Credit Cards-Pay-Back or Write-Off?

[thefarmer]

Bob "My wife and I called AmEx yesterday specifically to tell them to close the account and that they'd never see a dime of the nearly 12k that we still owe them."
[OOC]-Bob "The banking talk reminded me of that. I fucking hate credit companies."
[OOC]-You: "No, but they can take you to court and have a judged garnish your wages"
[OOC]-Bob "Assuming they find me. It's my wife's card technically, but I haven't paid on any of mine since 2000."
[OOC]-Bob "So nyah."
[OOC]-You: "Unless you change your SS number.. it's easy to find you"
[OOC]-Bob "Credit card companies are shit."
[OOC]-Bob "Heh, and AmEx is one of my clients."
[OOC]-Bob "They pay AT&T 10k for me to make a firewall change on the fly."
[OOC]-Bob "They don't care about my little piddly 10k debt. Not really."
[OOC]-You: "Different departments"
[OOC]-You: "The bill collectors aren't the same people thay pay techs"
[OOC]-Bob "I understand that. I'm talking "big picture" here."
[OOC]-Bob "When it boils down to it there's always just some guy who's trying to feed his kids on the other end of the phone."
[OOC]-Bob "But AmEx as an institution isn't going to bother to pay the court fees in order to fetch my pocket change when they throw that away on a two-line config change several times a week."
[OOC]-You: "Why aren't you paying them? Just because? Or did they do something wrong?"
[OOC]-Bob "They did something wrong."
[OOC]-Bob "That same debt was closer to 20k at the beginning of this year."
[OOC]-Bob "No, because my wife had a credit card."
[OOC]-You: "What'd they do?"
[OOC]-Bob "In July I made a payment on the 3rd."
[OOC]-Bob "And on the 16th."
[OOC]-Bob "The 16th was technically late, so on the 15th they charged me $40 as a late fee, and BUMPED UP THE INTEREST RATE."
[OOC]-You: "That's what you agreed for them to do..."
[OOC]-Bob "Since I'd been such a good customer all year they said that they could drop the charge and lower the interest rate back down to what it was."
[OOC]-You: "They do that with everyone with a past history of late payments"
[OOC]-Bob "Point being, AmEx as an entity pissed me off. And the guy who was just trying to feed his kids was also a dick."
[OOC]-You: "Yeah, but it doesn't happen all the time. With people with a history, it's all the time"
[OOC]-Bob "So they'll not get another dime from me. And if they MANAGE to garnish my wife's wages, I'll just have her quit. We don't need the money anyway, except to PAY THE AMEX BILL."
[OOC]-You: "So they raised your interest rate, you called, they lowered it, and that pissed you off enough to shrug off 12k?"
[OOC]-Bob "Well, we called to try and cut a deal."
[OOC]-Bob "Which is how and when we found out about the interest rate thing."
[OOC]-You: "Cut a deal to not have to pay the full 12k?"
[OOC]-Bob "Right. Much like they'll try to do after it goes to collections and we haven't paid them in 2 years."
[OOC]-You: "I mean, I totally agree that cc companies are fucktards, but it just seems.. wrong for you to essentially say fuck you from that 1 problem"
[OOC]-Bob "There's more to it than that of course, you're getting the Psinet cliff's notes currently."
[OOC]-You: "Eh."
[OOC]-Bob "And keep in mind I've paid them almost 10k over the last 7 months, and paid them twice in the same month they raised the interest rate."
[OOC]-Bob "The second payment being the one that was "late", by a day."
[OOC]-Bob "And the guy on the phone was really a cockholster."
[OOC]-Bob "Were we in person having this conversatino over beers there's a good chance you'd be nodding and patting me on the shoulder right now."
[OOC]-Bob "Conversatino was a typo, but I kinda like it."
[OOC]-You: "Nah."
[OOC]-You: "I liked the typo though"

Am I the only one that thinks this is kinda wrong? I mean the guy and his wife spent the money, they should have to pay it back. I know Bob said there were more reasons than what he gave, (but honestly I think if they were important ones he'd have mentioned it), but it really just seems like because the guy he talked to was a dick, and they wouldn't cut him a deal, he decides to not pay them anything else.

[waywardgs]

Heh... good luck to him. They'll grind his credit into the dirt. Hope he doesn't ever want to buy a house.

[Exit]

i thought the full convo was funny

[Sylvan Dreams]

AmEx would just sell his debt to a collections company, who will probably eventually get the money from him one way or another. You don't call a company and say "We're not paying you so go away" - doesn't work like that.

If they're married, I don't really think there's such a thing as "your credit" and "my credit" either.

[CrystalTears]

I agree with CC companies are little thieves, but seeing as how they did spend that money, to try to cut a deal with the company that just did a good deed of lowering their rate after they paid late as nice gesture, is really a dirtbag thing to do.

There has to be more to the story because I can't believe someone would be that stupid to let that kind of debt fester and ruin their credit scores.

[Skeeter]

typically people stop paying credit cards because they can no longer afford to. I would bet his stated worth is much less than he claims.

[Parkbandit]

If the credit card company you are using is a thief, then why are you using them? The 3 credit cards that I have all detailed out all the payment schedules, fees and interest rates before I signed up for them. There are no surprises, since I read over the agreement and signed my name to it.

Bob is a deadbeat scumbag who knows nothing about personal responsibility. He's a prime example of what's wrong with America today.

[CrystalTears]

How much of a CC debt did they/she run up? I think the most I ever put on a card was $5k. I can't imagine to keep going until it was $25k and then be all shocked that I would have to pay it now and try to better deal the company.

I'm not sure if a debt of $12k will be sent to collections. Even if it IS AmEx, that's still a hunk of money that they can subpoena and collect the money themselves.

[TheWitch]

If the credit card company you are using is a thief, then why are you using them? The 3 credit cards that I have all detailed out all the payment schedules, fees and interest rates before I signed up for them. There are no surprises, since I read over the agreement and signed my name to it.

Bob is a deadbeat scumbag who knows nothing about personal responsibility. He's a prime example of what's wrong with America today.

QFT.

I was just about to type almost the exact same thing - especially that last line, including a rant about this damn mortgage bailout.

But I lack the energy.

[Skeeter]

How much of a CC debt did they/she run up? I think the most I ever put on a card was $5k. I can't imagine to keep going until it was $25k and then be all shocked that I would have to pay it now and try to better deal the company.

I'm not sure if a debt of $12k will be sent to collections. Even if it IS AmEx, that's still a hunk of money that they can subpoena and collect the money themselves.


I got sent to collections over a disputed $5 fee. Fuckers.

[Parkbandit]

including a rant about this damn mortgage bailout.



Don't even get me started with that fucking bullshit.

[Tolwynn]

If Bob decides to buy a house in, say, the next 20 years or so, the tanking he's going to give his credit rating will cost him way more than 12 grand, heh.

Good luck buying a new car, applying for any other credit or loans, etc, either. The companies are getting increasingly strict in the wake of the subprime debacle, compounded with having to deal with folks like Bob who have bought into the new American dream of divorcing themselves of all personal responsibility.

[Parkbandit]

Maybe Congress (via our tax money) should just bail poor Bob out.. I mean, he IS the victim here!

[thefarmer]

Its good to know I'm not the only one who thinks this guy's not doing the right thing. When the conversation was taking place, nobody but me seemed to think what Bob was doing wasn't right. Or, at least, nobody but me spoke up about it.

[TheWitch]

Yes, because next thing we know, overspending will be diagnosed as a disease and we should pity people that do it and care for them.

Which is basically the bullshit that's already being required of us per force anyway.

[sst]

and people like him are the reason my interest rate wont get lower on my cards.

I hope he loses his job so he can enjoy the benifits of his decisions.

[NocturnalRob]

and people like him are the reason my interest rate wont get lower on my cards.


annoyingly true

[Gan]

He's an ass for not being responsible for his debt. No one held a gun to his head to make him use the card to buy all his shit.

Lenders are being real picky now about unpaid or non-negotiated debt. If he ever refinances his mortgage - they'll require it to be paid off first. If he sells and the card company throws up a personal debt lien - it has to be paid if the closing is done at a title company (ie. insured closing).

Written off debt will still come back to bite Bob in the ass because they'll just 1099 it which will show on his Federal Income Tax as earned income - to which he'll pay taxes on.

The lack of personal responsibilty that has run rampant today makes me sad. And mostly its my generation (pre-generation X) and generation X.

:(

[Revalos]

Yeah, he is a moron. First thing they'll do, since it is over $10,000 is garnish his wages, if he has any.

Then they'll sell his debt to a local company in the county where either he or his wife lives, and that company will literally show up at his house with a choice of receiving a summons for a court appearance or to pay right then.

If he chooses the summons, they have the right to repossess anything he owns that is currently not paid off (car, house, boat, etc...) under recently passed legislation until he agrees to a payoff schedule at something like 30% interest for every loan he has under a consolidation plan.

Or he could pay it down to $9,999 THEN close the account and only have to deal with the crap you guys have already discussed.

Genius.

[Bobmuhthol]

This thread is so misleading.

[Stretch]

Spend what you can afford to and pay your balances in full, and this isn't a problem. Jesus Christ, your friend is an idiot.

Once he's late for 180 days, AMEX gets to write off his debt as a loss. AMEX will then sell his debt for $0.20 on the dollar. The companies that buy his debt from then on will proceed to call him day in and day out about the money. There are several collection agencies that don't always follow the law. They will call his work. They will call his family. They will call at all hours of the day.

His credit will be destroyed. It is significantly easier to get credit with a bankruptcy on your file than a charged off account. Employers and landlords will use it as an excuse to shoot him down.

People need to really start trying to understand what they're agreeing to when they activate a credit card. Interest rates can change for any reason, include no reason at all, with only 15 days notice. Same for fees. Same for credit line. And in this environment, you can sure as hell bet that most banks will be trying to optimize and improve their collections strategies.

[longshot]

The lack of personal responsibilty that has run rampant today makes me sad. And mostly its my generation (pre-generation X) and generation X.

:(

Depending how you define it, I'm at the very end of generation X.

I think it's kind of funny, in a sad way, that the kids of the so-called "greatest generation" turned out this way.

We're infinitely better than generation Y though. They're the biggest bunch of self-righteous pussys ever spawned. People in their 20s should not be reading Harry fucking Potter.

God I sound old. Fuck me...

[AestheticDeath]

What exactly can you do to negotiate CC debt?

[The Ponzzz]

Well, if the company does a write-off, Bob's credit will remove that from the listing at around 7-10 years. Honestly, the story looks like a lie and a bad lie at that. But if you're going to fuck up your credit, it's best to do it at 18-19 and learn your lesson fast.

[The Ponzzz]

What exactly can you do to negotiate CC debt?

Once the debt is sold to a creditor, you can negotiate what you can pay back. Most companies will still want it all, but there are companies that will only ask for 50% of the debt or some other percentage. It comes down to how well you deal with them. Most of those companies get a lot of funding to not have to worry about the whole debt or if you say owe Verizon Wireless $500, the creditor buys it for only $180. So there is play there. Those are all just rough figures, but with Kodak, we sold a lot of our client's off to credit agencies.

[LMingrone]

You don't have to pay them, but get ready for your credit rating to get shitted on.

I had a Circuit City (Visa) card that I paid off in full and a few YEARS later I get a call from collections saying I owed them $700. I refused to pay it, gave them proof I payed it off, and they still hit my credit score every chance they had. I eventually settled with them for $300 even though I didn't owe them a dime, just to stop taking credit hits.

Even worse...I had a Webster Bank account. I closed it and withdrew my balance.
YEARS later:
"Hello this Tuco calling from India ( Ok, I made that up), you owe us $1700.17".
"No I don't. I closed my account months ago."
"Well.....there was cost to close the account. You know, interest, collection fees and all that."
"FUCK YOU ::click::"

Now no bank will give me an account. Not that it matters, because it made me use cash that is tangible and it makes you think a little more before you spend. Sucks to have to write, "pay to the order of ______" on the back of your paychecks though.

Lesson learned.

[AestheticDeath]

So what the CC company itself won't negotiate? You have to miss payments, and then get the credit sold off first?

[The Ponzzz]

Generally the actual merchant account won't accept a negotiation. It's the agencies they sell your debt to that will, because they buy your debt at less than what you owe (most cases).

[LMingrone]

So what the CC company itself won't negotiate? You have to miss payments, and then get the credit sold off first?

Another idea is to apply for a CC that you can transfer other CC debt to at 0%. If you can do it right you can just keep bouncing it back and forth. I don't know how legal this is anymore though. But it can be done.

For instance: My girlfriend just got a Costco card that charges 0% on transfers, and I think 0% interest for 6 months. We just bounce other things we're paying interest on (student loans, car payments, etc..) off of that. Not only does this jack up your credit pretty quickly if you do it for a while (and actually pay on time every month), but if you can keep finding a new CC every 6 months that does this....well.

Luckily she's a credit manager and I can just sit back and be a moron.

[The Ponzzz]

Another idea is to apply for a CC that you can transfer other CC debt to at 0%. If you can do it right you can just keep bouncing it back and forth. I don't know how legal this is anymore though. But it can be done.

For instance: My girlfriend just got a Costco card that charges 0% on transfers, and I think 0% interest for 6 months. We just bounce other things we're paying interest on (student loans, car payments, etc..) off of that. Not only does this jack up your credit pretty quickly if you do it for a while (and actually pay on time every month), but if you can keep finding a new CC every 6 months that does this....well.

Luckily she's a credit manager and I can just sit back and be a moron.

This can tank your actual credit score though because it creates a lot of OPEN accounts. And some merchant accounts won't allow the transfer. I think cards like Best Buy and Home Depot are pretty strict. Needs to be a Visa or Mastercard really. But it's not always the case. Lot of jobs out there that look at your credit history as well, keep that in mind.

My credit is shit, my divorce ruined me for a few more years. I was able to get pre-approved for a large mortgage still (and have a mortgage now). I would suggest people who have a WRITE-OFF or a BANKRUPTCY to contact a lawyer to start the healing ASAP.

[Seran]

Another idea is to apply for a CC that you can transfer other CC debt to at 0%. If you can do it right you can just keep bouncing it back and forth. I don't know how legal this is anymore though. For instance: My girlfriend just got a Costco card that charges 0% on transfers, and I think 0% interest for 6 months. We just bounce other things we're paying interest on (student loans, car payments, etc..) off of that. Not only does this jack up your credit pretty quickly if you do it for a while (and actually pay on time every month), but if you can keep finding a new CC every 6 months that does this....well. Alot of the issuers of the various Visa and Mastercard accounts out there have anticipated this and are instituting a 1-3% fee each time you transfer a balance. In the long run, if you've a 0% APR, you're better off just paying off all that nice interest free principal with small payments. As a credit manager, she should realize that having many large revolving lines is actually detrimental to your score. Even though they do not carry a balance, you're perceived as a greater risk due to the ability to max out each of those credit lines and thus causing insolvency.

[Sean of the Thread]

Actually without you taking proper action to lock in a bullshit payment play the 7-10 year vanish myth is just that... a myth.

These companies sell the debt back and forth before the deadline and everytime they do so it starts another 7+ period of debt with a new debt holder.

Just an fyi.

[The Ponzzz]

Actually without you taking proper action to lock in a bullshit payment play the 7-10 year vanish myth is just that... a myth.

These companies sell the debt back and forth before the deadline and everytime they do so it starts another 7+ period of debt with a new debt holder.

Just an fyi.

Yea, it can happen though. But more likely than not, you will be found. Anytime you are found, the cycle re-news itself.

[AnticorRifling]

I would have called "Bob" a spineless freeloading shit that's hoping to hell there is still enough hard working Americans out there willing to carry his ass. I'd be more than happy to see a law passed that should you fail to pay a debt without just cause (death, crippling so you can't work, etc) you open yourself to a payment plan involving bodily harm.

This is why, except for my house, I don't buy shit until I have the cash in pocket. There is nothing I need that I can't wait a few months for.

[Sean of the Thread]

This is why, except for my house, I don't buy shit until I have the cash in pocket. There is nothing I need that I can't wait a few months for.

That rule doesn't apply to new guns does it?


cringe

[sst]

just a FYI bankruptcy stays on your creit report for 10 years not 7

[AnticorRifling]

That rule doesn't apply to new guns does it?


cringe


For me it does. I don't buy a new pistol or rifle until I've got cash in hand. It helps with spur of the moment purchases, I get better deals for paying all at once in cash, and if while I'm saving something else comes out that catches my eye I can go for that.

[Cephalopod]

As an aside, American Express has been very good about working out payment options in my experience. I had a $9k debt with them that I had been paying on (minimum payments) for about 6 years and not otherwise spending on, but it was going to take years to pay off. I called them to ask to negotiate a change in interest rates and they indicated that because I had been making consistent payments, they would forgive the debt.

Credit card companies are required to give you all terms, fees and conditions upfront -- if you don't read them, that's your own fault.

...er, yeah. Short story: Bob is a douche, and the kind of douche that leads us directly to the financial problems we've got in the US right now. It ain't just the lenders.

[Mighty Nikkisaurus]

This is why, except for my house, I don't buy shit until I have the cash in pocket. There is nothing I need that I can't wait a few months for.

+1

Besides my student loans and house payments, I've paid everything with cash.

I have a single credit card with a $500 limit to it, I charge it then pay it off once or twice a month and then that's it.

If I can't afford it, I can't afford it and unless it's an utter emergency I won't die if I have to wait an extra month or so.

[Sean of the Thread]

No comment *cough*.

[Mighty Nikkisaurus]

No comment *cough*.

?

[Skeeter]

As an aside, American Express has been very good about working out payment options in my experience. I had a $9k debt with them that I had been paying on (minimum payments) for about 6 years and not otherwise spending on, but it was going to take years to pay off. I called them to ask to negotiate a change in interest rates and they indicated that because I had been making consistent payments, they would forgive the debt.

Credit card companies are required to give you all terms, fees and conditions upfront -- if you don't read them, that's your own fault.

...er, yeah. Short story: Bob is a douche, and the kind of douche that leads us directly to the financial problems we've got in the US right now. It ain't just the lenders.

This seems like an unlikely business practice. Why would they kill the cash cow? How much debt was left?

[Ravenstorm]

I never use cash if I can possibly help it. I have several cards and use them for everything. Why? Because they pay me to use them. I get cash back that ranges from 1% for most crap to 5% for gas, groceries and pharmacies. I pay every month in full and have never paid a cent in interest.

It is quite possible to save money by only using credit cards.

[Parkbandit]

As an aside, American Express has been very good about working out payment options in my experience. I had a $9k debt with them that I had been paying on (minimum payments) for about 6 years and not otherwise spending on, but it was going to take years to pay off. I called them to ask to negotiate a change in interest rates and they indicated that because I had been making consistent payments, they would forgive the debt.

Credit card companies are required to give you all terms, fees and conditions upfront -- if you don't read them, that's your own fault.

...er, yeah. Short story: Bob is a douche, and the kind of douche that leads us directly to the financial problems we've got in the US right now. It ain't just the lenders.

I have a tough time believing American Express would just forgive your debt instead of lowering your interest rate like you suggest. What did I miss?

[BigWorm]

Continuously compounded interest will fuck you big time if you just pay the minimums.

[LMingrone]

This can tank your actual credit score though because it creates a lot of OPEN accounts. And some merchant accounts won't allow the transfer. I think cards like Best Buy and Home Depot are pretty strict. Needs to be a Visa or Mastercard really. But it's not always the case. Lot of jobs out there that look at your credit history as well, keep that in mind.


Don't keep them open.
But, you are right. You just have to do it right. It's not easy finding a card that lets you do this, but they are out there. If you just use them for your benefit, then close them...and do it over and over. I'm not a genius when it comes to this stuff, but I've been paying off debt faster while at the same time getting my credit up pretty quickly.

[Cephalopod]

This seems like an unlikely business practice. Why would they kill the cash cow? How much debt was left?

The leftover debt was $9k split between two amex cards (both in my name -- don't ask how that happened).

I did leave something key out -- a mitigating factor was that a class-action lawsuit had been settled earlier in the year regarding Amex's predatory rates practices or something. I wasn't part of the suit, but I understood from what I read at the time that they were forgiving a lot of debt that had been on their books for a long time that fell within the realm of whatever 'predatory rate practices'. Something like that.

I also may have just dreamed all of this up, but it doesn't keep the person mentioned in the OP from being a douche.

[g++]

If he thinks the guy from amex is a "cockholdster" wait till he meets his local collections agency. Those people are professional rapists.

[Stanley Burrell]

Fucking scary ass bank motherfuckers. That are scary.

[Stretch]

Only a douchebag would work for a credit card company.

[Skeeter]

or an insurance company.

[thefarmer]

I've had debts of roughly 5k and 7k settled with a CC company. I offered to pay them something like 1k (for the 5k) and 2k-ish (7k) in a check over the phone and they agreed to mark both accounts paid in full.

[AestheticDeath]

What was the situation though, what makes them agree? And doing that does not affect your credit I assume?

[thefarmer]

There really wasn't a situation. I figured I'd ask.

It can affect your credit, but not with the terms I agreed to. Basically to a credit report, it will show that I paid off my debt in full. Just like if I had paid off the full amount.

[TheWitch]

I've had debts of roughly 5k and 7k settled with a CC company. I offered to pay them something like 1k (for the 5k) and 2k-ish (7k) in a check over the phone and they agreed to mark both accounts paid in full.

I would like you to explain to me how you can justify this to yourself.

You spent the money.
Why do you think you get a pass at paying it back?
How do you even have the balls to ask.

Honestly, I don't know who disgusts me more, people like you, or the credit cards/banks that deal with you on your lowest common denominator terms.

You effectively fuck over every single one of us that plays by the rules - does not spend more than we can afford, does not create mountains of debt, live below our means to save, so in a time of crisis we have a safety net.

I realize, crisis happens that even the most prepared may not be able to handle - and that's not what I'm talking about here. There was no mention of crisis by either the OP or this ass.

[g++]

I would like you to explain to me how you can justify this to yourself.

You spent the money.
Why do you think you get a pass at paying it back?
How do you even have the balls to ask.

Honestly, I don't know who disgusts me more, people like you, or the credit cards/banks that deal with you on your lowest common denominator terms.

You effectively fuck over every single one of us that plays by the rules - does not spend more than we can afford, does not create mountains of debt, live below our means to save, so in a time of crisis we have a safety net.

I realize, crisis happens that even the most prepared may not be able to handle - and that's not what I'm talking about here. There was no mention of crisis by either the OP or this ass.

I imagine its a situation where they have already payed or payed twice over their original debt and have been getting drowned by the interest for years. Credit card companies make the vaste majority of their money off people like that who will put themselves in that no mans-land right between bankrupcy and living to pay their credit card down so they will be nice to them if they slavishly work to pay the minimum for years in the hopes they will do the same with the same bank next time they see something shiny that costs 70 times their monthly spendable income.

Actually the CC companies dont give two shits about people that pay their bills on time, I bet theyd actually rather you didnt use their cards. Its people that cant manage their finances that are the big money for them.

[TheWitch]

I imagine its a situation where they have already payed or payed twice over their original debt and have been getting drowned by the interest for years. Credit card companies make the vaste majority of their money off people like that who will put themselves in that no mans-land right between bankrupcy and living to pay their credit card down so they will be nice to them if they slavishly work to pay the minimum for years in the hopes they will do the same with the same bank next time they see something shiny that costs 70 times their monthly spendable income.

Actually the CC companies dont give two shits about people that pay their bills on time, I bet theyd actually rather you didnt use their cards. Its people that cant manage their finances that are the big money for them.

The original debt that they wracked up. I have no pity. None. If a person is smart enough to get the credit card, but too stupid to use properly, they do not get my pity.

The tone of that entire post was "it's the credit card companies fault", and my bad if I'm reading between the lines on that, but this really irritates me.

The credit card companies might be shiesters, they might jack their rates, they might have hidden clauses, all that jazz.

None of which effects anyone - until they:
A. Accept the card.
B. Use it irresponsibly.

I have room in my opinion for people who are/were in debt due to financial crisis, I've been there. My son had leukemia. I had to leave my career, which was half our income at the time. We were lucky enough to have fall back money, we didn't spend the maximum we could afford on our home, and we don't drive fancy cars, etc etc etc. Some people are not equally prepared, and I get it - and those are NOT the people I'm talking about.

The ones that have to have the 52" 1080 TV, the blackberry, the Lexus, the weekly manicure, the daily cup of $8 coffee, the Xbox AND the PS3 AND HDTV and etc etc - but lack the finances and then expect a free pass?

That's who pisses me off, with their twisted sense of entitlement.

And whether you think it screws everyone else or not, it does. The mountains of debt put a strain on the entire economy. If I have to spell that out for anyone, I'd simply link them to the financial section of MSN, the Wall Street Journal, NYT, etc.

[Kranar]

I would like you to explain to me how you can justify this to yourself.


It's very simple and entirely justified. He entered into a business negotiation with his credit card company, and given that he had a previous track record of payments made on time and a good enough credit score, his credit card company decided that forgiving the debt to a person like him was in their best interest in the long run.

There's nothing unethical about trying to re-negotiate a loan. You can't in anyway compare someone who goes to their lender and negotiates a better deal to someone who just plain bails out on their responsibility.



And whether you think it screws everyone else or not, it does. The mountains of debt put a strain on the entire economy. If I have to spell that out for anyone, I'd simply link them to the financial section of MSN, the Wall Street Journal, NYT, etc.


You're confusing two different people. Debt is actually the very engine that drives the world economy. Granted, mountains of debt is bad, but thefarmer was not in mountains of debt. He was in debt and managed to negotiate a better deal for himself which benefited both him, and his lender.

[Latrinsorm]

If it was me, I think I would be careful presuming I knew everything about someone else's personal and medical history from a 50-word post, and I'd certainly be a little careful about throwing words around like "disgust" or "twisted".

But you're not me. :)

[Kranar]

Okay, admittedly I confused thefarmer with Nachos DLC.

While thefarmer is sparse on details, I think it's safe to assume he's in a similar situation. Either way, negotiating a deal with your lender is entirely rational. Your lender isn't going to do you any favors, if they forgive debt is because their profile of you indicates that in the long run you're better to have around as a client. They don't make these deals with deadbeats with mountains of debt and no intention of paying them back like 'Bob'.

[Mighty Nikkisaurus]

I'm with Kranar on this.

There's nothing wrong with re-negotiating any sort of bill, and it's FAR more responsible than simply ignoring your responsibility to pay.

I will probably be paying hospital bills my whole life because of a condition my insurance has deemed "non-threatening" and therefore refuses to pay for the treatment of. Left untreated, this condition would absolutely ruin my life even if it's not going to outright kill me.

I already have a ton of hospital and medical bills, but after each one I get on the phone and call the billing department and start working something out. Because I have a squeaky clean pay record and I'm the one who initiates contact, I've managed to get the amount I pay reduced (and some things even free). In fact I went through one week of a treatment that would have cost me 600 dollars a day and the hospital agreed to eat the entire cost for me. I don't think it's "irresponsible" of me to look for ways to make sure I get the care I need without ending up living in a cardboard box somewhere. Similarly, I don't think it's irresponsible for someone with credit card debt that they feel is burying them to call the company and try to work something out. It's not as black and white as "Pay the amount you've been billed and be a good person, or don't pay and be a bad person."

[Latrinsorm]

I should have quoted, but if it wasn't clear my post was directed at TheWitch. :yes:

[TheWitch]

I thought I was pretty clear in stating, my aggravation is not driven by people are negoiating because of financial crisis. I did plenty of that while my son was in treatment, to the tune of nearly 300k. We had great coverage, but some things weren't covered and there were large deductibles and co-pays.

My issue is with people like the OP, who spend and spend, then don't want to pay. People like who I read about in Newsday who defaulted on their mortgage, were foreclosed upon, and don't want to pay even the negotiated reduced payment - because it's preventing them from buying a new car. That's one example.

Based on the context of the thread, my assumption on thefamers negotiation is that he negotiated the waiver of this debt based on his inability to pay it. Lacking any reason given, I don't assume he's in crisis - I assume he's just no longer interested in paying for items he may no longer have, meals he can no longer remember eating, etc.

Is that a fair assumption? Maybe not without context, no. In the context of the thread, it's really not that outlandish.

[Sean]

If TheFarmer had 3k onhand to send to his CC company to negotiate with I think it's safe to say he could make his min payments at least which are probably a total of what? $3-400 total with crappy interest rates?

[Clove]

If the credit card company you are using is a thief, then why are you using them? The 3 credit cards that I have all detailed out all the payment schedules, fees and interest rates before I signed up for them. There are no surprises, since I read over the agreement and signed my name to it.

Bob is a deadbeat scumbag who knows nothing about personal responsibility. He's a prime example of what's wrong with America today.QFT.

And he's deluding himself if he doesn't think Amex won't seek judgement against him and his wife for 12k. They will find him and if he doesn't make good, they'll have his and his wife's assets attached and then they'll get a garnishment.

[Clove]

It's very simple and entirely justified. He entered into a business negotiation with his credit card company, and given that he had a previous track record of payments made on time and a good enough credit score, his credit card company decided that forgiving the debt to a person like him was in their best interest in the long run.

There's nothing unethical about trying to re-negotiate a loan. You can't in anyway compare someone who goes to their lender and negotiates a better deal to someone who just plain bails out on their responsibility.QFT. Negotiating and re-negotiating loans and business deals are simply routine business; but you must abide by your agreements. If you can't convince the other party to make a new deal- that doesn't give you the right to stiff them out of spite.

[The Ponzzz]

I'm pretty sure thefarmer had a reason to do what he did. There are clauses you agree to when you sign up for a credit card that allows you out the contract and out of your debt. Some examples lay offs, disability, death, hospitalization, etc.

[Mighty Nikkisaurus]

I thought I was pretty clear in stating, my aggravation is not driven by people are negoiating because of financial crisis. I did plenty of that while my son was in treatment, to the tune of nearly 300k. We had great coverage, but some things weren't covered and there were large deductibles and co-pays.

My issue is with people like the OP, who spend and spend, then don't want to pay. People like who I read about in Newsday who defaulted on their mortgage, were foreclosed upon, and don't want to pay even the negotiated reduced payment - because it's preventing them from buying a new car. That's one example.

Based on the context of the thread, my assumption on thefamers negotiation is that he negotiated the waiver of this debt based on his inability to pay it. Lacking any reason given, I don't assume he's in crisis - I assume he's just no longer interested in paying for items he may no longer have, meals he can no longer remember eating, etc.

Is that a fair assumption? Maybe not without context, no. In the context of the thread, it's really not that outlandish.

There's absolutely nothing wrong with re-negotiating for the simple fact that you want to be able to pay less.

The creditor can still say No, but if they say Sure why not, then there's really no harm or foul.

Frankly I think it's absolutely idiotic to resign yourself to a year of eating Top Ramen while paying off debt without first contacting the company and seeing if you can work something out.

[sst]

Actually the CC companies dont give two shits about people that pay their bills on time, I bet theyd actually rather you didnt use their cards. Its people that cant manage their finances that are the big money for them.

You have no idea how credit agreements between merchants and CC companys work then

CC companies pay anywhere from 3-5% less to the merchant than what you pay for the item.
Discover charges a 5% fee

--you buy a $100 something from Best Buy on your Discover Card.
Best buy gets paid $95 dollars from Discover Cards.

They love every time you use their card because its free money.

[Kranar]

You have no idea how credit agreements between merchants and CC companys work then

...

You have no idea how credit agreements between merchants and CC companys work then


And you my friend need a simple lesson in math/finance. What do you think results in more money? A flat 5 bucks on a 100 dollar purchase... or 18% compounded interest on a 100 dollar purchase.

Believe me... these guys don't care much for that flat processing fee. True, it's free money and no company will turn down free money, but it's the interest that earns these guys the big bucks.

[g++]

You have no idea how credit agreements between merchants and CC companys work then

CC companies pay anywhere from 3-5% less to the merchant than what you pay for the item.
Discover charges a 5% fee

--you buy a $100 something from Best Buy on your Discover Card.
Best buy gets paid $95 dollars from Discover Cards.

They love every time you use their card because its free money.

You dont owe visa money you owe MBNA money. MBNA doesnt give a fuck how much VISA is making on your purchases.

[TheWitch]

There's absolutely nothing wrong with re-negotiating for the simple fact that you want to be able to pay less.

The creditor can still say No, but if they say Sure why not, then there's really no harm or foul.

Frankly I think it's absolutely idiotic to resign yourself to a year of eating Top Ramen while paying off debt without first contacting the company and seeing if you can work something out.

See, I can't agree with that. In a situation where what you owe on is something you choose to spend on. If a person chooses to spend two grand on a big ass TV, why shouldn't they resign themselves to noodles - if they didn't have the good sense to do the math and figure out they couldn't afford it and still eat steak.

If they bought the big ass TV, then got hit by a bus and couldn't work anymore, that's a different story entirely. Again, financial crisis.

[g++]

I think what your missing is that a credit card company would rather work with a guy who will spend beyond his means and pay an absurd amount of interest on a debt over time then a person who plunges into a debt for an emergency and then defaults on the loan. In the one instance the credit card company has already made its money back and then some and can continue to make 1.5x - 2x its investment of debt on what they essentially see as a walking cash machine so long as they keep him out of bankrupcy court.

Its a credit card theres nothing utilitarian about it having a good exuse or bad exuse doesnt matter to them.

[Clove]

There's absolutely nothing wrong with re-negotiating for the simple fact that you want to be able to pay less.

The creditor can still say No, but if they say Sure why not, then there's really no harm or foul.

Frankly I think it's absolutely idiotic to resign yourself to a year of eating Top Ramen while paying off debt without first contacting the company and seeing if you can work something out.


See, I can't agree with that. In a situation where what you owe on is something you choose to spend on. If a person chooses to spend two grand on a big ass TV, why shouldn't they resign themselves to noodles - if they didn't have the good sense to do the math and figure out they couldn't afford it and still eat steak.

If they bought the big ass TV, then got hit by a bus and couldn't work anymore, that's a different story entirely. Again, financial crisis.You would do badly in business. You aren't negotiating on the price of the TV, you're negotiating the financing. If the bank was willing to offer you cheaper financing you'd be a fool not to take it (regardless of the reason or circumstances) and, if you don't ask then you don't get.

I understand that you advocate that people buy responsibly, but honestly, does that mean if you make a mistake you should just deliberately suffer as much as possible for it? Frankly I consider that attitude foolish and liken it to deliberately standing in the rain (instead of seeking shelter) because you didn't have the wisdom to check the weather and bring an umbrella along. Why not see if your creditor is willing to settle for less and therefore minimize the consequences? Isn't that merely... smart?

If I followed your line of reasoning, I shouldn't ever refinance my house for lower interest because "I should have known the cost of the purchase and financing at the sale and resigned myself to it for the next 30 years."

Of course it's your perogative to disagree, but I think you're going to be hard-pressed to convince any ethicist that it's unethical to honestly deal for the lowest price or rate possible. That's simply shrewd.

[Stretch]

Credit card companies make money in three key ways:

- Interchange fee (a % cut and sometimes $0.05 - $0.10 per transaction). Despite what the other poster said, it's usually between 1.5% and 2%; some of the premier cards go up to 3%.
- Card fees (late payments, going over limit, membership fees, convenience fees)
- Interest

I'm not going to say how they're weighted, since it varies by bank and consumer segment, but they're all a significant percentage of overall revenue. Here's what most people don't understand -- the interchange fee gets split between the card issuer (i.e. Chase, Citibank) and VISA / Mastercard / AmEx, so it doesn't generate as much as people might think.

Collecting 18% interest is all well and good, but there's something else at play here. Someone who only qualifies for high interest rates is probably more likely to charge off. 18% interest = good, 10% charge off rate = bad. On time payment = good, since at the very least the account doesn't COST the bank money.

$39 in revenue from a late payment is all well and good for the bank...except if the person is late on payments in the first place, they're xx% less likely to ever pay a dime to the bank, so the $39 just gets added into the charge off amount.

There's two sides to every coin. Personally, I'd take a guaranteed $50 over a 50% chance to make $100 and a 50% chance to lose $500.

[g++]

Credit card companies make money in three key ways:

- Interchange fee (a % cut and sometimes $0.05 - $0.10 per transaction). Despite what the other poster said, it's usually between 1.5% and 2%; some of the premier cards go up to 3%.
- Card fees (late payments, going over limit, membership fees, convenience fees)
- Interest

I'm not going to say how they're weighted, since it varies by bank and consumer segment, but they're all a significant percentage of overall revenue. Here's what most people don't understand -- the interchange fee gets split between the card issuer (i.e. Chase, Citibank) and VISA / Mastercard / AmEx, so it doesn't generate as much as people might think.

Collecting 18% interest is all well and good, but there's something else at play here. Someone who only qualifies for high interest rates is probably more likely to charge off. 18% interest = good, 10% charge off rate = bad. On time payment = good, since at the very least the account doesn't COST the bank money.

$39 in revenue from a late payment is all well and good for the bank...except if the person is late on payments in the first place, they're xx% less likely to ever pay a dime to the bank, so the $39 just gets added into the charge off amount.

There's two sides to every coin. Personally, I'd take a guaranteed $50 over a 50% chance to make $100 and a 50% chance to lose $500.


Sure sure, if were looking at just a single card holder however lets take two guys that both make about 50k a year. One keeps his balance under 2 grand makes timely payments and is generally responsible. The loan originator will make a reasonable amount of money off of them. If the same guy runs his card up to 12-15k and gets into a situation where he needs to cut half his check to the credit card company every month the loan originator basically has this asshole working for them now. He will keep the payment up but will never get to the 12k with his other bills so he is essentially a gold mine. When MBNA got taken over by Bank of America the CEO of Bank of Americas first move was to have a huge conference with all the collections and loan originator heads and talk about how they were going to stop issuing high risk credit cards. He felt pretty stupid when they explained to him that those two areas were the vaste majority of MBNA profits.

[sst]

And you my friend need a simple lesson in math/finance. What do you think results in more money? A flat 5 bucks on a 100 dollar purchase... or 18% compounded interest on a 100 dollar purchase.

Believe me... these guys don't care much for that flat processing fee. True, it's free money and no company will turn down free money, but it's the interest that earns these guys the big bucks.

18% APR will end up being a little bit over $18.00 on $100

$5.00 instant payoff

Its a bit less than 1/3rd of it, still a fair amount of money. To say a credit card company does not want you to use the card if you dont carry a ballance is pretty stupid.

[Sean]

Originally Posted by g++
Sure sure, if were looking at just a single card holder however lets take two guys that both make about 50k a year. One keeps his balance under 2 grand makes timely payments and is generally responsible. The loan originator will make a reasonable amount of money off of them. If the same guy runs his card up to 12-15k and gets into a situation where he needs to cut half his check to the credit card company every month the loan originator basically has this asshole working for them now. He will keep the payment up but will never get to the 12k with his other bills so he is essentially a gold mine. When MBNA got taken over by Bank of America the CEO of Bank of Americas first move was to have a huge conference with all the collections and loan originator heads and talk about how they were going to stop issuing high risk credit cards. He felt pretty stupid when they explained to him that those two areas were the vaste majority of MBNA profits.

You know what Stretch does for a living right?

[sst]

Credit card companies make money in three key ways:

- Interchange fee (a % cut and sometimes $0.05 - $0.10 per transaction). Despite what the other poster said, it's usually between 1.5% and 2%; some of the premier cards go up to 3%.

Somebody who knows it a bit more than me =)

I know Sears was really bad about the fees and i remember reading somewhere that it was something stupid like 5%, which is why they started dissapearing and people stoped accepting them. Then again i may have exagerated it in my head

[Clove]

18% APR will end up being a little bit over $18.00 on $100

$5.00 instant payoff

Its a bit less than 1/3rd of it, still a fair amount of money. To say a credit card company does not want you to use the card if you dont carry a ballance is pretty stupid.Not quite. 18% APR is 1.5% a month which compounds the longer you take to pay it off. So you charge 100.00 and you pay it the first month the bank and Visa get to split the interchange. Let's say 5 bucks. $2.50... isn't all that thrilling for fronting you $100.00 for 20 days, but it's better than nothing.

Now, if you DON'T pay it off, the bank and Visa STILL split the interchange! So they're going to get their 2.50 plus the interest you pay by paying off over time.

Let's say you pay 20 bucks a month.

100.00+1.50-20.00=81.50
81.50+1.22-20.00=62.72
62.72+0.94-20.00=43.66
43.66+0.65-20.00=24.31
24.31+0.36-20.00=4.67
4.67+0.07-4.74=0.00

You've paid $4.74 in interest for borrowing a $100.00 for 6 months. The bank still gets the interchange- $2.50. They've received $7.24 for loaning you $100.00 for six months. Much more appealing. 2.5%.... 7.24%.... hmmmmm. And the longer you take to pay, the greater their percentage. They really WANT you to carry a balance for as long as possible (assuming you're a good credit risk), they've just worked out so that if you DO pay your balance every month, they won't lose money on it.

[sst]

...
I agree clove...

All i typed was in response to this


Actually the CC companies dont give two shits about people that pay their bills on time, I bet theyd actually rather you didnt use their cards. Its people that cant manage their finances that are the big money for them.

[TheWitch]

You would do badly in business. You aren't negotiating on the price of the TV, you're negotiating the financing. If the bank was willing to offer you cheaper financing you'd be a fool not to take it (regardless of the reason or circumstances) and, if you don't ask then you don't get.

I understand that you advocate that people buy responsibly, but honestly, does that mean if you make a mistake you should just deliberately suffer as much as possible for it? Frankly I consider that attitude foolish and liken it to deliberately standing in the rain (instead of seeking shelter) because you didn't have the wisdom to check the weather and bring an umbrella along. Why not see if your creditor is willing to settle for less and therefore minimize the consequences? Isn't that merely... smart?

If I followed your line of reasoning, I shouldn't ever refinance my house for lower interest because "I should have known the cost of the purchase and financing at the sale and resigned myself to it for the next 30 years."

Of course it's your perogative to disagree, but I think you're going to be hard-pressed to convince any ethicist that it's unethical to honestly deal for the lowest price or rate possible. That's simply shrewd.

Well, previous discussions hadn't necessarily been based on simply asking for a lower rate, they were based on asking for a partial relief from a debt entirely, or simply not paying the debt at all.

You're right, I would be a fool to say, don't try to negotiate better terms, and if I implied that I was unclear.

However, yes, to a certain extent I think if a person digs themselves a hole, they should dig themselves out. The analogy to a rainstorm doesn't work, being wet is temporary.

Learning from mistakes the hard way is a great way to remember not to make them again. And I don't think it's right to ask someone else to pay that price for you, even if that someone else is a credit card company.

[Kranar]

18% APR will end up being a little bit over $18.00 on $100

Sure, it's exactly $19.56 after a year.

Now while I haven't found an official source for this, I just spoke with a buddy of mine who used to work for a bank and he said interest payments account for 75% of credit card revenue, while fees such as late fees, processing fees, annual fees etc... account for 25%.

He also told me, once again, anecdotal, that informally banks have terms for various types of borrowers. They have the "deadbeats", who are those who always pay off their credit card on time, and account for roughly 30-40% of credit card users, they have the so called revolvers, who only pay off minimums, and then there are the sweatbox, those who are in jeopardy.

I think when informally you're known as a deadbeat, it's fair to say the credit card companies don't care about you all too much. Whereas I assumed revolvers would be those who make the credit card companies the most money, supposedly a lot of the money comes from those who can barely afford to pay off their debt, and this should be evidenced by the whole sub-prime lending industry which has made a killing.

But I mean in my opinion the math is on my side. You're thinking a one time percentage charged as a processing fee is significant. I'm arguing that while it's nice free money for the banks, just have a look at examples of exponential growth and the consequences of compounded interest over say 4-5 years. People who end up in credit card debt usually stay in debt for well over a decade, constantly paying compound interest every freaking month.

After no more than 4 years you're paying 104% of your principle, after 5 years its 144%, after 6 years its 192%, after 10 years its 500%.

That's the nature of the beast. Now if when presented with that kind of exponential growth you still think charging a 1-2% processing fee is how banks are getting rich off of credit cards... by all means, continue believing it. But the numbers should convince you otherwise.

[Stretch]

Sure, it's exactly $19.56 after a year.

He also told me, once again, anecdotal, that informally banks have terms for various types of lenders. They have the "deadbeats", who are those who always pay off their credit card on time, and account for roughly 30-40% of credit card users, they have the so called revolvers, who only pay off minimums, and then there are the sweatbox, those who are in jeopardy.

I think when informally you're known as a deadbeat, it's fair to say the credit card companies don't care about you all too much. Whereas I assumed revolvers would be those who make the credit card companies the most money, supposedly a lot of the money comes from those who can barely afford to pay off their debt, and this should be evidenced by the whole sub-prime lending industry which has made a killing.



The deadbeat term drives me nuts for some reason. One bank's practices get applied to the entire industry. Some woman professor from Harvard happened to hear that the term batted around at Citi for a transactor (i.e., someone who pays off their cards) is "deadbeat," and suddenly everyone thinks that's how every company thinks.

At a macro level, the valuations on revolvers and people who pay in full are not worlds apart. A revolver with a poor credit history will make you less money than their pay-in-full counterpart, simply because the impact of a charge off is pretty devastating.

A revolver with a good credit history might be that "cash cow," but on the flip side, a high-worth person who spends thousands a month will also generate hundreds of dollars of risk-free interchange revenue. All it takes is one revolver carrying a $20k balance to charge off, and that wipes out the gains of dozens of other revolvers. At the individual customer level, you don't consider losing everything, but taken at the customer base level, an increase of a efw basis points in the charge off rate can cost millions of dollars.

[g++]

You know what Stretch does for a living right?

I vaguely remember hearing hes a trader or banker or some shit...Im not intimidated by the fact that hes immersed in what were talking about. He held up alot of what I was saying and I just added to it, yah credit card companies make alot of revenue from normal customers but they dont get nearly the bang for the buck they get busting out an irresponsible person with a good income.

[AestheticDeath]

He works for a credit card company. I thought.

[g++]

I worked for MBNA in 2000, can I be super expert now?

[AestheticDeath]

Depends on what you did for them I guess!

[Stretch]

I worked for MBNA in 2000, can I be super expert now?

I don't work in the credit card division anymore, but I did credit policy and valuations for a year and a half for a large bank.

[g++]

Sales supervisor, I got to ring the bell when we transfered a balance for you dumb fucks that dont understand a balance transfer fee when its read to you at lightning speed.

[g++]

I don't work in the credit card division anymore, but I did credit policy and valuations for a year and a half for a large bank.

Fine, I still think people that are in trouble with their credit card are the biggest payoff for credit card companies on a customer to customer basis. IE if two are sitting next to each other one responsible and one not and neither are indigent the irresponsible person is going to pay you the most. You have just said over time normal customers also make them money, Im aware just not at the rates a person who doesnt read their mail will. The millionaire credit card guy...I dont know about your company but our millionaires at MBNA werent walking around with platinum cards, they usually got special cards just for banking with us so they didnt pay any of this shit.

[thefarmer]

I would like you to explain to me how you can justify this to yourself.

You spent the money.
Why do you think you get a pass at paying it back?
How do you even have the balls to ask.

Honestly, I don't know who disgusts me more, people like you, or the credit cards/banks that deal with you on your lowest common denominator terms.

You effectively fuck over every single one of us that plays by the rules - does not spend more than we can afford, does not create mountains of debt, live below our means to save, so in a time of crisis we have a safety net.

I realize, crisis happens that even the most prepared may not be able to handle - and that's not what I'm talking about here. There was no mention of crisis by either the OP or this ass.


If you can't see the difference between what I did, and what Bob did in the log, then there's nothing more I really need to say.

Edit: I will note that I still have both accounts, and with a lower interest rate than when I initially opened the accounts. Feel free to think I'm fucking over everyone that plays by the rules though.

[Clove]

Sure, it's exactly $19.56 after a year.

Now while I haven't found an official source for this, I just spoke with a buddy of mine who used to work for a bank and he said interest payments account for 75% of credit card revenue, while fees such as late fees, processing fees, annual fees etc... account for 25%.I can absolutely believe this (as well as the nicknames banks have for customer types).

It only takes a few exercises in compound interest to make a believer.

Let's assume you charge a new TV for $1,999.95 (tax included) on your Visa and your APR 18.000%. You decide you're going to pay $100.00 a month (without using your credit card again) until it's paid off.

You will pay $2,395.58 over 24 payments (2 years) of which $395.63 will be interest. That's 19.78% interest on the original purchase price.

That's only a single 2k purchase financed for 2 years. Let your mind imagine the kind of interest revenue the banks can rake in on 5k... 10k... or 15k worth of debt spread out over 10 or 20 years?

Trust me, they want you to finance your loan for as long as possible.

[Clove]

Stretch is ultimately right, it does depend on the consumer. I'm not assuming charge offs which can utterly neutralize gains. If you have a high volume credit card user that always pays his balance at the end of her billing cycle the interchange fees can add up to a lot.

All things being equal (and you don't have to worry about the consumer charging off) MUCH more money will be made the longer they finance their balance.

[sst]

I'm just curious... what are the interest rates on everyones cards =)

[The Ponzzz]

6 on my Visa through my bank and 9.9 on my Chase.

Other cards I own, but rarely use are my Best Buy with a 10k limit and my Home Depot with a 10k limit. Their rates are disgustingly high, but interest free for 6 months. I generally pay them off within a month or two.

[g++]

Card I use is 0% for now, will go to 9.9 in January, so when Im selling all my shit in the merchant market place in December that will be why.