Three Sinister Schemes Creditors Will Use To Screw You And Keep You In Debt
Banks and creditors are always trying to figure out a way to make money. One way is to keep you buried in debt. Nothing says long-term customer than one who owes you money. One of the first things you learn in adulthood is that your future hinges on your willingness to take on debt. Do you want to go to college? You’ll probably need a loan for that. Need a car? That’s going to require a loan. Ready to put down some roots and settle in a permanent place of your own? Unless your name is Mister or Miss Money Bags, get ready to put yourself in debt
The bad news is that your car, education, and house are only the tip of the debt iceberg. Beneath the sea is a whole other landmass of ways American businesses want to keep you in debt.
Creditors Will Try To Convince You To Inherit Your Dead Relative’s Debt
Imagine your parents died in a freak accident in Las Vegas with Archibald Meatpants. In the middle of making funeral arrangements and divvying up mom’s jewelry and Nazi silverware grandpa brought back from Europe, you start getting calls from Dad’s creditors.
It turns out your father thought he was the EF Hutton of FOREX. He ran up a huge debt. Now the Wall Street guys want to know how you intend to pay up.
You’re thinking, “Hey, wait a minute. I don’t have to pay my parents’ debts!”
You may be right but you being right won’t stop creditors who think they are owed money.
Bank of America sent their collection agents after Linda Long. Linda found herself getting calls from a collection agency on behalf of Bank of America shortly after her husband passed away.
The collection agent told Linda that she was not legally obligated to pay her husband’s debt. However, the agent then turned around and recommended that she “get this taken off [her] plate. Immediately!” And the debt collector wasn’t talking about the Pasta Fagioli.
Federal Trade Commission guidelines require that debt collectors tell people when they don’t have to pay a debt. However, this doesn’t stop creditors from trying to collect. Bill collectors tell mourners they have a “moral obligation” to make things right before presenting them with the “opportunity” to assume the debt of the deceased.
Creditors make the grieving person feel as if they have just been visited by the Publishers Clearing House Prize Patrol. Additional prizes include constant robocalls reminding family members that corporate yachts don’t pay for themselves.
Creditors Don’t Always Need To Call You To Get Their Money, They Call The Lawyers
Of course, sometimes creditors don’t even need to call you to pay the debt off. Instead, they’ll demand it from the estate of the deceased. Debt collectors are legally free to get all up in that shit.
Executors of estates must use money in an estate to pay off debts from the deceased before it’s distributed to the heirs. That even Mom’s Visa bill could suck up your entire inheritance. Creditors can also grab the money in Pop’s 401(k).
However, there is only one way to stop a creditor from taking money from a 401(k). Mom and Pop need to make sure their heirs are named as beneficiaries in the 401(k).
Creditors aren’t as bad as state governments. States will put a lien on your parent’s house to try to get money back if your parents collected Medicaid.
Basically, not even the Grim Reaper will get in between bill collectors and what they want.
Banks Make Millions Off Of “Free” Checking Accounts
Banks charging overdraft fees are the most well-known fee banks charge.
However, banks charge a lot of other lesser-known fees are usually disclosed at the end of some 43-page account agreement.
Most people are unaware of these fees. Banks are perfectly happy not telling you about all of them.
Everyone knows banks charge $25-$40 for overdraft fees. Most banks will charge you $10-$20 a month for not maintaining a minimum balance.
Some banks even charge you for opting to receive a paper statement. Wells Fargo will charge you if you fart in one of their bank branches. Yes, this actually happened to a friend of mine.
The British government got so fed up with this crap they have given banks an ultimatum. Banks need to either clearly explain how they make money off of “free” checking. Or they need to start charging a flat monthly fee to everyone with an account. Up for grabs are “billions of pounds sterling” in hidden fees, according to one former banking executive.
Creditors Make Everything About Student Loans Suck
Let’s be real. Student loan debt in the United States is out of control. The national student loan debt is at a staggering $1.5 trillion. This is higher than the debt Colombia owes the IMF.
You are also stuck with this debt until it’s paid off. This is thanks to some Avatar-level law-bending on the part of the loan companies and barely competent state politicians.
Student loans are very hard to make disappear even if you go bankrupt. However, it is possible if you hire the right people. You would think easily manipulated politicians would be enough for the loan companies. Unfortunately, the real world still needs its share of cartoon villains to twirl their villainous mustaches who believe, “Greed is good.“
You might also find yourself saddled with late fees for no reason. Student loan servicers are infamous for losing having documents from your file. Borrowers have found their documents just “go missing.” Where did they go? Were they hauled out of the office by agents in a black van in the middle of the night?
More likely than not, the company servicing your loan won’t tell you that there are better repayment options out there. One report found that even though 51 percent of students are eligible for some sort of debt relief. Yet, only 15 percent actually take advantage of it. Instead, most companies like Navient suggest forbearance. This is where you can avoid payments for six months but interest keeps building up. You ultimately have to pay more.
Student Loan Creditors Think They Are Tony Soprano
More than half of student loan borrowers are either delinquent or default because of this craziness. They face ruining their credit and what remains of their Ramen noodle budget. The companies will put you through hell if you fall behind on your payments. They will do whatever it takes to get that money back from you. They will even do their best Tony Soprano impersonation.
“Well, I’ll just look around and go with a student loan company that doesn’t do that crap!”
First of all, it’s not that easy. So stop yelling at your monitor and freaking out your family. Second, no, you won’t because you can’t. You’re not actually allowed to choose your loan servicer. The government and the loan companies make that decision for you. Your student loan debt will get sold and resold for decades after you sign the paperwork.
New Jersey’s State-Sanctioned Loan Sharking Operation
Hopefully, you didn’t pull your student loan out from the state of New Jersey’s Higher Education Student Assistance Authority. Because HESAA is a state-run agency it can do things private creditors can’t do. Critics claim former Governor Chris Christie turned HESAA into a state-sanctioned loan sharking operation.
HESAA and their heavy-handed debt collection practices are unique. The government agency does not offer debt forgiveness nor do they allow any types of deferments. HESAA also refuses to modify the terms of loan agreements due to disability or death.
HESAA loans also carry an unusually high rate of interest at 8%. The HESAA interest rate is 175% higher than the rate offered by other states that offer similar programs. Texas is the only other state that offers a flat interest rate (4.5%) while most states offer income-based repayment plans. HESAA interest rates are also higher than most private student loans charge between 5% to 5.5% interest rate.