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|06-28-2013, 12:36 AM||#1|
Join Date: Jun 2013
Location: Los Angeles
Involuntary Credit Card Default vs Strategic Credit Card Default
I don't understand why judges appear to believe that the only criteria in a credit card default case is whether or not the credit card default is valid or not.
Why don't judges actually consider whether the credit card default is an involuntary default versus a strategic default? This distinction with a huge difference would allow judges room to maneuver whenever they found the credit card default was involuntary.
The judge could then actually declare the credit card debt valid, but freeze it at the amount it was at the time of the default, freeze all penalties and interest rate charges, and let the involuntary defaulter pay off the debt over time.
Additionally, the judge could also rule that if the debtor begins making monthly payments that are reasonable based on their income, the debt could be reported as being paid off rather than written off, and remove the ongoing credit score blemish that presently exists until the debt is completely paid off. To bolster this position, the judge could consider the history of the account. If the involuntary defaulter had a perfect payment history and had over the years paid interest rate charges a figure higher than the remaining debt, that could be used by a judge as a valid reason to simply let the defaulter pay off the debt with no more interest rate charges, penalties or fees.
The distinction between Involuntary Credit Card Defaults and strategic Credit Card Defaults would also allow the courts and debt collection companies to put more resources into the strategic defaulters and less resources into involuntary defaulters. Certainly this could be viewed as a win for civilized society, no?
I have no problem with credit card contracts being contracts of adhesions, (apparently judges bristle at the use of the word adhesion since in some states that makes the credit card contract illegal). What I think does not make sense is allowing credit card companies to HIDE critical tenets that relate to the debt.
Sure it's easy to state in the contract to pay the credit card debt every month or else. But if the reason the credit card debt suddenly goes unpaid is based on a life changing event that was beyond the credit card debtor's control, it seems REASONABLE to freeze the debt where it was and let the involuntary defaulter pay it off over time.
Additionally, MOST judges do not know that Debt Suspension Insurance was declared a monopoly by the Comptroller of the Currency in 2002 as they basically allowed credit card companies to OVERCHARGE for debt suspension insurance by a factor of 10 to 20 times MORE than they should have been charging.
This one act, monopolizing debt suspension insurance and then overpricing the coverage basically stripped away the pre-defaulter's most authentic way to be responsible in the event of a life changing event in their lives. Not buying the debt suspension insurance also left the the defaulter with no reasonable defense in court.
For these reasons, I believe it is REASONABLE for a judge to consider whether or not a credit card default is involuntary or strategic.
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