Special Report: A New Kind Of Debt

By David Miller

www.CardDebtRescue.com

America is awash with a new kind of debt that threatens both personal and national well-being. It is a problem that afflicts the middle class as much or more than the poor, and like many of life’s problems, it hardly affects the rich and powerful at all. This is a new breed of credit card debt that has consumers today paying 29% or 36% interest on purchases made years ago, all with little hope of ever paying them off.

Loren Steffy, columnist for the Houston Chronicle, summed up the situation well when he said, “As a country, we live one illness, one layoff, one crisis away from financial ruin.”

Of course, credit card debt is just one aspect of a larger problem that includes our outrageous national debt and deficit, but that is too wide a subject to include in this

report. So I’ll confine myself to the topic of credit card debt and why it is a different problem from debt in years gone by.

In researching this issue, I’m struck by how thoroughly we as a society are willing to accept the card companies’ interpretation and view of this problem. When a drug dealer protests that he isn’t responsible for a drug user’s habit and actions, we can see the hypocrisy in that statement. But, when the banks insist that debtors are 100% to blame for their woes, it rings hollow to me.

In fact, I’m sure the “powers that be” would prefer you to believe that no problem exists. The fact that people are living on one meal a day, not buying needed medication, are unable to sleep at night and are seriously contemplating suicide tells me that this problem is real, common, and being swept under the rug.

The examples above are real. In my own personal experience of referring debtors to legal help, I’ve emailed and spoken to all of the above. People hide this problem sometimes even from their loved ones out of shame and guilt, so we may never know how many of our friends, neighbors and family members are already near “financial ruin,” but I assure you there are many millions of such stories.

As for my original point concerning this being a different kind of debt, please let me explain.

Debt has been with us since biblical times and before. Debt then as now was essential  for progress, investment, production and enterprise. But for all these years mankind has tried to balance the rights of both lenders and debtors to encourage lending but to prohibit what was in the old days called “usury.”

In the 1980’s, however, the banking industry was deregulated and the courts decided  that the interest rates charged in such states as Delaware and South Dakota (where there were no limits to the rates) could be applied to credit cards used by consumers nationwide. By the ‘90’s the concept of usury had virtually become a thing of the past.

Today card companies charge whatever they want to. And this applies not only to new purchases but to existing balances as well. It is not uncommon to get a card at 9.9% and soon be paying 30% due to late payments or exceeded limits. Not surprisingly, these huge corporations are making record profits.

So, while twenty years ago we had debt and charge cards, it was not a case of unrestrained greed like it is today. At the same time, the marketing of credit has become more pervasive and seductive. We are encouraged to get “freedom cards” but they should be called “debt cards” not “credit cards.” Beginning in college, young people are trained to depend on credit and get into debt. The young and poor are increasingly the targets of teaser offers to get them hooked, and soon perpetually being in debt becomes a normal and accepted state of affairs.

Also, credit cards in the ‘80’s were mostly used for trips and luxuries, but today they are commonly used for necessities such as food, bills, and even taxes. Whereas “plastic” was once a means to buy some “extras” on time, today it is often used as a way to stay afloat for another month or so. Today due to declining real wages, inflation, high costs for housing, healthcare, and education, and compounded by historically high interest rates we see nearly 40% of US families spending more than they earn, with nearly all “disposable income” going to debt payments.

Banks and politicians may not see a problem with this picture but I do. Faced with already pyramiding debt how can a person possibly afford to pay 30% interest. Even with the “average” interest of 17.8% it is very difficult to get out of this hole.

And unlike a generation ago, today the card companies do not primarily earn their profits on interest alone. Now late penalties and over-the-limit fees are their major income streams. In the last ten years late fees have increased by 160% and over-the-limit fees have gone up 138%. Last year alone the industry collected $17.1 billion in late fees.

The question now is: “What is a debtor to do?”

For many, bankruptcy is still the solution they think of first. This is natural because for most of our history as a country this has been the way that people have been able to put

financial difficulties behind them and start a “new life.” We have wanted to make it at least possible for folks who have “gambled and lost” to “get back in the game.”

America was indeed founded by debtors, and we have long recognized that it is in our national interest to encourage such “fresh starts.” Our bankruptcy laws were designed to make this possible if necessary. Until we ran out of cheap and free land, debtors often moved west to new frontiers in search of opportunities. Today the frontiers are gone and bankruptcy has been stripped of much of its protection due to the massive influence and contributions of the financial industry.

In 2005 Congress passed and President Bush signed a new bankruptcy bill which has made bankruptcy much more costly and difficult. Even US Bankruptcy Judge Keith Lundin of Tennessee has been quoted as saying that ”unquestionably, this is the most poorly written piece of legislation I have ever seen.”

Now the lack of debtor options, the greed of creditors, the inaction of politicians, and the lure of easy credit has created a “perfect storm” of debt problems and misery.

Sure much of the blame does rest with the debtors, but the debt industry will continue to extract their “pound of flesh” until they are stopped. To insure an endless supply of new debtors they blanketed the country with more than 6 billion card offers last year (more than 30 per household), many targeting the young, poor and even “high risk” consumers. They have become “corporate loan sharks” who benefit not so much from legitimate lending as by ensnaring gullible and unsophisticated borrowers. They use “pre-approved” offers, teaser rates, 0% balance transfers, “courtesy checks,” hidden fees, and small print contracts that even lawyers can’t understand to get them hooked.

Then, if they can keep them teetering long enough making minimum payments and paying penalties and fees, they get their most profitable “clients.” Indeed, in this industry those who pay their bills monthly are disparaged as “deadbeats.” Ironic isn’t it? One card company executive even admits that “the higher risk customers are actually more profitable, especially if you can get them to pay.”

Yet, the card companies continue to claim the moral high ground. They pretend the problem is one of big-spending and irresponsible consumers. They ignore that most defaults are a result not of greedy borrowers but rather of folks who experience the sometimes inevitable setbacks in life such as death, illness, divorce, medical bills and unemployment. These dangers are far from one’s mind when he first “accepts this offer,” but once hooked it is nearly impossible to get free if one becomes “guilty of misfortune.”

Adding insult to injury, a new industry of “debt buyers” has emerged who will continue to pursue debtors long after the original borrowers have written off the loans.

They buy these debts at as low as 2 cents on the dollar then use every trick in the book to harass and threaten debtors into paying up, even if the statute of limitations on a debt has expired. They routinely use illegal methods including calling late at night, calling employers and family members, using abusive and sometimes obscene language, using threats of jail or property seizure, etc. These are all used in the effort to humiliate and intimidate the already miserable debtor. Can you think of any other industry in which such behavior is the norm?

Finally, these debt collectors are represented by an army of lawyers who stand ready to file suits in small-claims and district civil courts to obtain judgments. This is legal, of course, but it is an unfair fight in which all of the plaintiffs have lawyers and almost none of the defendants do. Indeed, most of these suits would be dismissed on grounds of missing documentation if defendants were present to defend themselves and had competent counsel, but in most of these cases default judgements are now granted.

For these reasons, I think it is essential, if at all possible, to hire an experienced an effective lawyer to represent your interests. Once faced with the threat of lawsuits, judgments, wage garnishment, asset forfeiture, and all the other bad things that arise from this predicament, I would no sooner try to represent myself in one of these cases than I would in a criminal case. True your freedom isn’t at stake but your financial freedom is.

I will discuss the specific plan and group of lawyers that I recommend at the end of this report, but be aware that 99% of all lawyers don’t have the skills and system you need. Only a specialist in this field will achieve the results you desire.

What about the other so-called “solutions” for this problem? The common ones are: to continue struggling to pay off the debts, debt consolidation, consumer credit counseling (CCCS), debt settlement, bankruptcy, and doing nothing. All of these are much more popular and well known than hiring a debt attorney, but they all have terrible records of success. Over 80% of those who enter debt consolidation programs fail to complete them, leaving the debtors in worse trouble than when they started. Bankruptcy is a poor solution for reasons already stated. Only an aggressive lawyer committed to protecting your rights has a reasonable chance of getting you out of this jam without wrecking your financial future.

Creditors and debt collectors will use all their tricks and tactics, legal and illegal, to try and get your last nickel. They will use your guilt and fear against you. They will appear to have all the power and law on their side. They will condemn you for your “failure to honor your obligations and accept responsibility.” But with a good lawyer representing you your chances of a favorable outcome increase immensely. They will challenge the validity of your debt and demand documentation, something that most “debt buyers” cannot provide. They will insure that your rights are protected and used to your advantage. And usually, they will discourage lawsuits because these debt holders are not interested in battling competent attorneys in court. They are like predators preying on the weak and defenseless, and there are more than enough helpless debtors without lawyers to for them to concentrate on.

So to me it only makes sense to hire the very best lawyer you can find and afford. The expense of hiring a lawyer will pay for itself many times over in the long run. And the peace of mind that comes from having a good lawyer on your side is priceless. Your goal should be to get out of your current situation as fast and painlessly as possible.

You should try to learn from your past mistakes but not obsess over them. You should accept responsibility for your actions, but that doesn’t mean that you should assume the role of helpless victim. You have rights and you should use them. If someone accuses you of seeking to get out of your jam by exploiting “loopholes” in the law, tell them to mind their own business. Your lawyer should be tough, experienced and deeply committed to your protecting your financial interests. Solving debt problems must be his only area of specialty, and a successful resolution is the only appropriate goal. You should not hire someone who is “conflicted” in any way. The last thing that you need is a lawyer who is reluctant to use every “trick in the book” to get you the relief you need.

So, if you can see how the decision to get legal help can save money in the long run, the question then becomes, “Who do I hire, and can I afford them?”

This is where our recommendation is important. You have found here a way to contact the best legal team and best system for getting debt-free on the web. We will refer you to a national group of debt specialist lawyers with an unmatched record of success.

You won’t find lawyers like this on your own or in the Yellow Pages. The lawyers we refer are part of a nationwide group of debt lawyers who work together, comparing and refining legal strategies. This approach offers value that no single lawyer can offer, regardless of experience.

As for price, you should end up solving your debt problem for literally pennies on the dollar. Other solutions offer savings but fail to deliver. This method offers real and massive debt relief at an affordable price.

As I said, this is a legal problem requiring a legal solution. Don’t let those who would make it a moral issue and paint you as the “bad guy” get their way. I assure you that you have suffered enough, paid enough, and you don’t need to be punished or humiliated further. You need to get out of your jam and on with your life, hopefully a bit wiser for the experience.

The truth is, you are fighting for your economic survival. Credit card debt is extremely dangerous, as you have found out. Your creditors are deadly serious about getting your money and you need to be just as serious about protecting it. Denial and procrastination will only make matters worse. It is better not to wait until all your assets are consumed to take action. Though a bargain, these legal services do cost (I’ve yet to find lawyers that will work for free), so if you get started while you still have this option you will definitely be making a smart move.

I’m sure that fewer than 1 in 1000 people who could benefit from this plan will ever hear about it. You are one of the fortunate few. Don’t let this chance to gain control over your finances and future pass you by. If you do, you will be missing a golden opportunity to get back on track financially.

I promised that I would tell you about my own experience with this problem and how I handled it. I'll do so now, but this report is really about you, not me.

About four years ago I was over $45,000 in debt on five cards and barely making the minimum payments on them. When I confessed this this to a friend, she recommended I speak to a lawyer friend of hers who specialized in consumer debt issues. His name is Robert Hinsley, of Hinsley and associates in Houston.

He explained that Texas was founded by debtors and that our state is more debtor-friendly than most. He said that I should quit making payments, and let his legal strategies fend off my creditors, bill collectors, and lawsuits.

He challenged the validity of the debts in writing and had me document collection calls and letters. Parts of the process were not pleasant, but at least I had "stopped the bleading."

Four years later the statute of limitations on these debts have expired, collection efforts have ceased, and I had only one lawsuit (Citibank) to deal with, which I settled for 50 cent on the dollar. 

I estimate that this course of action saved me $40-$50,000 even after including this settlement and legal fees.

If I had ignored the problem or had tried any of the "consolidation-counselling-bankruptcy" methods that are promoted so widely, I don't think my present situation would be nearly as good.

Though I like and respect Mr. Hinsley immensely, and still recommend him highly, I am now recommending another program that will work for debtors outside of Texas.

This program and group of lawyers base their strategies on federal laws and have been very successful in helping their clients.

For a free consultation with a representative of this group please click here.

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David Miller helps debtors find debt specialist lawyers to defend their rights. To learn more and get debt-free, please visit his website at: www.CardDebtRescue.com.