Credit card troubles

[StressedOne]

What is the name of your state? Oklahoma

My 22-year-old daughter's credit card is way past due. I think she hasn't made a payment in over 6 months to a year. BankOne has been calling my house because they think she still lives here. She doesn't live with us anymore and has her own apartment but is only working about 25 hours a week and is not able to pay her rent and utilities, let alone a credit card! We have been screening our calls with an answering machine so that we don't have to talk to the collectors. They had been calling about 4 times a day over the last 2 months, and now in the past 2 weeks it has dropped to about once a day. I thought they were going away! Well, today she was at work and they called her there. They tracked her down and she said they were very "nice" to her. They said her CC debt had been about $700 but now it has jumped up to $1536! (due to interest and penalities, I assume) They put her on hold and came back and said that they could reduce it to $1100 if she could pay them right now. She told them she cannot afford to even pay her own rent and there was no way she could pay that amount. They said they would call back tomorrow but she MUST settle this immediately.
My questions are:
1) Can they keep compounding interest upon interest? I told her to ask them if they would stop doing this, because if she sends a payment of $20 or $30 a month, it will take over 100 years to pay it off, since she will be paying nothing but interest!
2) What should she say or do when they call back?
3) Can they garnish her paycheck? (We live in Oklahoma) She won't be able to live on such a small amount of money. She lives by herself currently and is looking for a better job.
I'm desperate for advice. Thank you for any help!

 

[big_rob]

1) Can they keep compounding interest upon interest? I told her to ask them if they would stop doing this, because if she sends a payment of $20 or $30 a month, it will take over 100 years to pay it off, since she will be paying nothing but interest!

By Law, Yes. Keep In mind that creditors usually will not reduce or eliminate interest or fees for paying late or being over the limit.

3) Can they garnish her paycheck? (We live in Oklahoma) She won't be able to live on such a small amount of money. She lives by herself currently and is looking for a better job.

Creditors can garnish her paycheck If her weekly take home pay is greater than 30 times the minimum wage ($154.50). However, creditors can't garnish until they sue and win a judgement against your daughter. That usually takes a while. Oklahoma's SOL for Open Accounts (Credit Card Debts) is only 3 years, so there is a possibility that the SOL may expire before they actually sue.

 

[Ladynred]

If your daughter hasn't paid in 6 months to a year, then the account is with a collection agency. Collection agencies are bound by the Fair Debt Collections Practices Act (FDCPA) and there is a LOT they are NOT allowed to do. Verbal abuse, threats, calling at inconvenient times, and calling relatives and neighbors to get them to take messages or discuss her debt. If she cannot pay them, do NOT talk to them, they will only turn the screws and try to scare her into paying something she cannot afford. They should also not be calling her at work and she CAN make them stop. All she has to do is tell them that her employer does not allow personal calls and they are NOT to call her at work ever again, that all their contact should be by MAIL ONLY. The verbal notification IS enough per the FDCPA to make the stop, but a letter to back it up is always a good idea.

Her best bet is to not talk to them. Talking to a debt collector is like talking to a brick wall. They may have been 'nice' to her this time, next time they're likely to be quite nasty (and break the law in doing so !).

 

[jazzy13]

Indiv

Please do your self and your daughter a favor and demand that she take responsibility for the debt she created and honor her written word by paying back the money she borrowed, including the interest (cost of doing buisness that the bank assesed a risk but extended the credit line), fees (charges the cardholder agreement stipulates to use the card), and penalties ( for paying late, not paying , going over the limit) *** By attempting to help your daughter avoid paying the bill, your are basically negating all the values I'm sure you taught her as a youg girl; i.e be reponsible, self-reliant, do not steal, make good decisions,etc. Most people get in trouble with one credit card, and continue this cycle their entire life always living paycheck to paycheck because they were not shown how to solve a minor problem that they themselves created. Yes, collection agencies have laws to follow. Consumers that choose to assert thier rights while ignoring their responsiblities are no better than the collection agencies they so highly despise, and normally screw up their credit following poor advice. If you truly want to help your daghter--and I believe you do--Do NOT tell her to stop communcating with her creditors, that type of advice only comes from people who are career debtors and have a looser mentality, their advice is usually worht about as much as thier own credit report. Believe me, THEY will take no responsibilty years from now when your daughter continues to make this same msitake over and again destroying her credit and finacial future. Help her face her msitake of believing tseh could charge/buy/have stuff and then walk away and not pay for it. She will eventually HAVE to pay this account since is is not been paid for so long is is nowsurely closed and chrged off -showing the msot derrogatory mark on her credit report and the intrest wont stop until she pays or settles the account. Tell her to politly let the collectors know not to call you or her place of employement AND give them a contact phone number where at least a message can be left, AND negotiate a suitable arrangemnt. They have the right to set the terms for any discounted amount so $1100, if your daughter can get that money form another source and pay $20-$30 amonth to them, then her credit reoport will show $0 balance settled account which is far better than continuing to allow it to remain unpaid in a deliquent status. Otherwise, tell your daughter to write a letter with a $25 payment, reqpectfully asking them to waive future interest and give her an opportunity to pay off the balnce in full that she owes now in interest free monthly installments as long as she keeps the arrangement, and possibly they may allow her to discount the bill down the road when seh can use a tax refund to offer them a lump sum. Remember that the free advice you get here or on other sites will not protect your daughter's financial future the way YOU can with good ol' fashion parental guidance in doing the right thing. You can't become a winner in life unless you honor your obligations. It's just good character-- and that's all you truly own in this life.

 

[Ladynred]

Oh boy.. what a sermon !! Typical debt collector mentality and the personal attacks on me and the name-calling are typical of a debt collector

No one HAS to speak to a debt collector for any reason, restricting them to communication by mail is perfectly acceptable. Debt collectors use the phone to harrass and annoy, it is their weapon of choice to badger people and everyone has the choice to take that weapon away from them using the FEDERAL LAWS that are in place. I never told her to stop communicating, I told her not to TALK to them on the phone and restrict them to MAIL ONLY. The good 'ole US MAIL works just as well and has the added benefit of creating a verifiable paper trail to use when the collectors commit the inevitable FDCPA violations - for which they can be sued.

 

[guest.]

While I have some issues with Jazzy's response, he does make some valid points.

I have lived through some of your daughter's mistakes. She should be educated on the dire importance of her credit report. Not only her, but everyone. Due to it's serious consequences and importance in society it should be a required part of the high school curriculum.

In my case, I defauled a couple $300 credit limit cards in my youth. Currently I have 2 mortgages, a car payment, car insurance, home insurance, life insurance, & 5 open lines of revolving credit. I pay on a monthly basis over $700 in excess interest or otherwise higher rates I would not have to pay if I did not have this derogatory information in my credit history. I make about 62K a year in oklahoma and live paycheck to paycheck. With OK's cost of living I should be living high on the hog. I am not.

If there is anyway for her to work out an arrangement now, it would be in her best long term interest. Take it from someone with the proverbial 20/20 hindsight.

 

[Ladynred]

In your youth ?? Just how OLD are these derogatory entries ?? You do know I hope that collections cannot survive the obsolesence of the ORIGINAL debt on your CR ???

 

[guest.]

Most are in excess of th 7 years + 180 days, but you probably are aware of the rubber stamp relationship the CRA's have with some of the OC's and CA's.

I learned of my rights and the laws after all of my current obligations. I am re-financing what I can: just got 5.5% refi on my car (from 14.9%), need to wait another 1.5 years on my 2nd mortgage (9.8% on $110,000) to avoid a prepayment penalty, the 1st morgage is on a mobile home I live in briefly which I now rent out that I am so upside down in there is no way to refinance,

I know where you are going and I agree with you, but fighting takes time and the FCRA sucks in penalizing violators.

 

[Ladynred]

I wouldn't call what you can go after in violations and damages per the FCRA awful. You can get $1000 PER VIOLATION for FCRA violations, plus damages. Illegally re-aging a tradeline to keep it on your reports past the legal reporting period is definitely costing you REAL damages in higher interest rates, lost loans, etc. For each month they keep those illegal re-agings on your report it is 1 violation @ $1k each - 6 months = $6000 !! This could be FAR more than the chump change you can go after with the FDCPA. Add actual damages for the term of a mortgage you were stuck with at a higher interest rate, and the damages start adding up.

I'm aware of the CRA/Creditor relationship - that doesn't mean you can't prevail. No way I'd let any of them off the hook for penalizing you that way. That is EXACTLY why the FCRA was ammended in 1996, to make certain that creditors couldn't keep punishing you past the 7-1/2 year period.

Sounds to me like you need some real geurilla credit repair tactics - ever try www.creditboards.com ??

 

[guest.]

Belive me, I am not the type to go away quietly and if I could find a lawyer like you, I would already be in suit.
You may or may not recall who I am, but I have sent you emails in the past about a letter I used to send consumers soliciting them to fight collection agencies. I have recently desisted that practice since I can't find a lawyer who will back up the whychat assertation of 12A O.S. 3-118 3 year SOL and unwritten contract.
The NACA lawyers I have talked to seem to prefer cases of "true" victims such as fraud or identity theft. Since at one point I was guilty of default, I am not a rosy plaintiff. Maybe it has something to do with unclean hands, I don't know, but it looks like it will be pro se or nothing for me.
Sorry for the hijack, but in my opinion it is related to your daughters situation, in OK she will likely be sued and it will likely be based on breach of written contract.

 

[StressedOne]

Well, thanks for all the input. I don't think there is much left to do now, as they called her at home and she was talking to them when I got there. The lady on the phone was trying to get her to pay $600 by the end of the month! My daughter told her there was no way she could, as she doesn't even bring home that much. She told the lady that she could make monthly payments, albeit small, but she was then told that if she couldn't make the $600 initial payment, she would have to file a report that stated she refused to pay. So, I guess the next step is the lawsuit.
I guess I failed to mention in my first post that my daughter is in no way trying to get out of paying this debt. She knows it is hers to pay and she has every intention of paying it off. That being said, when you are having to take money from your parents just to pay your rent and utilities, paying off a credit card is farther down on the list of priorities. She got this credit card when she was right out of high school, and now she knows the reason why I told her over and over again not to get one. They are easily abused, and she learned from this experience. There are a lot of young people going through this same thing right now because of the ease of getting a credit card. She was getting about 10 offers a week in the mail right after she turned 18. Anyway, thanks again for the input.

 

[Ladynred]

For that amount - less than $2,000 - its unlikely that there will be any lawsuit, especially since she has no assets and her wages are likley below the level that would even allow them to garnish if they did sue and win.

People are afraid of going to court, so the threat of a lawsuit is a collector's favorite thing. If they make that threat - and they don't go thru with it or CAN'T go thru with it (for any number of reasons), then they are violating the FDCPA.