Banks Switch to Predatory Credit Card Lending

It’s a fact; banks continue to want your money and they will get it no matter what they have to do. Since the low up of the housing market and the spotlight on the predatory lending practices of big banks when it comes to home loans, business hasn’t been so great for banks. Don’t worry though, they’ve found another way to weasel their way in to your wallet.

Congress enacted the Fair Debt Credit Reporting act in 1971. Over the years there have been some changes made but there are a couple of key things to keep in mind. Some items have a 7-year “Statute of Limitations” while other items remain for 10 years or, in the case of tax liens, indefinitely.

Hand in hand with this, each state has their own debt collection statute of limitations. Banks are trying to be sneaky and they are circumventing the statutes by now offering “credit cards” to the people LEAST likely to be able to pay; people classified as sub-prime borrowers. You may receive a letter in the mail stating you can open a new MasterCard account. The catch is that you have to agree to pay a previous debt that you may no longer LEGALLY OWE.

The way it works: Banks are working hand in hand with debt collection agencies. They receive fees and higher-than-average interest rates by granting debt collectors access to their license with MasterCard. The debt companies typically agree to cover losses to banks if borrowers stop paying. Visa doesn’t seem to be participating in this scheme.

Collectors aren’t afraid of the risks in issuing new credit cards because they instantly turn a profit on virtually worthless debts—purchased for pennies on the dollar—when people agree to start making payments on them. The credit-card agreements essentially create assets out of thin air.

If you suddenly begin receiving offers for credit cards make sure to read the entire letter. you may find “This communication is from a debt collector.” on that letter! If the debt has been expunged, you are no longer LEGALLY LIABLE and there is no reason for you to repay it.

If you agree to accept one of these “credit cards” you then restart the debt collection clock and if you fail to pay then the debt collectors can, and will, come after you for that old debt again. Companies participating in this scheme have already started having legal troubles because the letters being sent out are, for the most part, deceptive.

Angela Hoover, a 47-year-old laboratory assistant from Strasburg, Pa., said she was ready to sign up for an Emblem credit card in November. After reading the offer letter three times, she realized she would have to pay $434 in old debts before she could get the card.

The letter’s “legal hogwash” was confusing, she said. “I am just grateful I didn’t accept it.”




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