I finally got a response from the OCC on my complaint about MBNA. If you remember, it was about reviewing the contract before applying for an account. Apparently banks and credit cards don't have to tell you what you are promising them until you are obligated.
Here is the text of the letter:
“The Office of the Comptroller of the Currency (OCC) is responding to your letter regarding the above-mentioned bank. The focus of the OCC’s review of consumer complaints against national banks is to determine whether the bank’s actions are consistent with banking statutes, regulations or any policies that are applicable to nationally chartered banking institutions.
In your correspondence with this agency, you expressed your concern regarding the delivery of the card agreement for a credit card account. You feel the card agreement should be provided before the application is completed, instead of after the application has been completed.
The OCC contacted the bank, which responded to us regarding your concerns. The bank contacted you by phone to discuss your concerns. The bank advised you that the card agreement is specific to the approved application and is mailed to the consumer with the credit card. The bank confirmed that all rates, fees, and other costs and provisions are disclosed in the card agreement.
Regulation Z, the Truth In Lending Act, does not require the bank to provide the disclosures prior to the application process. However, the act does require that the bank disclose the terms, fees, and charges associated with the account once established.
The Customer Assistance Group’s consumer complaint process is a service that is provided to customers of national banks. Information provided within this letter is specifically related to an individual consumer complaint and should not be construed as either a legal opinion of the OCC or a supervisory action. If you are not satisfied with the resolution of your complaint, you may wish to consult legal counsel so as to preserve your rights.”
This letter was dated August 9, 2005. I had previously written Dianne Feinstein about my complaint and that I hadn't received a response. Her letter to me was dated July 18, 2005.
“Thank you for contacting me to express your concerns about MBNA and the Truth In Lending Act (TILA). I appreciate the time you took to write and welcome the opportunity to respond.
Like you, I am very concerned that some credit card companies are using deceptive tactics that push consumers into debt. This is especially relevant with regard to solicitations and I cannot stress enough how critical it is for credit card companies to abide by existing regulations like the TILA and the Federal Reserve Board’s Regulation Z. As you know, these safeguards are in place to ensure the “clear and conspicuous” disclosure of certain terms of credit card agreements – including annual percentage rates (APR) – in solicitations to open a credit card account. Furthermore, I find misleading tactics particularly troubling because credit card solicitations are growing fastest among consumers with the lowest incomes.
Research done by my staff shows that many credit card issuers fail to screen their clients, thus credit cards are being offered to people who are unable to afford them. In addition, inadequate information is provided to new users of credit cards on how to manage their credit. In part for these reasons, I have introduced the Credit Card Minimum Payment Notification Act (S.1040). My bill would require creditors to disclose the amount of time and amount of money that it would take to pay off a credit card balance if only the minimum payment is made. I believe the consumer has the right to know the long term impacts and details of their credit card debt.
Again, thank you for your letter. Please know that my staff will follow this issue closely and I will be sure to keep your concerns in mind should legislation related to credit card payments come to the Senate floor.”
While I applaud her efforts. I still think it is too little. All I am asking for is to see a contract before I sign it. It seems banks and credit card companies aren't required to treat people fairly. The Truth In Lending Act (TILA) and Regulation Z are simply regulations that protect banks more than they protect consumers. TILA is a substitute for a contract, and credit card companies bait and switch by sending you a new agreement in the mail, after you have given them your private information and added an account to your credit report. You have also waived constitutional rights and given the credit card company the ability to put you into financial slavery with the flick of a pen - but you don't know that because you don't understand your agreement, nor have you even read it.
Sunday, August 14, 2005
Wednesday, June 15, 2005
The Fed is Considering Credit Controls
In a recent blog post, I saw that the Federal Reserve Board is considering a response to credit card holder complaints. It is the first time since 1980.
It is about time that the Federal Reserve Board does something. When we apply for a credit card, we are required to disclose a lot of personal and private information. That information is kept in the bank's database and used for marketing and other purposes. We are not compensated for that disclosure because it is simply provided on an account application. Banks and credit card companies have little regard for privacy, especially after the recent Financial Services Modernization Act was passed. This law essentially dismantled the protections put in place by the Glass-Steagal Act of 1933 that prevented banks from doing both wholesale and retail banking. Now that the likes of Citibank have become financial conglomerates, in every area of financial services, privacy no longer exists as this information is shared across all areas of bank operations. Instead of this leading to lower costs that are passed on to consumers, prices for financial services have gone up in financial and legal terms.
Signing Unseen Contracts
Consumers are signing contracts that don't disclose their content until after the contract is made. The industry is using the disclosure laws as a substitute for the actual contract. There is simply one line in the disclosure that defers to a yet unseen agreement, that you are agreeing to with your application. You are not allowed to see the contract until it comes in the mail with your credit card. This would be considered dishonest in every other industry. It is simply wrong to sign a contract you haven't seen, yet we are expected to "take personal responsibility" for what we agreed to. What is worse, those contracts are so carefully crafted that it is difficult for even an attorney to completely assess the implications of the agreement. I hope the Fed puts a stop to this practice.
Illusory Contract
Black's Law Dictionary defines an illusory contract as "An agreement in which one party gives as consideration a promise that is so insubstantial as to impose no obligation. The insubstantial promise renders that contract unenforceable." I would make the argument that credit card agreements qualify under that definition. The agreements are virtually unenforceable by the consumer and the credit card company can change the terms at any time to their benefit. It is especially illusory now that "mandatory arbitration" clauses have been added. It is a well known fact that these arbitration arrangements are giving lopsided justice, and keeping credit card abuses private, as arbitration proceedings are kept out of the public record. This type of clause included in an Adhesion contract, which credit card agreements also qualify, should make the clause unenforceable, but consumers have little power to fight the force of highly paid credit card company attorneys. It is a waiving of a constitutional right, and should not be taken so lightly as it is slipped in under the radar of credit card holders and considered applicable to retroactive purchases. I hope the Fed puts a stop to this.
Consumer Abuses
The media has documented abuses quite well. These abuses are made legal by the careful crafting of deceptive and unfair credit card agreements that are slipped into envelopes with the credit card as it is issued, taking advantage of human nature. There is clearly intent to decieve. Credit card companies treat their customers as if they are simply objects in which they extract money. If they don't comply, and submit to abuse, they are punished using the credit reporting bureaus. Even when they try to comply, the credit bureaus are used as a means of extracting more money. We have been programmed to believe credit cards are a necessary form of payment, and that we have little choice but to sign their agreements. If these abuses do not stop, things will only get worse. It is killing the financial health of our country, and will eventually cause us to lose our position of strength in the world. I hope the Fed does something to stop this.
It is about time that the Federal Reserve Board does something. When we apply for a credit card, we are required to disclose a lot of personal and private information. That information is kept in the bank's database and used for marketing and other purposes. We are not compensated for that disclosure because it is simply provided on an account application. Banks and credit card companies have little regard for privacy, especially after the recent Financial Services Modernization Act was passed. This law essentially dismantled the protections put in place by the Glass-Steagal Act of 1933 that prevented banks from doing both wholesale and retail banking. Now that the likes of Citibank have become financial conglomerates, in every area of financial services, privacy no longer exists as this information is shared across all areas of bank operations. Instead of this leading to lower costs that are passed on to consumers, prices for financial services have gone up in financial and legal terms.
Signing Unseen Contracts
Consumers are signing contracts that don't disclose their content until after the contract is made. The industry is using the disclosure laws as a substitute for the actual contract. There is simply one line in the disclosure that defers to a yet unseen agreement, that you are agreeing to with your application. You are not allowed to see the contract until it comes in the mail with your credit card. This would be considered dishonest in every other industry. It is simply wrong to sign a contract you haven't seen, yet we are expected to "take personal responsibility" for what we agreed to. What is worse, those contracts are so carefully crafted that it is difficult for even an attorney to completely assess the implications of the agreement. I hope the Fed puts a stop to this practice.
Illusory Contract
Black's Law Dictionary defines an illusory contract as "An agreement in which one party gives as consideration a promise that is so insubstantial as to impose no obligation. The insubstantial promise renders that contract unenforceable." I would make the argument that credit card agreements qualify under that definition. The agreements are virtually unenforceable by the consumer and the credit card company can change the terms at any time to their benefit. It is especially illusory now that "mandatory arbitration" clauses have been added. It is a well known fact that these arbitration arrangements are giving lopsided justice, and keeping credit card abuses private, as arbitration proceedings are kept out of the public record. This type of clause included in an Adhesion contract, which credit card agreements also qualify, should make the clause unenforceable, but consumers have little power to fight the force of highly paid credit card company attorneys. It is a waiving of a constitutional right, and should not be taken so lightly as it is slipped in under the radar of credit card holders and considered applicable to retroactive purchases. I hope the Fed puts a stop to this.
Consumer Abuses
The media has documented abuses quite well. These abuses are made legal by the careful crafting of deceptive and unfair credit card agreements that are slipped into envelopes with the credit card as it is issued, taking advantage of human nature. There is clearly intent to decieve. Credit card companies treat their customers as if they are simply objects in which they extract money. If they don't comply, and submit to abuse, they are punished using the credit reporting bureaus. Even when they try to comply, the credit bureaus are used as a means of extracting more money. We have been programmed to believe credit cards are a necessary form of payment, and that we have little choice but to sign their agreements. If these abuses do not stop, things will only get worse. It is killing the financial health of our country, and will eventually cause us to lose our position of strength in the world. I hope the Fed does something to stop this.
Tuesday, June 07, 2005
Irresponsible Lending
If you would like to see a report that shows poor stewardship go here. It seems like there should be a law against binding minors into contracts, especially without their parent's knowledge. Can somebody get mad about this and organize to stop it? It seems a bill in congress that addressed this failed to pass. I guess this just goes to show how corrupt our leadership has become.
Monday, June 06, 2005
Using What You Have
One day we will all stand before God and give an account for what we did with what He gave us. Romans 14:12 and 2 Corinthians 5:10 make it clear. In Matthew 25:14-30, Jesus tells a parable that illustrates what He expects us to do with what He gives us. This parable is referred to as the Parable of the Talents. Talents in biblical times were actually money. Today the word is used to describe our abilities. Both meanings are revelant, because both represent wealth.
The first thing to notice is that what we had during our life was really loaned to us for a short time while we were on earth. In verse 14 he is telling us that God entrusts certain "property" to us to use for Him. We are stewards for what He has given us. We often think we own what we have, but we really only have it on loan. He has given us gifts (Ephesians 4:8).
In verse 15, we see that He is giving us these "talents" according to what we can handle. We all have different gifts according to the grace He has given us (Romans 12:6). If He didn't do it this way He would cause us trouble. This also means that if we are envious of what others have, we are not appreciative of what He has given us, and we are ignorant of the trouble we would have if we were given those things.
In verses 16-19 and the Master's response to the 3rd man in the parable in verse 26,27, it is evident what He expects from us. If we did not have enough trust in God to do something besides keep His gifts safe, we are lazy and wicked. God expects us to try even if we are going to fail. If we are doing His will, He will bless our efforts. So we need to deal with our fears and move forward. In verse 25 we see that the 3rd man was afraid to lose the talent he was given, and buried it. Don't bury what God has given you, and don't squander it. Use it for what the real owner would want done with it. Remember, you are just the steward.
In verse 28, the Master gave the one talent from the 3rd man and gave it to the one who had the most, because he had made the most with what God gave him. We are expected to do God's will with what we have. If we do well, we will get more. This is evident by the statement in verse 23 of the parable.
So God does expect us to be productive with what we have. If we pass the money test, He will give us more. As long as we are good stewards of it. If we use it to oppress others, or otherwise misuse it, it will eventually be taken away. If we do foolish things like spend it on selfish things, and borrow more money to get bigger and better things, we will lose it quickly. God's will for our use of money is found in 1 Timothy 6:17-19. We are to be willing to help others with it. In Matthew 6:21, we see the principle where looking at how you use your money, reveals what you love. If you are storing it up, and have much wealth, that you'll never use, you are materialistic and put your trust in money. If you use your excess wealth to help others, you are probably being a better steward for God's wealth. The same goes with your talents, they are wealth as well. A good book on stewardship, for further study is God & Your Stuff
The first thing to notice is that what we had during our life was really loaned to us for a short time while we were on earth. In verse 14 he is telling us that God entrusts certain "property" to us to use for Him. We are stewards for what He has given us. We often think we own what we have, but we really only have it on loan. He has given us gifts (Ephesians 4:8).
In verse 15, we see that He is giving us these "talents" according to what we can handle. We all have different gifts according to the grace He has given us (Romans 12:6). If He didn't do it this way He would cause us trouble. This also means that if we are envious of what others have, we are not appreciative of what He has given us, and we are ignorant of the trouble we would have if we were given those things.
In verses 16-19 and the Master's response to the 3rd man in the parable in verse 26,27, it is evident what He expects from us. If we did not have enough trust in God to do something besides keep His gifts safe, we are lazy and wicked. God expects us to try even if we are going to fail. If we are doing His will, He will bless our efforts. So we need to deal with our fears and move forward. In verse 25 we see that the 3rd man was afraid to lose the talent he was given, and buried it. Don't bury what God has given you, and don't squander it. Use it for what the real owner would want done with it. Remember, you are just the steward.
In verse 28, the Master gave the one talent from the 3rd man and gave it to the one who had the most, because he had made the most with what God gave him. We are expected to do God's will with what we have. If we do well, we will get more. This is evident by the statement in verse 23 of the parable.
So God does expect us to be productive with what we have. If we pass the money test, He will give us more. As long as we are good stewards of it. If we use it to oppress others, or otherwise misuse it, it will eventually be taken away. If we do foolish things like spend it on selfish things, and borrow more money to get bigger and better things, we will lose it quickly. God's will for our use of money is found in 1 Timothy 6:17-19. We are to be willing to help others with it. In Matthew 6:21, we see the principle where looking at how you use your money, reveals what you love. If you are storing it up, and have much wealth, that you'll never use, you are materialistic and put your trust in money. If you use your excess wealth to help others, you are probably being a better steward for God's wealth. The same goes with your talents, they are wealth as well. A good book on stewardship, for further study is God & Your Stuff
Thursday, June 02, 2005
Who's Fault is it?
I encountered an interesting blog post on placing blame for the bankruptcy problem in our society today. There are some good comments. See it here.
Tuesday, May 31, 2005
Thoughts on Stewardship
The best source for advice on money is the Word. Here are some things I found on how to be a good steward:
We are instructed to see our relationship with money to be one of stewardship where we must be trustworthy. It tells us this in 1 Corinthians 4:1-2. This scripture speaks of ministers of the Word, but uses a term applied to those who were entrusted with wealthy estates. As we are entrusted with God’s gifts to us, whether they are skills, knowledge, or money, we are expected to be good stewards (1 Peter 4:10). Matthew 20:1-16 is the parable of the laborers in the vineyard (or sometimes “the parable of the unjust steward”. It depends on how you want to interpret it.) It seems unfair that the steward paid workers the same regardless of how much time they worked. However, a steward who is not faithful in his duties will be dismissed quickly (Luke 16:1-13). He did pay fairly according to individual agreements. For examples that explain good and bad stewardship, see Luke 19:11-27 or the Parable of the Pounds and Matthew 25:14-30 the Parable of the Talents. Also see Matthew 21:33-46 for the Parable of the Wicked Husbandmen and Luke 12:42-48.
I think when you read these scriptures you’ll see why giving simply for the sake of giving isn’t what a good steward does. A good steward gives using good judgment. While it is important to have compassion on the poor, those who are lazy and unwilling to help themselves are not going to be good stewards of what you give them, (2 Thessalonians 3:10) and it would be wrong to endorse or support their laziness. This is because of the law given in Genesis 3:19. There are always those who are not able, but it is the willingness that is important.
NOTE: Please look up the scriptural references for yourself. I am simply commenting on them to seek relevance.
We are instructed to see our relationship with money to be one of stewardship where we must be trustworthy. It tells us this in 1 Corinthians 4:1-2. This scripture speaks of ministers of the Word, but uses a term applied to those who were entrusted with wealthy estates. As we are entrusted with God’s gifts to us, whether they are skills, knowledge, or money, we are expected to be good stewards (1 Peter 4:10). Matthew 20:1-16 is the parable of the laborers in the vineyard (or sometimes “the parable of the unjust steward”. It depends on how you want to interpret it.) It seems unfair that the steward paid workers the same regardless of how much time they worked. However, a steward who is not faithful in his duties will be dismissed quickly (Luke 16:1-13). He did pay fairly according to individual agreements. For examples that explain good and bad stewardship, see Luke 19:11-27 or the Parable of the Pounds and Matthew 25:14-30 the Parable of the Talents. Also see Matthew 21:33-46 for the Parable of the Wicked Husbandmen and Luke 12:42-48.
I think when you read these scriptures you’ll see why giving simply for the sake of giving isn’t what a good steward does. A good steward gives using good judgment. While it is important to have compassion on the poor, those who are lazy and unwilling to help themselves are not going to be good stewards of what you give them, (2 Thessalonians 3:10) and it would be wrong to endorse or support their laziness. This is because of the law given in Genesis 3:19. There are always those who are not able, but it is the willingness that is important.
NOTE: Please look up the scriptural references for yourself. I am simply commenting on them to seek relevance.
Thursday, May 26, 2005
One Nation Under Lawyers
Lending agreements are the most onerous contracts you can find at the consumer level. Most consumers don’t understand anything in their agreement beyond the annual percentage rate, the amount borrowed, and the payment schedule. They still sign the agreements without consulting an attorney because attorneys are too expensive for it to be practical. It seems ridiculous to hire an attorney to interpret the numerous pages of credit card disclosures, agreement, and amendments. Even then the consumer may not even comprehend the explanation. As a result, people rely on peer experiences, and dismiss all the legal jargon as insignificant as long as they make their payments. They essentially make agreements they can’t keep, and don’t know it. People who do read the agreements pretend to understand them, and maybe even think they do. But even attorneys struggle with the hidden agendas found between the carefully crafted words. What happens too often is that this sets the stage for you to be dragged into court over a disagreement. The only ones who win in all this are the attorneys who corrupted the system to begin with by corrupting it. (See The Fraternity)
In Acts 25:11 Paul appealed to Caesar knowing that a trial by Festus would not be impartial. He exercised a right of his as a Roman citizen. Paul never attacked the Jews who were accusing him, a principle that guides us in avoiding counter lawsuits. He was seeking the truth. We should only seek to clear our name and reputation, and present the truth. If you are a godly man or woman and are falsely accused, you can’t be intimidated. However, in the case of being sued by a credit card company, when you can’t pay the bill, the truth is you do owe the money. Your only argument is to ask for mercy, and if the credit card company is not willing to settle with what you have to settle with, let the judge see the truth of the situation. You will most likely end up with a judgment against you anyway. You may even get advice from the judge to take a look at bankruptcy. That may be the only way to settle with unforgiving lenders that insist on depriving you of basic needs and extract their "pound of flesh" (highly recommended movie)
The only way to avoid this situation is not to fall prey to the credit card company’s traps to begin with, and avoid them like the plague. They will lead you to destroy your good name and character, without you realizing what is happening until it is too late.
)In Acts 25:11 Paul appealed to Caesar knowing that a trial by Festus would not be impartial. He exercised a right of his as a Roman citizen. Paul never attacked the Jews who were accusing him, a principle that guides us in avoiding counter lawsuits. He was seeking the truth. We should only seek to clear our name and reputation, and present the truth. If you are a godly man or woman and are falsely accused, you can’t be intimidated. However, in the case of being sued by a credit card company, when you can’t pay the bill, the truth is you do owe the money. Your only argument is to ask for mercy, and if the credit card company is not willing to settle with what you have to settle with, let the judge see the truth of the situation. You will most likely end up with a judgment against you anyway. You may even get advice from the judge to take a look at bankruptcy. That may be the only way to settle with unforgiving lenders that insist on depriving you of basic needs and extract their "pound of flesh" (highly recommended movie)
The only way to avoid this situation is not to fall prey to the credit card company’s traps to begin with, and avoid them like the plague. They will lead you to destroy your good name and character, without you realizing what is happening until it is too late.
Wednesday, May 25, 2005
It's Not How Much You Make
When I had to consider finding a "job" in 2001 after closing down my business, I was faced with the reality of making a fraction of what I made as a business owner. My business had $6 million a year in revenue, and provided a nice six-figure salary for my family. Afterwards, with both my wife and I looking at our likely income levels, would make less even when we both went to work. If that wasn't enough, my saleable skills were primarily in management, especially after the computer training business market was severely depressed, my other skills from the business. For quite a while there really were no management jobs, and computer training jobs were being cut back. I simply couldn't find work. I was either over qualified, or in the wrong industry.
This eventually forced me into taking a close look at the economic realities that existed. How do we "downsize" our lifestyle to live within my wife's sales income? She had much greater potential for bringing in money than I did in this market. In time, she'd be able to get close to where we were in our business, income-wise, than me. When I started cutting the budget, I realized we were already operating pretty efficiently, and there wasn't much room to cut. That was actually bad news. It mean't our "necessities" were too high. That is when I realized that the middle-class families in my area are stretched beyond their means due to housing costs. Our mortgage payment was almost 50% of our lean budget. It seemed prudent to consider selling. My wife wouldn't have it. Our son was in a good school and we couldn't move him. When I read Elizabeth Warren's book The Two Income Trap, it confirmed my findings.
So where was my solution? I started looking at how much we were saving by my staying home. To get a good handle on this I picked up a book by Linda Kelley titled, Two Incomes and Still Broke?. It detailed the costs of a second job in the family, including the income tax effect. I was surprised at what I found. I would have to exceed my realistic potential starting salary by a wide margin to just pay the costs of the second job. That means I would most likely be losing money if I took on a job. What impacted me the most was that about 60% of my salary would be eaten up in payroll taxes, before I even could start paying for the job related expenses I would incur. I decided it would be better to stay home and be a full-time dad. I'm glad I did. So instead, I am moonlighting by writing books and doing ministry work.
The rules have changed. The economics of running a home are not as simple as they used to be for our parents. A second income isn't always better. Focusing on how much is leftover after taxes and basic needs are met is the key. I highly recommend Linda Kelley's book.
This eventually forced me into taking a close look at the economic realities that existed. How do we "downsize" our lifestyle to live within my wife's sales income? She had much greater potential for bringing in money than I did in this market. In time, she'd be able to get close to where we were in our business, income-wise, than me. When I started cutting the budget, I realized we were already operating pretty efficiently, and there wasn't much room to cut. That was actually bad news. It mean't our "necessities" were too high. That is when I realized that the middle-class families in my area are stretched beyond their means due to housing costs. Our mortgage payment was almost 50% of our lean budget. It seemed prudent to consider selling. My wife wouldn't have it. Our son was in a good school and we couldn't move him. When I read Elizabeth Warren's book The Two Income Trap
, it confirmed my findings.So where was my solution? I started looking at how much we were saving by my staying home. To get a good handle on this I picked up a book by Linda Kelley titled, Two Incomes and Still Broke?
. It detailed the costs of a second job in the family, including the income tax effect. I was surprised at what I found. I would have to exceed my realistic potential starting salary by a wide margin to just pay the costs of the second job. That means I would most likely be losing money if I took on a job. What impacted me the most was that about 60% of my salary would be eaten up in payroll taxes, before I even could start paying for the job related expenses I would incur. I decided it would be better to stay home and be a full-time dad. I'm glad I did. So instead, I am moonlighting by writing books and doing ministry work.The rules have changed. The economics of running a home are not as simple as they used to be for our parents. A second income isn't always better. Focusing on how much is leftover after taxes and basic needs are met is the key. I highly recommend Linda Kelley's book.
Tuesday, May 24, 2005
Borrowing for Business Ventures
When I was in business school, I was taught that borrowing is necessary. Now I know that nothing could be further from the truth. In the early years of our country, borrowing for business ventures was rare. When the idea of lending by the goldsmiths started, we began a slow desensitizing to the dangers of debt. Today investors look for a key number in a business called a "Return on Investment" or ROI. It is calculated by the amount of their investment divided into the profit. ( Annual Profit/Investment= ROI). If you use less investment capital and more debt, you can boost this ratio by making the amount of the investment smaller.
What is the effect of this boost in ROI through borrowing? It artificially inflates the apparent success of the business. You can look at other business ratios and uncover this scheme, but in today's business environment it is hard to compete for investment capital without the use of debt, because of this artificial boost. Investors expect a certain amount of debt, unless they are unusually conservative.
This is why debt is called "leverage" in business schools. It is a principle that has inflated the prices of homes, because they are almost always purchased with a loan. Credit cards have the same effect on consumer prices. When consumers spend more, which credit cards encourage, the economy looks healthy. Credit cards have artificially inflated the apparent health of our economy, and we are starting to feel the effects with the high levels of bankruptcies. Actual bankruptcies will drop significantly after this year, because it will be harder to file, not because people are doing better financially in general. Our economy has become a house of cards, literally. The question is, are you contributing to the problem, or are you solving the problem? The Federal Reserve's stated mission is to provide the nation with a safer, more flexible, and more stable monetary and financial system, and to that end they have failed if you compare their performance with pre-Federal Reserve conditions. That is because a fiat currency does not provide stability, it provides the policy makers power to print money when they need it, at the expense of their citizens. Fiat currency is unsecured debt, plain and simple. It is the Federal Government's credit card.
You can write your senators or house representatives and voice your opinion. Do so regularly. File complaints about bank's abusive fees and interest rates at the OCC and the Federal Reserve Board.
What is the effect of this boost in ROI through borrowing? It artificially inflates the apparent success of the business. You can look at other business ratios and uncover this scheme, but in today's business environment it is hard to compete for investment capital without the use of debt, because of this artificial boost. Investors expect a certain amount of debt, unless they are unusually conservative.
This is why debt is called "leverage" in business schools. It is a principle that has inflated the prices of homes, because they are almost always purchased with a loan. Credit cards have the same effect on consumer prices. When consumers spend more, which credit cards encourage, the economy looks healthy. Credit cards have artificially inflated the apparent health of our economy, and we are starting to feel the effects with the high levels of bankruptcies. Actual bankruptcies will drop significantly after this year, because it will be harder to file, not because people are doing better financially in general. Our economy has become a house of cards, literally. The question is, are you contributing to the problem, or are you solving the problem? The Federal Reserve's stated mission is to provide the nation with a safer, more flexible, and more stable monetary and financial system, and to that end they have failed if you compare their performance with pre-Federal Reserve conditions. That is because a fiat currency does not provide stability, it provides the policy makers power to print money when they need it, at the expense of their citizens. Fiat currency is unsecured debt, plain and simple. It is the Federal Government's credit card.
You can write your senators or house representatives and voice your opinion. Do so regularly. File complaints about bank's abusive fees and interest rates at the OCC and the Federal Reserve Board.
Saturday, May 21, 2005
Debt - Help Yourself Get Out of It 3
In my last two posts, I talked about a plan to get out of debt. This time I'll conclude.
- Don't Borrow Again. This may seem like an obvious concept, but what happens the majority of the time is that people feel the tremendous freedom of getting out of debt, and then let credit card balances creep up again. Cut up your credit cards and never use them again. I can't emphasize that enough. Have a credit card slicing party. I heard someone talk about melting them in your oven. Then send them back to the credit card company and insist that they never send you advertisements again. You might be saying that is not practical for you because your job requires travel and that requires credit cards. Hogwash!! In a previous post I talked about a fairly recent development that allows you an alternative that can limit your risk of overspending with a credit card. See that post by going here for the post titled "Alternative to the Credit Card". Hebrews13:5 tells us to be content with what we have. We don't need to have a credit card and we don't need debt in any form. If you can hear what Jesus said about being content with your pay in Luke 3:14, you won't need them at all.
- Negotiate with Your Creditors. I'm not suggesting that you attempt to pay as little of your debt as possible. I am saying that you should negotiate away the interest you are being charged. If you are in trouble, credit cards will be charging you interest in the 20% to 35% range. That is simply a cement block tied to your feet. If you let it continue, you may never get out of debt. Communicate your plan with the creditors and tell them what you can pay. Explain to them that if they continue to charge interest that you will never get out, and you don't want to file for bankruptcy (if that is true, of course). Ask them to stop the interest and allow you to pay off the debt. You might be thinking, and they will surely argue, that they must make money or they would go out of business. But I say, you have already paid significant interest. Add it up over the life of your account, and give them that number. Then ask them how much is enough? You have probably already paid back the original loan and are paying interest on interest. This is worth the effort because Proverbs 16:7 tells us you can turn your enemies into friends by following the ways of the Lord. Commit to the new payment plan once you have come to an agreement. Get it in writing so the creditor doesn't conveniently forget their agreement and alter it. Believe me, it happens. These days, if the agreement isn't in writing, it doesn't exist.
- Stay On Course with Your Plan. Remind yourself of Galatians 6:9 regularly. God will reward your persistence and discipline. It won't be easy, but remember that life is a test. If you prove yourself trustworthy to be a good steward of God's resources, you will be trusted with it. God will take care of your needs, but you must trust Him.
This is just one possible plan. You have to do what works for you, but whatever you do you must stick with it. Everyone's situation is unique and that is why no single plan sold in the myriad of financial planning books on the market will necessarily work for you. You must seek advice, become financially literate yourself, and study the scripture. Once you learn what is means to be a good steward, this problem will be overcome because you will know how to handle challenges with money. You will no longer be lead into financial slavery again.
Friday, May 20, 2005
Debt - Help Yourself Get Out of It 2
Last time I covered the first three steps for a plan to get out of debt. This time I'll cover three more:
- Start selling things. We all accumulate a lot of clutter. You may not realize this, but there is money in that clutter. You may also have some valuable items that you don't really need. It is far better for you to sell these items than for your creditors to seize them and sell them for pennies on the dollar. Some of your more valuable items might be costing you in insurance premiums, storage space, or to maintain it. You might also have an expensive car. You could sell the car and get a smaller one that will save you on maintenance and insurance costs, not to mention fuel. The same goes for your house. If you can't bring yourself to sell items, because they mean too much to you, be aware that you may have identified a problem. You may be making that item an idol. Ezekiel 20:7 tells us to get rid of idols. It is easy to set up a seller's account on eBay, and there are a lot of buyers. If you don't think you can do it yourself, hire someone who is skilled at selling on eBay. If you have a lot of books, try selling them on Amazon.com. It doesn't cost anything, and couldn't be simpler. If the books aren't worth anything, or won't sell, give them to a charity and take a tax deduction for them. This will free up cash to pay off debts. In fact, selling a car or a house might raise enough cash to make you debt free instantly.
- Seek Counsel. In Proverbs 21:5 it tells us that it is good to use planning as a tool to build prosperity. That is what we are doing here, creating a plan. You would never get out of debt if you didn't commit to doing it and had a plan of action. In some cases, you may want to find a financial planner to assist you, but if you are essentially poor you probably can't afford it. However, it is always wise to seek counsel. Psalm 1:1,2 tells us to choose that person wisely. They should be a person who is an expert in finances but also that person should be godly - 2 Samuel 16:20-23. The ultimate source of counsel is the scripture - Joshua 1:8. The purpose for seeking this counselor out is to help you see where you can improve your stewardship with money, and to help you come up with ways to pay your debts off. They can give you guidance in working out a negotiation for a repayment schedule that makes sense, and that you can stick with.
- Accelerate Your Efforts. Once you have a plan in place, look for ways to accelerate it. This is to focus your mind in on solving the problem. If it becomes a focus, it is more likely to be successful ahead of schedule. In Luke 18:27 tells us that we can accomplish anything if we are operating in God's will for us. Getting free of the slavery of debt is His will. Ask for His help. You find money by spending less and applying it to debt service ahead of schedule greatly accelerates it's elimination. After paying off one account, apply that payment to the next account on top of what you are already paying. Elizabeth Warren, Author of the book "All Your Worth
The rest of the plan, next time...
Thursday, May 19, 2005
Debt - Help Yourself Get Out of It
Here is one plan that could get you out of debt:
- Make the commitment to get out. Decide that you are going to persevere and do what it takes. James 1:12 tells us we will be rewarded for it.
- Set priorities according to your values, and put your money toward what you value most first. This doesn't mean that you decide to become materialistic and buy all kinds of things. What this means is that you pay yourself first. Remember that God provides for you. He gives you the talents to be productive. Once you have provided for your basic NEEDS (food, clothing, and shelter) then put some away in savings. Putting 10% of it into savings is a good guideline. First for emergencies, up to 6 months or a year of expenses, then for years that you may not be able to be productive. Then tithe or give to the poor. Give to God. It is His money to start with, He simply entrusted it to you. (Matthew 25:14-30) He instructs us to use it to endear others to us with money so that when we have none, we might get help from them. (Luke 16:9)
- Do an inventory of what you have and what you owe. Proverbs 18:13 tells us that we can't make decisions without knowing the facts first. One of the best helps I have found to do this is a book titled Smart Couples Finish Rich
More tomorrow....
Wednesday, May 18, 2005
Get Rich Quick!
There is one thing for certain. If you are considering an MLM, Multilevel Marketing, or Network Marketing business, or if you are considering a money making idea that requires little effort and promises fast cash, you are probably trying to get out of debt or you're headed into debt.
In Proverbs 21:5 it says, "The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty." Being in a hurry to acquire wealth is just as futile as procrastination and laziness. Don't be fooled into putting good money, that the Lord has provided for you, into a scheme that makes promises of quick wealth.
This is also true for hopes of winning the lottery, or waiting for Ed McMahon to show up on your door step after diligently filling out the sweepstakes entries. The odds of getting killed in a car accident, or getting the flesh-eating bacteria are better. This akin to gambling. Gambling is also a way to hope for a windfall of wealth. Many people here in Orange County go to Las Vegas, a.k.a. Lost Wages, in hopes of a jackpot. However, in Ecclesiastes 5:7 it says that dreaming is foolish if it isn't followed up with action.
You may feel like it is impossible to get out of debt, but nothing is impossible with God. You have to trust God and make a commitment to making changes. The bankruptcy laws have recently changed to make it more difficult to get a fresh start, but that shouldn't matter because you can find a way if you trust God. Avoiding bankruptcy allows you to keep your integrity. It isn't easy, because it is going to require persistence (James 1:3,4) to get through the trial. You have to ask God what it is He is trying to teach you. Learn the lesson as fast as you can, to get through this time. Your perseverance will be rewarded (James 1:12). Create a plan and stick with it. I'll give you a suggested plan next time.
In Proverbs 21:5 it says, "The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty." Being in a hurry to acquire wealth is just as futile as procrastination and laziness. Don't be fooled into putting good money, that the Lord has provided for you, into a scheme that makes promises of quick wealth.
This is also true for hopes of winning the lottery, or waiting for Ed McMahon to show up on your door step after diligently filling out the sweepstakes entries. The odds of getting killed in a car accident, or getting the flesh-eating bacteria are better. This akin to gambling. Gambling is also a way to hope for a windfall of wealth. Many people here in Orange County go to Las Vegas, a.k.a. Lost Wages, in hopes of a jackpot. However, in Ecclesiastes 5:7 it says that dreaming is foolish if it isn't followed up with action.
You may feel like it is impossible to get out of debt, but nothing is impossible with God. You have to trust God and make a commitment to making changes. The bankruptcy laws have recently changed to make it more difficult to get a fresh start, but that shouldn't matter because you can find a way if you trust God. Avoiding bankruptcy allows you to keep your integrity. It isn't easy, because it is going to require persistence (James 1:3,4) to get through the trial. You have to ask God what it is He is trying to teach you. Learn the lesson as fast as you can, to get through this time. Your perseverance will be rewarded (James 1:12). Create a plan and stick with it. I'll give you a suggested plan next time.
Tuesday, May 17, 2005
Forgetting the History of Economic Blunders
In the depression era, Congress responded to the economic collapse by forbidding financial institutions to engage in both wholesale and retail banking. This was to keep financial services conglomerates who offered insurance, brokerage, underwriting, credit cards, and retail banking services from forming. One of the problems during the onset of the depression was the speculative investments banks made that put retail bank deposits at risk.
Well, it seems Congress has forgotten the lesson. In 1999 they passed the Financial Services Modernization Act (FSMA), H.R.-10, which was also referred to as the Gramm-Leach-Bliley Act. It promised lower-priced financial services. Instead of that, we got higher prices. It also unraveled the protections of the 1933 Glass-Steagall Act that prevented retail banks from getting involved in investment banking.
Today Citigroup, a result of a merger between Citicorp and Travelers, offers brokerage services through Salomon Smith Barney, mutual funds through Primerica Financial (an MLM), property and casualty services through Travelers Property Casualty, real estate services through Citicorp Real Estate, and retirment products through Travelers Life and Annuity. This re-emergence of the conglomerate bank is threatening consumer privacy, since banks tend to have little respect for privacy. They share customer information across all these companies, and are aggressively lobbying against privacy laws. This information is the cornerstone of their marketing strategies. It also results in customers getting rejected for insurance, for example, because of information from an account in another part of the conglomerate.
These developments are bad for consumers. Actions these banks take can cause significant market swings in the economy and in the stock market. They don't seem to think it is necessary to lend responsibly, evidenced by their credit card practices, so there is no reason to think they will manage their other services responsibly. Thomas Jefferson once said, "The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens every accumulating." Credit cards are becoming a threat to our personal liberties.
Write your congressman and voice your opinion about banking deregulation and the assault on your privacy. You can write your congressman at the House and the Senate. When you feel you've been mistreated by a bank or credit card company, file a complaint with the Office of the Comptroller of the Currency. Things won't change if you don't fight back. The Senate Committee on Banking, Housing, and Urban Affairs is having a hearing today on credit card industry practices. See more information here and look for video here. One thing about these hearings I would like to note is that the credit card issuers are denying that "Universal Default" is practiced by their company. MBNAs Honorable Louis Freeh, Senior Vice Chairman and General Counsel has specifically and clearly denied that MBNA uses Universal Default yet there is this complaint on the consumer affairs website. Is there a penalty for perjury when testifying before congress?
Well, it seems Congress has forgotten the lesson. In 1999 they passed the Financial Services Modernization Act (FSMA), H.R.-10, which was also referred to as the Gramm-Leach-Bliley Act. It promised lower-priced financial services. Instead of that, we got higher prices. It also unraveled the protections of the 1933 Glass-Steagall Act that prevented retail banks from getting involved in investment banking.
Today Citigroup, a result of a merger between Citicorp and Travelers, offers brokerage services through Salomon Smith Barney, mutual funds through Primerica Financial (an MLM), property and casualty services through Travelers Property Casualty, real estate services through Citicorp Real Estate, and retirment products through Travelers Life and Annuity. This re-emergence of the conglomerate bank is threatening consumer privacy, since banks tend to have little respect for privacy. They share customer information across all these companies, and are aggressively lobbying against privacy laws. This information is the cornerstone of their marketing strategies. It also results in customers getting rejected for insurance, for example, because of information from an account in another part of the conglomerate.
These developments are bad for consumers. Actions these banks take can cause significant market swings in the economy and in the stock market. They don't seem to think it is necessary to lend responsibly, evidenced by their credit card practices, so there is no reason to think they will manage their other services responsibly. Thomas Jefferson once said, "The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens every accumulating." Credit cards are becoming a threat to our personal liberties.
Write your congressman and voice your opinion about banking deregulation and the assault on your privacy. You can write your congressman at the House and the Senate. When you feel you've been mistreated by a bank or credit card company, file a complaint with the Office of the Comptroller of the Currency. Things won't change if you don't fight back. The Senate Committee on Banking, Housing, and Urban Affairs is having a hearing today on credit card industry practices. See more information here and look for video here. One thing about these hearings I would like to note is that the credit card issuers are denying that "Universal Default" is practiced by their company. MBNAs Honorable Louis Freeh, Senior Vice Chairman and General Counsel has specifically and clearly denied that MBNA uses Universal Default yet there is this complaint on the consumer affairs website. Is there a penalty for perjury when testifying before congress?
Monday, May 16, 2005
Biblical Debt Help for Yourself
The first thing you can do to help yourself get out of debt is to live on cash, and cut up your credit cards. Credit cards encourage excessive spending, they are specifically designed for that purpose. It is a proven fact that people spend significantly more using a credit card. Even when you pay off your credit card each month, you are still in danger and you still spend more due to the convenience of it. Proverbs 3:27,28 tells us not to withhold our payments on debt (incurred at the time of purchase) if we have the cash to pay it now. That is putting your payment off into the future. You are incurring debt.
You can't live on credit. It shows you are not content with what God has provided you. 1 Timothy 6:8 tells us what is enough. Hebrews 13:5 tells us that we should be content with what God provides. It is better to have little wealth and be serving God's purpose for our lives, than to be wealthy without living our God given purpose (Psalm 37:16). Wealth provides a false sense of security. (Proverbs 27:7)
Proverbs 27:1 tells us that when we use credit to purchase things, we make a bold presumption of what the future holds. In fact anytime we borrow money we do that. We take away our flexibility to follow God's direction, and become slaves to paying our creditors instead. You simply can't serve both masters. So the first step to giving yourself "debt help" is to live on cash.
Dave Ramsey has a great system for doing this. You might check out his book "Financial Peace" which helps you with a system for living on cash. This is probably a difficult step for many, since you have too much debt and are playing the "credit card shuffle", or have a mortgage that stretches you too thin. However, it can be done, and takes discipline and patience. When you get your spending priorities striaght, it can reduce a lot of stress. You have to make decisions to "downsize" your spending, and find ways to increase your income. The easiest way to downsize spending is to sell things that can be used to pay off loans, including your house and moving into a smaller, less expensive, place to get your housing expenses in line with your income level. It can be a quite liberating experience!
You can't live on credit. It shows you are not content with what God has provided you. 1 Timothy 6:8 tells us what is enough. Hebrews 13:5 tells us that we should be content with what God provides. It is better to have little wealth and be serving God's purpose for our lives, than to be wealthy without living our God given purpose (Psalm 37:16). Wealth provides a false sense of security. (Proverbs 27:7)
Proverbs 27:1 tells us that when we use credit to purchase things, we make a bold presumption of what the future holds. In fact anytime we borrow money we do that. We take away our flexibility to follow God's direction, and become slaves to paying our creditors instead. You simply can't serve both masters. So the first step to giving yourself "debt help" is to live on cash.
Dave Ramsey has a great system for doing this. You might check out his book "Financial Peace
" which helps you with a system for living on cash. This is probably a difficult step for many, since you have too much debt and are playing the "credit card shuffle", or have a mortgage that stretches you too thin. However, it can be done, and takes discipline and patience. When you get your spending priorities striaght, it can reduce a lot of stress. You have to make decisions to "downsize" your spending, and find ways to increase your income. The easiest way to downsize spending is to sell things that can be used to pay off loans, including your house and moving into a smaller, less expensive, place to get your housing expenses in line with your income level. It can be a quite liberating experience!
Saturday, May 14, 2005
Financial Literacy and Credit Card Debt
The Consumer Literacy Consortium asked 1,000 people financial questions, to find out how financially literate the average American is. The average score was 53%. That would be a failing score in school. The scoring was pretty even across the board except the affluent and college educated scored about 10% higher than the poor and uneducated. Not much difference. Go here to see how you score.
Credit card companies are taking advantage of this and blaming the victims by saying they had a choice, and no one forced them to open an account. They are right, but the problem is no one is holding them accountable for lending responsibly. Citibank is known for being agressive at marketing to high school and college students, though many credit card companies are guilty. They don't even require the parents to cosign, yet they are more than willing to go after the parents when the teenager defaults. Parents pay out of embarassment, and no one questions the credit card company's tactics. (67% of undergraduate students in college had credit card accounts in 1996 according to a study by Claritas, Inc. ) They will even go so far as to sue the parents. This was revealed in a congressional hearing before the Committee on Banking, Finance, and Urban Affairs on March 10th 1994. Still nothing has been done about it.
In Robert Manning's book, Credit Card Nation, on page 160, he describes a student who committed suicide after getting deep in debt on credit cards. He was a National Merit finalist and a liberal arts "letters" major. He wanted to go to law school, was working two jobs, went to counseling, and moved to a less expensive school. He still couldn't keep up. He had 12 credit cards when he died. After he died, the credit card companies called the parents to collect, and blamed the parents for not holding him responsible for his debts. The parents had left two messages for one collector about his death certificate and got a return call insisting that the parents pay the debt. Chase and other credit card companies still mail preapproved credit card applications is the teenager's name to their home, even while years later the collectors still call.
These are not companies you can do business with and maintain a good reputation. It is wise to heed the warning in Habakkuk 2:6-7 where it warns us against creditors. It is wise to stay away from credit cards and any other form of debt. I think the volume of complaints speak for themselves.
Here are just a few I found in a fast search on consumer sites:
See some complaints against Citibank here and here and here
See some complaints against MBNA here and here and here
Capital One here and here and here
First USA here and here and here and here
Go here for information about why and where you can complain. If you don't hold them accountable, by staying quiet we tell congress that what they are doing is okay. Credit card companies are slipping through new laws in amendments that take away our privacy rights, reduce our rights as debtors in the collection process, and increase their profits through sneaky contractual tactics. What you don't know WILL hurt you! Make an effort to become financially literate.
Credit card companies are taking advantage of this and blaming the victims by saying they had a choice, and no one forced them to open an account. They are right, but the problem is no one is holding them accountable for lending responsibly. Citibank is known for being agressive at marketing to high school and college students, though many credit card companies are guilty. They don't even require the parents to cosign, yet they are more than willing to go after the parents when the teenager defaults. Parents pay out of embarassment, and no one questions the credit card company's tactics. (67% of undergraduate students in college had credit card accounts in 1996 according to a study by Claritas, Inc. ) They will even go so far as to sue the parents. This was revealed in a congressional hearing before the Committee on Banking, Finance, and Urban Affairs on March 10th 1994. Still nothing has been done about it.
In Robert Manning's book, Credit Card Nation
, on page 160, he describes a student who committed suicide after getting deep in debt on credit cards. He was a National Merit finalist and a liberal arts "letters" major. He wanted to go to law school, was working two jobs, went to counseling, and moved to a less expensive school. He still couldn't keep up. He had 12 credit cards when he died. After he died, the credit card companies called the parents to collect, and blamed the parents for not holding him responsible for his debts. The parents had left two messages for one collector about his death certificate and got a return call insisting that the parents pay the debt. Chase and other credit card companies still mail preapproved credit card applications is the teenager's name to their home, even while years later the collectors still call.These are not companies you can do business with and maintain a good reputation. It is wise to heed the warning in Habakkuk 2:6-7 where it warns us against creditors. It is wise to stay away from credit cards and any other form of debt. I think the volume of complaints speak for themselves.
Here are just a few I found in a fast search on consumer sites:
See some complaints against Citibank here and here and here
See some complaints against MBNA here and here and here
Capital One here and here and here
First USA here and here and here and here
Go here for information about why and where you can complain. If you don't hold them accountable, by staying quiet we tell congress that what they are doing is okay. Credit card companies are slipping through new laws in amendments that take away our privacy rights, reduce our rights as debtors in the collection process, and increase their profits through sneaky contractual tactics. What you don't know WILL hurt you! Make an effort to become financially literate.
Friday, May 13, 2005
How To Eliminate Your Debt
I do post a lot about why it is bad to use credit cards and debt. You might wonder why there isn't more about getting out of trouble if you are already in it. There are a lot of websites and other resources that claim to be able to help you, and you certainly need the help. I have been in trouble myself since my business failure in 2001, and found it impossible to catch up. Yet I still get credit card (requires Adobe Reader) solicitations in the mail.
I have tried debt consolidation with mortgage loans (scroll down to "Mortgaging the Future"), only to find that I can now barely make my mortgage payments.
I have tried the debt elimination programs because the business charges to my credit card accounts were legal but without my consent (yes they can do that), only to find the programs were not what was promised. I desperately needed a legal position to fight the credit card company's unfair treatment.
I have looked into debt counseling, only to find the vast majority of the programs are scams. (I wonder how congress will handle this problem, now that they have mandated counseling before bankruptcy.) I hope they won't push consumers into becoming fraud victims. For many of the non-profits, they are funded by credit card companies who pressure counselors to steer consumers away from bankruptcy even if it is appropriate, and encourage long term payment plans that don't solve consumer financial problems, and often make them worse.
I have considered bankruptcy, only to find I have to file Chapter 7 or find myself becoming a statistic of Chapter 13 (75% currently fall out of bankruptcy protection from default, a direct result of court mandated payments that are too difficult to maintain for 3 to 5 years. The new law recently passed will probably increase failures close to 100% with tougher repayment standards.) Chapter 7 would be too harsh on my family, and it just isn't appropriate.
I have tried negotiating, and found credit card companies unforgiving and litigious. Look here for their latest move to push people already on the edge into financial ruin. Citibank would not accept less than 80% of the balance in settlement, the alternative was litigation. With increased collection power given to credit card companies in the new bankruptcy law, they will find it more profitable to pursue litigation in the future.
So there isn't much for me to recommend, except try to settle. If that doesn't work, beg for mercy. If that doesn't work, let them sue you, then file a response denying all claims and wait. If they follow through, file bankruptcy chapter 7, but do it before October (requires Adobe Reader) this year. Get a fresh start and never use another credit card, and stop using debt. Write your congressman and senators as well as the Office of the Comptroller of the Currency, and complain about lending abuse. Educate yourself on the corruption in Washington. Put simply, debt is a trap. It has snared both our government and it's citizens.
Sorry I don't have any easy answers. All these companies selling solutions to debt, are just capitalizing on your misfortune. Even the non-profits are frequently fraudulent. Subprime mortgage lenders are notorious for abusing consumers. You also get targeted for every MLM and business opportunity scam out there, promising to solve your debt problems. The problem is that if it sounds too good to be true it probably is. Take that advice from someone who has tried them all, and only made my situation worse. My wife will vouch for that. There is no easy solution. So the only sure thing you can do is change your attitude toward money. That's what I am doing. Learn what the scriptures teach about money. That is what I am trying to deliver on this blog and in the book I am writing. Just the TRUTH as I have found it.
I have tried debt consolidation with mortgage loans (scroll down to "Mortgaging the Future"), only to find that I can now barely make my mortgage payments.
I have tried the debt elimination programs because the business charges to my credit card accounts were legal but without my consent (yes they can do that), only to find the programs were not what was promised. I desperately needed a legal position to fight the credit card company's unfair treatment.
I have looked into debt counseling, only to find the vast majority of the programs are scams. (I wonder how congress will handle this problem, now that they have mandated counseling before bankruptcy.) I hope they won't push consumers into becoming fraud victims. For many of the non-profits, they are funded by credit card companies who pressure counselors to steer consumers away from bankruptcy even if it is appropriate, and encourage long term payment plans that don't solve consumer financial problems, and often make them worse.
I have considered bankruptcy, only to find I have to file Chapter 7 or find myself becoming a statistic of Chapter 13 (75% currently fall out of bankruptcy protection from default, a direct result of court mandated payments that are too difficult to maintain for 3 to 5 years. The new law recently passed will probably increase failures close to 100% with tougher repayment standards.) Chapter 7 would be too harsh on my family, and it just isn't appropriate.
I have tried negotiating, and found credit card companies unforgiving and litigious. Look here for their latest move to push people already on the edge into financial ruin. Citibank would not accept less than 80% of the balance in settlement, the alternative was litigation. With increased collection power given to credit card companies in the new bankruptcy law, they will find it more profitable to pursue litigation in the future.
So there isn't much for me to recommend, except try to settle. If that doesn't work, beg for mercy. If that doesn't work, let them sue you, then file a response denying all claims and wait. If they follow through, file bankruptcy chapter 7, but do it before October (requires Adobe Reader) this year. Get a fresh start and never use another credit card, and stop using debt. Write your congressman and senators as well as the Office of the Comptroller of the Currency, and complain about lending abuse. Educate yourself on the corruption in Washington. Put simply, debt is a trap. It has snared both our government and it's citizens.
Sorry I don't have any easy answers. All these companies selling solutions to debt, are just capitalizing on your misfortune. Even the non-profits are frequently fraudulent. Subprime mortgage lenders are notorious for abusing consumers. You also get targeted for every MLM and business opportunity scam out there, promising to solve your debt problems. The problem is that if it sounds too good to be true it probably is. Take that advice from someone who has tried them all, and only made my situation worse. My wife will vouch for that. There is no easy solution. So the only sure thing you can do is change your attitude toward money. That's what I am doing. Learn what the scriptures teach about money. That is what I am trying to deliver on this blog and in the book I am writing. Just the TRUTH as I have found it.
Thursday, May 12, 2005
Bankers and the New World Order
The New World Order. This is a topic that gets a lot of conspiracy theorists going. They talk about the Order of Illumnati, the UN/World Bank/IMF, Bilderberger, the Council on Foreign Relations, and the Trilateral Commission. All these groups are alledgedly working together to take over with a one world government. It is also thought that the Federal Reserve Bank is moving in this direction, by preparing Americans through indebtedness. Credit cards are part of their strategy. The recent "Real ID" amendment in the military spending bill just passed in Congress may be another piece.
Well, they might be right, and they might be wrong. There is no way to know for sure. There seems to be a lot of circumstantial evidence. However, I think concentrating on the alleged conspiracy, we should be paying more attention to what scripture tells us about these issues.
Arnold Fruchtenbaum, a New York University Seminary Ph.D, and reknowned expert in scripture, has a book that speaks about the end times. In this book we see the prophecies that have been fulfilled that point to the end times, and he also talks about the ones yet to be fulfilled. One of those yet to be fulfilled is a One World Government. So the conspiracy theorists could be identifying some of the specifics that are leading to the One World Government. However, that won't come until another prophecy is fulfilled - A Russian invasion of Israel. Russia invaded Afghanistan and failed, so this does sound feasible. Russia will be defeated, according to scripture(Ezekiel 38:1-39:16). Then the One World Government will come (Daniel 7:23-24)
If you are a Christian, this could be a good reason to avoid credit cards, and be prepared on how you will respond to the Real ID card (a National ID card or the beast?). If only for your own protection. It at least deserves some scriptural study. How can you resist government actions that violate your religious beliefs if you are in debt? That debt can be used to force you to comply or suffer serious consequences. It is far better to be debt free and able to express your beliefs without being under economic duress.
Well, they might be right, and they might be wrong. There is no way to know for sure. There seems to be a lot of circumstantial evidence. However, I think concentrating on the alleged conspiracy, we should be paying more attention to what scripture tells us about these issues.
Arnold Fruchtenbaum, a New York University Seminary Ph.D, and reknowned expert in scripture, has a book that speaks about the end times. In this book
we see the prophecies that have been fulfilled that point to the end times, and he also talks about the ones yet to be fulfilled. One of those yet to be fulfilled is a One World Government. So the conspiracy theorists could be identifying some of the specifics that are leading to the One World Government. However, that won't come until another prophecy is fulfilled - A Russian invasion of Israel. Russia invaded Afghanistan and failed, so this does sound feasible. Russia will be defeated, according to scripture(Ezekiel 38:1-39:16). Then the One World Government will come (Daniel 7:23-24)If you are a Christian, this could be a good reason to avoid credit cards, and be prepared on how you will respond to the Real ID card (a National ID card or the beast?). If only for your own protection. It at least deserves some scriptural study. How can you resist government actions that violate your religious beliefs if you are in debt? That debt can be used to force you to comply or suffer serious consequences. It is far better to be debt free and able to express your beliefs without being under economic duress.
Wednesday, May 11, 2005
Debt Elimination Programs
There has been a lot of email traffic selling debt elimination that isn't consolidation, bankruptcy, or negotiation. It is a dispute process.
In the mid 90s, these programs began to grow in popularity. They would hire their customers as agents to sell the service, with the promise that they would make a lot of money helping other people get out of debt. The barrier to the program is the upfront fee of a few thousand dollars, depending on the amount of debt you wanted to eliminate. What you were really purchasing was an educational set of audio CDs and ongoing email support as you followed their system for elimination.
The programs varied in many ways, in fact some were probably teaching illegal activity, such as using offshore accounts to avoid income tax. Some of them were smart enough to avoid the illegal aspects. The process would go something like this. The first step was usually to dispute the debt by sending a letter that cited their belief that the lender had created new money based on their signature on the loan application and did so without disclosing that fact to the borrower. It would go on to claim the borrower was entitled to the money created. The creditor would usually respond with a letter indicating that the dispute is frivolous, and their subsequent collection actions are allowed under federal law. They may cite a case to back their claim along with federal code that the dispute is frivolous, and the matter is closed. The debt is due as agreed in the loan agreement. As a matter of law, the bank would be correct.
There is a nice loophole in Regulation Z that allows the creditor to make the determination if an account dispute is frivolous. This is like letting the fox watch the chicken coup. It makes it very difficult for the customer when they have a dispute that the creditor doesn’t want to acknowledge. That leeway, coupled with their ability to allow charges to your account without your knowledge or express consent, is frustrating to say the least. As a result, this method of debt elimination was eventually doomed as credit card companies began to take the dispute seriously and aggressively pursue the account holder for collection.
It is also doomed because these account holders agreed to the credit card company's one sided terms that gave them permission to do what they do. Proverbs 22:7 says that the debtor is a slave to the lender, and Psalm 37:21 makes it clear that you must pay your debts. It is better to simply avoid debt.
In the mid 90s, these programs began to grow in popularity. They would hire their customers as agents to sell the service, with the promise that they would make a lot of money helping other people get out of debt. The barrier to the program is the upfront fee of a few thousand dollars, depending on the amount of debt you wanted to eliminate. What you were really purchasing was an educational set of audio CDs and ongoing email support as you followed their system for elimination.
The programs varied in many ways, in fact some were probably teaching illegal activity, such as using offshore accounts to avoid income tax. Some of them were smart enough to avoid the illegal aspects. The process would go something like this. The first step was usually to dispute the debt by sending a letter that cited their belief that the lender had created new money based on their signature on the loan application and did so without disclosing that fact to the borrower. It would go on to claim the borrower was entitled to the money created. The creditor would usually respond with a letter indicating that the dispute is frivolous, and their subsequent collection actions are allowed under federal law. They may cite a case to back their claim along with federal code that the dispute is frivolous, and the matter is closed. The debt is due as agreed in the loan agreement. As a matter of law, the bank would be correct.
There is a nice loophole in Regulation Z that allows the creditor to make the determination if an account dispute is frivolous. This is like letting the fox watch the chicken coup. It makes it very difficult for the customer when they have a dispute that the creditor doesn’t want to acknowledge. That leeway, coupled with their ability to allow charges to your account without your knowledge or express consent, is frustrating to say the least. As a result, this method of debt elimination was eventually doomed as credit card companies began to take the dispute seriously and aggressively pursue the account holder for collection.
It is also doomed because these account holders agreed to the credit card company's one sided terms that gave them permission to do what they do. Proverbs 22:7 says that the debtor is a slave to the lender, and Psalm 37:21 makes it clear that you must pay your debts. It is better to simply avoid debt.
Banksters or Gangsters?
Most of us have let ourselves get caught up in the slavery of working to pay off debts. This is a direct result of the creation of a central bank to manage a fiat currency, and our participation in that system by using debt as a financial tool. As I mentioned before, the Federal Reserve Bank is a private corporation. One of the first questions that come to mind is who owns the stock of that corporation?
The major shareholders, who hold Class "A" Stock are:
1. Rothschild: London and Berlin
2. Lazard Brothers: Paris
3. Israel Seiff: Italy
4. Kuhn-Loeb Company: Germany
5. Warburg: Hamburg, Amsterdam, The Netherlands
6. Lehman Brothers: New York
7. Goldman and Sachs: New York
8. Rockefeller: New York
The rest of the stock is owned by the member commercial banks. These major stockholders effectively control the medium of exchange in the U.S., throughtheir influence on the Federal Reserve System. They are all extremely wealthy.
Source: "Economic Solutions" by Peter Kershaw
The major shareholders, who hold Class "A" Stock are:
1. Rothschild: London and Berlin
2. Lazard Brothers: Paris
3. Israel Seiff: Italy
4. Kuhn-Loeb Company: Germany
5. Warburg: Hamburg, Amsterdam, The Netherlands
6. Lehman Brothers: New York
7. Goldman and Sachs: New York
8. Rockefeller: New York
The rest of the stock is owned by the member commercial banks. These major stockholders effectively control the medium of exchange in the U.S., throughtheir influence on the Federal Reserve System. They are all extremely wealthy.
Source: "Economic Solutions" by Peter Kershaw
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