks could potentially effect you. Understand the risks associated with the decision you are making and then ask yourself --Is the chance of settling my accounts for pennies on the dollar worth the chance that [negative impact on credit score/ lawsuit/ etc.] might happen?
Also remember that different states have different legislatures and that different outcomes depend on where you are located. For instance, Pennsylvania is a non garnishable state, but neighboring Ohio is not. This means if you live in Pennsylvania, your creditors cannot sue you and win garnishment of your wages. In Ohio, they can take you to court and be awarded a judgement to garnish wages right off the top of your paycheck.

I did not investigate the website mentioned in your comment, however, many websites of this nature are called lead providers. Debtors come along and provide information based on their situation and they sell this information to companies looking for people who potentially need their services. They do not judge any companies based on ethics, honesty or worthiness. They are simply a middle man providing information to those (companies) who are willing to pay.

As far as the costs of services are concerned, put yourself in the position of any debt settlement, consolidation, or management company. Your clientele are people who, for whatever reason, are unable to manage or afford payments to creditors. They are in a financial situation.
Would you want to provide services to someone in a financial situation on the good faith that they will pay you after services are rendered? Especially with risks of lawsuit or inability to settle at the ideal rate?
A good debt settlement company understands that some of their clients are hiring them due to unexpected, unfortunate circumstances, while others are hiring them due to downright financial irresponsibility. It's irrational for anyone to expect another person or entity to render services with no guarantee of payment, particularly to someone already in a financial situation.

Your question to me is whether or not you should file bankruptcy. Please remember, Justafact, I am not an attorney or financial advisor and cannot advise you as to what you should do. I can only give you my opinion based on the information about your situation that you have provided. I cannot be held liable or responsible for anything. Always consult with a professional and weigh the facts before making any important decision of this nature.

Can you tell me a little bit about the company you are paying?
What kind of paperwork does the process entail? What kind of paperwork do they need from you to begin and execute the process? Do they tell you not to make payments? Do they tell you not to talk to creditors?
In the event that they negotiate with your creditor and obtain a reasonable deal for you, how will the creditor be paid? Do they relate the details of the offer and how to pay? Do they utilize an escrow account?
What happens if you are sued by your creditor? Do they stop working with that account entirely?

Johnnie Callsalot says he's with the prelegal team within BOA. We have no real way of determining whether or not Johnnie is really on any prelegal team. Have you received any letters in the mail mentioning any kind of prelegal status?
What this could mean is that they are considering pursuing you in civil court. They may or may not consider beforehand whether the effort is worth it or not.
Do you have any assets?
Your 401K and Social Security income are exempt from any kind of levy or garnishment, so these funds are safe from creditors and it may not be a wise choice to cash out your retirement money to pay these debts off.
Do you rent or own?
If you own, a creditor could potentially be awarded a judgement of a lien against your home. If a creditor were to obtain a lien on your home, this does not necessarily mean you and your wife will be out on the street without a roof over your head. This simply means that you must pay out what is owed to your creditors from any capital gains when you sell your home. If they obtain a lien against your home, they will not be paid until the home is sold. A Sheriff's sale of your home is also a possibility, but not commonplace.

There's a lot more information needed to give an opinion as to whether you should just call it quits and file bankruptcy or not. You may have stood a chance in debt settlement but just went with a bad or wrong company. You may have made the right choice with the company but could potentially be sued in the near future by your creditors.

The road forks in many paths, but I hope you will share what you go through with me and others.

Sunday, December 7, 2008

Life, interrupted.

Many Americans today are in trouble with creditors, mortgages, or both. Some of these Americans ignored statements, ignored late notices, and now are being hit with the ugliness of a commission-paid collector from either a collection department within their credit company or a collections agency.
There are also many Americans that knew they could only make a partial payment or no payment at all, and went to their creditor to ask for help. If not help, maybe some compassion or understanding. When I asked Chase for a little extension on my due date, the door was slammed in my face. I know I am not alone.

The number one complaint of debtors delinquent on one or more accounts are the phone calls from creditors. The calls span from morning to night and whether they're courteous or threatening depends on who is on the other end of the line.

My number one pet peeve as a employee in the industry are people who believe everything a collector on the end of the phone line says.
If Johnny Vacuum Salesman made commission and really needed a paycheck, wouldn't he tell you that vacuum could work magic? He'd tell you that vacuum would suck 99.99% of the dirt and filth out of your carpet fiber. He'd tell you the hypoallergenic filter sucked 99.99% of all allergens right out of the air in your home. Ultimately it would be up to you whether you believed Johnny Vacuum was telling you the truth or exaggerating the real abilities of the vacuum.

Now let's relate that to a commission-paid collector for the credit companies.
If Tommy Callsalot calls you from [credit company here] and states that your $2500 credit card account is 60 days late, why wouldn't Tommy Callsalot tell you ANYTHING short of threats of violence to earn his commission?
Tommy Callsalot has a wife and kids at home afterall. And maybe the missus is out of work. Maybe little Bobby or Susie has a serious case of the flu and needs to go to the doctor. Maybe Tommy Callsalot can't get to work because he's having car trouble. Just like you and I, Tommy Callsalot is a human being with loved ones and survival needs. But it just so happens that Tommy Callsalot's survival needs are met with a paycheck from XYZ credit company by squeezing payments out of delinquent debtors.

I cannot stress enough the importance of KNOWING YOUR RIGHTS!

We tell our children their whole lives that education will get them anywhere and everywhere they want to be in life. When did that change? When did that exclude credit card holders? If you are in the right or the wrong of any situation, you should know your rights. Educate yourself so that you know you have options. Being in a financial situation can be stressful, burdensome, and downright maddening. But knowing your rights and your options could LITERALLY SET YOU FREE!