Category Archives: Credit Card

Chase doesn’t care about you. Really.

I don’t think I’m breaking any news story here but just for the record, Chase doesn’t care about you. Neither does AMEX (even if you have a Platinum card), or Discover, or Bank of America or… you get the idea. They DO care about taking your money. No doubt. However, they don’t care about you.

As eloquently put by Seth Godin:

“No organization cares about you. Organizations aren’t capable of this.
Your bank, certainly, doesn’t care. Neither does your HMO or even your car dealer. It’s amazing to me that people are surprised to discover this fact.”

They don’t care that you’ve lost your job or that you’ve gone through medical issues. They don’t care that you can’t repay credit card debt with 32% interest or come up with $500,000 in one lump sum to repay a balloon payment on your home.

If they cared about you, they wouldn’t charge you 33% interest rate or triple your monthly mortgage payment. They wouldn’t hire Linda Green to robosign fake mortgage documents. They wouldn’t charge outrageous late fees, bounced check fees, ATM fees, annual fees, and other junk fees.

They bribe you with bonus points, miles, cash back bonuses, and platinum status. If I had a dollar for every time a client told me “well, {evil bank} has really been good to me” or “I feel guilty about filing bankruptcy against {bank}” or “I’ve had that account for __ years” I’d be a rich woman.

So, please stop telling me how Chase really cares. Banks are in the business of making money. They are pretty good at faking it and pretending they care but they really just want your money.

Should you file?

By: Jeena Cho

If you have overwhelming debt and are considering bankruptcy, here are some tell-tell signs you should consider filing (or at least pick-up the phone to get help).

  1. Borrowing from Peter to pay Paul. If you’ve been playing musical chairs with your credit cards, borrowing from Chase to pay Discover, it’s definitely time to speak with a professional about your finances.
  2. Paying the monthly minimum on your credit card. This may be one of the most worst mistakes clients make. By making the minimum payment, you are basically repaying interest only. The average credit card loan will take 33 years to repay if you pay the minimum amount. That’s a really long time!
  3. Insufficient disposable income. Disposable income is the money you have left over at the end of the month after paying all of your bills. If you are in the red every month because you have too much debt, it’s time to get help. Another good indicator is if you’re charging groceries because you don’t have enough money to buy milk.
  4. Your wages are being garnished or you have pending lawsuits. This should be fairly obvious. If you have creditors knocking on your door - time to get help.
  5. You can’t sleep or you are worried about debt. Frequently, I’ll meet with clients that have not slept for months, have been fighting with their spouse or just plain “stressed out” because of debt.

Don’t make the mistake we see most often - waiting too long.

Sharpen your pencils

I’ll be the first to admit, math is not my strong suit. Despite having a Tiger Mom and having taken years of Kumon I still have to reach for the calculator whenever I do math.

If you are mathematically challenged like me, you probably have no idea what your monthly payment is on a $10,000 credit card debt repaid over 5 year at 10% interest. How about 20%? 30%?

You may be surprised to learn that you would repay almost DOUBLE the amount you borrowed over 5 years at 30% interest.

Here’s the break down:
Loan amount: $10,000
Repayment: 5 years

Interest rate/ Monthly payment/ Total amount repaid
10% $212.47 $12,748.23
20% $264.94 $15,896.33
30% $323.53 $19,412.04

To put these numbers into perspective, if you were to repay the same $323.53 at 5% interest, you would have repaid the ENTIRE loan after 34 months (that’s 2 years and 10 months). In another words, you would be done with debt 2 years and 2 months sooner just by a reduction in the interest rate.

This is the reason why credit card debt is so to toxic. You end up paying 100%+ of the amount borrowed on interest alone.

One of the most common mistakes I see clients make is making the monthly minimum payments on their credit cards. Making the monthly minimum payment makes almost NO DIFFERENCE on the principal amount of the loan. For example, if you were to make only the monthly minimum payment on the $10,000 credit card loan, you would repay $24,261.14 over 365 months. (That’s slightly over 30 years!) The starting monthly minimum payment? $350.

So, sharpen your pencil, gather all of your bills and spend some quality time with your calculator. For those of you who are mathematically challenged like I am – have no fear. There are hundreds of online calculators that will do all the math for you. Here’s one of my favorites from Bankrate.com

Image credit: xsphotos

Have you been sued by Mann Bracken?

If you have been sued by Mann Bracken or any other law firm representing creditors, it is important that you not ignore it. One thing you may not realize is that often times, the creditor that is bringing the law suit are third party collection companies (not the original creditor) and they may not be able to prove the debt. Remember, the burden of proof is on them. They must prove that you did in fact incur the debt they are suing you for.

Assuming you do nothing and ignore the law suit, they will get a default judgement. This means that they can garnish your wages, or put a a lien on your property. They will not only get the amount they sued for, but generally costs, such as cost to bring the law suit, as well as attorney fees.

Law suits are always an expensive proposition for all parties involved. Even at the end of the day, the plaintiff is unable to prove the debt, you’ll have to front the expense of hiring an attorney. Depending on your financial circumstances, and other debt you have, bankruptcy may be an option. By filing for bankruptcy, you are getting rid of the underlying debt that the lawsuit is based on - hence the law suit is killed in its track.

If you did ignore the law suit, and your wage is garnished, it’s still not too late to file for bankruptcy and stop the garnishment. In fact, you may be able to recover up to 90 days of garnished wages by bringing an Adversarial Procedure in bankruptcy court.

If you are facing a law suit by Mann Bracken or another creditor, call a lawyer right away. We represent clients in the San Francisco Bay Area.

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