Guest Article

Credit Card Concerns

In volunteering to write this article, I am not encouraging anyone to break any laws or to do anything dishonest, just to perhaps allow you to consider more options and look at other alternatives, should you run into difficulties with credit cards or other debts. As I don't wish to be identified as the author of this, I am writing now and may do again under the pseudonym of 'Arthur'.

Many of us have come to the conclusion that the credit card companies and banks that run them are dishonest organisations, and now with government investment in them, we cannot expect any political action to make them more honourable.

Recently (December 2008) interest rates have fallen very sharply, but credit card interest rates have at the same time gone up rapidly. At the same time many people have found their credit limits reduced to eliminate available balances, and perhaps a cartel exists in that you cannot get other cards now, or transfer balances as before at preferential rates, although these were never as good at they appeared, but that's another article perhaps one day.

Many people up until recently used their credit cards as revolving credit, paying some off each and charging most new expenditure to the cards. With rising prices and not a matching rise in income, the card balances had risen. While not ideal it worked, although expensive and of course beneficial to the card companies, who did everything they could to encourage it.

With the credit crunch and banks realising that most other banks were dishonest and therefore could not be trusted, they no longer would lend to each other, and most could not pay either their creditors or depositors, so the scramble to get funds started, some from stupid governments who have invested heavily without any conditions that they operate either honourably or run the financial markets as before. It should perhaps be noted that very many politicians when no longer in office go on to become directors or retained by banks, probably as a payment for services previously rendered. Also they have stopped lending, so no car finance, mortgages, business funding and reduced balances on credit cards, creating the financial mess the world is currently in.

If you are one of the people whose personal finances have been wrecked by this or will be shortly, perhaps you can no longer add new items to credit cards, but have to pay increasing credit card bills, or are suffering in another similar way, then this article is for you.

Already and over the next year increasingly, very many people are going to suffer, many loosing their home and their quality of life damaged, probably also leading to break ups in relationships and even suicides. The stress felt will also kill quite a lot of people. Many more will loose their jobs as a direct result of the dishonest action by the credit card companies and banks.

So what can you do to even things up.

1. Check the situation and be aware ahead of disaster that you are going to be running into problems. Look at the worst case situation, if you lose your job....   what then. If you are not going to be able to pay all your bills, then see the plan below.

2. Pay off as a priority any credit cards you have with the same bank as your current account, using any balances from other cards, then use these cards as charge cards, paying off the complete balance each month, this leaves you with some working cards. If you can't do this apply for some small value cards, some are still being issued and use these as charge cards, clearing them each month.

3. Keep on top of the situation, and plan ahead, some of the information below may help.

I say pay off the credit cards that are with your bank, as although they are not supposed to, people do experience transfers occurring between their main account and credit card accounts and in some cases entire savings wiped out to clear credit card accounts.

You need some cards that you use as charge cards, so that if the others are removed you can still function in our society. Although debit cards can usually be used in places where credit cards can. Anyone can also get pre- payment visa and MasterCard credit cards, W H Smiths sell some, but there are costs on using them.

If you can see a problem ahead, then you need to do some some planning (see below), and prioritise your expenditure.

The priority is:

1. Mortgage or rent

2. Council tax (or you will end up in jail, and you thought debtors jails had gone)

3. Utility bills (Heating and power and water)

4. Food

5. Legal requirements ie third party cover on your car, car tax etc.

6. Your charge cards or credit cards you are using as charge cards (to keep them working).

The rest are ultimately optional.

Planning for problems

1. Get an idiot number, this is a phone number that you won't be answering, and send a note of your change of phone number to this, to credit card companies and others who may be likely to be chasing you for money in the future. They have a policy of intimidation and may phone you up to 25 or so times a day starting early morning and going through to the evening, so you want to get them off your main number. You can create an idiot number by;

   1. Buying a spare sim card for a mobile putting only a small balance on this and putting it in the phone just occasionally to keep it working.

   2. Get a low cost additional mobile, some are available for under £10, on pay as you go.

   3. Get an internet phone number, see for example Skype or Tesco. If using Skype don't put this on your main Skype account but set up a special one you can put the Skype-in number to. Skype-in numbers are free with some services starting at under £2 a month. The Skype-in number are normal local to you phone numbers so may be the best option, as they look like a normal land line.

   4. Using one of the personal number redirecting services, you can find them on the internet, most are free they charge the equivalent of a national rate for incoming calls and make their profit this way. Many of these can be configured so calls are forwarded to a mail box and delivered to an email address.

2. Safeguard the equity in your home. You can do this by setting up a company at minimal cost and then agreeing to it issuing a charge (second mortgage) against your property up to and beyond the equity. This means that should the property be sold then the residue of moneys beyond paying off the first mortgage ends up in this company, making it unprofitable for credit card companies, banks and other parasites to seek to steal your home equity. If you want to make it less obvious and there is a lot of equity, you could set up one or two off shore companies in a country where ownership is secret and make these company's the owner of your UK company.

3. Safeguard other major assets, i.e. cars, in a similar way, or just transfer ownership to a close relative who you are sure you can trust and won't also be in financial difficulty. A slight warning here, some guys on loosing their jobs and wealth have found that wives have spotted that the benefits as a single parent are equivalent to a married couple so the guy is dumped, and in this situation who controls the assets may be important.

4. Move any company registered offices away from your home. Also any trading addresses. If you cannot do this then look at a variation for example, some businesses use a suite number, and put this and a note that its the registered office onto a garden shed or other outbuilding. The reason for this is that bailiffs acting in some cases may be able to enter business premises where they have no right to enter private homes. Anyone can become a bailiff, its just a case of saying a few words in front of judge and filling in a few forms. You never let them into your home.

5. You can register charges against a company in a similar way to mortgages on property. Safeguarding assets, stock ......

6. Assets, including money, held by a company is not held by you, and is at least in theory independent of your own wealth. Cash is ultimately an alternative, but there is the risk of burglaries.

When you have problems

Don't do what others want. For example don't give your financial details to credit card companies, don't complete their forms or assist them to rip you off.

Don't tell your bank, they are interested in their own profit, not you, and are likely to create more problems for you, cancel any credit you have with them and more.

Don't discuss your personal affairs or financial maters on the phone with anyone, or give information to confirm your identity. Insist on doing everything in writing. If they phone you just redirect them to the idiot number.

Don't take part in phone questionnaires, or research project, it may not appear you are telling them much, but if they do this two or three times under different disguises they can build up quite a lot of information. So can burglars and those interested in identity theft.

Don't invite into your home anyone who calls who you haven't invited or know. Someone may say they have broken down and just need to make a phone call, but it could be just an excuse to get it, or of course they could be running a scam that involves calling several times to very expensive premium numbers they control. Also if they don't have an appointment you agreed to (and you never do, its all in writing) then refuse to discuss anything with anyone who calls.

After you have your planning in place, then write to them, saying as little as possible, just that you can't pay, don't want any interest added and won't be using the cards any more. Some people also like to ask for specific information, so that they need a personal reply as opposed to a standard answer, which may slow things down. Tell them not to telephone or call and that you will only deal with them in writing, then stick to this.

What the credit card companies will do

They will write to you, then again, then again, including making various threats and including inaccurate information. Most of this is just computer generated rubbish, and if you have asked questions you can sort out any that are personally written to you from the circulars, if you are interested. Don't let this get to you, its intended to. If you find it depressing just open it once a month and file it.

They will pester and intimidate you on the phone,  but of course if they are calling your idiot number this is eliminated or at least greatly reduced. They may after a while try the previous number they had so its important not to confirm this as your number and to always redirect them to the idiot number. A lot of these calls will come from overseas call centres. They tend to be easy to spot as they ask to speak to a specific person and you can then ask who's calling before confirming its you, or redirecting them. If you haven't got an idiot number in place before, then add one, or later add a second if you like. If you still get these calls, then if you have a hands free multi-phone set you can transfer calls between extensions, these sets don't cost much. As these sets are expandable you can transfer calls in most cases to extensions you don't have, leaving the person on hold, so if you have told a nuisance company a number of times to call the idiot number and they still call, just say you are transferring them and transfer them to a non existent extension. They won't stay on hold long before clearing the line.

After a short while the name of the company contacting you will change to a credit collection agency. Probably just another part of the credit card company. Treat these exactly the same way.

Next, the credit card company will sell the debt to another company, who are experts at intimidation, and get a percentage of people to pay up. Treat them in exactly the same way. They will use different letter headings, different names, threaten all sorts of legal action, for people to call on you .....  At times it will appear as if there are a whole load of agencies collecting this for the company that bought the debt, to a range of collection agencies to something pretending to be a solicitors office, however looking at the addresses often shows them to be the same or with only a couple of addresses, so its all smoke and mirrors. However don't underestimate these people, it can be these who manage to take peoples homes away by getting unsecured debts attached to properties and then foreclosing on them.

All the threats of both the credit card companies and people they sell debts won't come to anything unless they think they can get their hands on more money than the cost involved. So if they think you don't have any assets and are broke, they may threaten and make a nuisance but won't actually do anything. Particularly those who buy debts at a discount, won't risk making expenditure unless they know they can get their hands on something. Some may threaten to make you bankrupt, but there is quite a lot of cost to them in this and the best defence is to write to them and say 'yes please as you can't afford to make yourself bankrupt'. They are never gong to spend the money.

As the information held on you by the credit card companies is confidential, as is the detail of transactions these people know only the balance. So if you ask for proof, or confirmation by a director of the credit card company that they legally have this debt, or ask for copies of the agreement you signed, or log of payments you have made since opening the account, they can't provide it, and its likely that things will go quiet for at least a while as it sits in a pending tray somewhere.

After a while they will go quiet for a period, but then start the process all over again, but by now it won't concern you. Eventually they start to offer you discounts to clear the debt, perhaps 20% to start, rising over time, 50% should be reached before long. Perhaps if the discount gets high enough you may want to clear it, and by then its with devalued money.

Credit Reference Agencies

From the beginning you will be threatened with references against you being recorded on credit reference agencies. This rarely actually happens. If they do put something on them its only on for a few years before its out of date and disappears again. There are a number of agencies and you can for a small fee find out what has been registered against you if anything. Most firms that do record anything only belong to one of these so its unlikely they affect more than a third of applications for credit if it does at all.  If you do get something listed its not all that important, it may affect the interest rate you get in the future but for many situations such as tenancy checks its a credit scoring not detail that is disclosed and if the person really wants to rent to you they will whatever the credit score. Many people who have defaulted on a long list of credit cards don't find any listed.

County Court Actions

Another threat will be to start action against you in the county court. As this is an expensive and very inefficient way to collect money they are unlikely to do it. If they do then immediately apply to get it transferred to your local court, this will always happen when you request it, this is convenient to you and expensive for them to service. Next if you have any grounds to dispute the amount or even if you don't know if its true, then dispute it and ask them to prove it, making it more expensive for them. If they proceed and you are on a low income you may be able to get legal aid, and have a solicitor run this for you, but its designed to be something you can handle yourself and very low key with a registrar (often a solicitor on his day off), and usually takes place in chambers (an office). If you loose then offer to pay it of at so much a month, perhaps a £1 a month. You may get told by the court that you have to give details of your income and expenditure, so you need to make sure that you have thought about this before completing it so that there is no money left. Once an order is made, if you don't pay it and you are in employment then they can apply for an attachment to earnings order, or ask the court to send around a bailiff to collect goods for sale.  If everything of value is owned by others the bailiff just goes away saying insufficient goods to cover cost of removal and sale. At some point if you loose, or you don't like the figures or they want a  bailiff to call ...., you can appeal, and more hearings occur. In each case with long delays it takes a long time for this process to happen especially if you want it to. County court orders are recorded by credit reference agencies. If the person processing the action does not believe you have sufficient funds or an income that could be attached, then they are not going to take these steps, they will just threaten, so when you get a threatening letter write and tell them you don't have anything, expect to lose your job shortly......

Be prepared

Although I am able to share with you this insight based upon the experiences of many people over a period of time, none of us know what is likely to happen in the future. All crooks, con-artists and parasites find new ways to cheat people and the people behind credit cards and who buy up bad debts at a discount are no exception, so perhaps we should expect to see new tricks and more underhand practices.

Is it immoral not to pay

Yes if you can without causing hardship to you or others, no if by doing so you create problems for yourself or those around you. Credit cards are unsecured debts, and as such are low in priority, they charge high interest rates and in part justify this to cover losing some when people are unable to pay, and if you have had cards for any time you have already paid them far more than that they will lose through you not paying them, the retailers or people you used the card with also had to pay them a percentage on every transaction.

Don't let it get you down

Remember that all they can take is anything you have left unprotected, and even that they can't get immediately so you may get a chance to sell it first. Their actions are intended to intimidate you and change your priorities, so they get paid and you go hungry, cold or end up homeless. Remember that ultimately if you chose you could just sell everything and emigrate somewhere warm, and not give them your new address.

Two final thoughts

1. The more you are prepared the lower your risk.

2. Use mushroom management techniques - keep them in the dark and feed, bury them in S**t.