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Millions of Americans Get Wages Garnished Over Credit Card Debt

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Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#41

Post by themartorana »

smtddr wrote: post #29
joshuaheard wrote: post #21

People don't wake up one day and find their wages garnished. They must have a lawsuit filed against them, be served with a summons, get a judgment against them, and finally have their wages garnished. And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice.

>>And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice. I wouldn't describe a big CC corp bringing a citizen to near-financial-ruin as "justice". While you are probably factually right and all the legal procedures more or less followed, this article still highlights a problem with our current system. That it drains people who are…

Exactly. Justice is hardly found in making it impossible for someone to pick themselves back up. It also seems odd to sue someone who may be behind on payments, but hasn't resorted to bankruptcy court to completely eliminate those debts (save college loans, which is a whole other thing).

It's hardly surprising that people who have never been down on their luck are the first to turn a blind eye or scolding glance towards a fellow human who has fallen from grace.

I'm not advocating for people not being responsible for their debts, but I am advocating for a caring society that helps people back up, not one that puts a boot on their throat.

Also, just a personal grievance, is any bank garnishing wages from a tax payer that took tax payer money during the bail-out.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#42

Post by fennecfoxen »

shmerl wrote: post #26
joshuaheard wrote: post #21

People don't wake up one day and find their wages garnished. They must have a lawsuit filed against them, be served with a summons, get a judgment against them, and finally have their wages garnished. And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice.

Charging constant percentage on the debt is not called justice. It's a rip off.

Charging some percentage on the debt (interest) is in fact just compensation for the time value of money, risk, and reasonable expenses incurred while pursuing the judgement. Money isn't free for lenders, either -- until their borrowed money is returned, they're incurring recurring costs.

It's only a rip-off when they're empowered to charge interest in excess of that.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#43

Post by misaelm »

Jtsummers wrote: post #22
at-fates-hands wrote: post #10

Earlier quoted context omitted.

Well credit cards are a pretty recent development. The first general purpose card wasn't created until 1966. Sure, you can trace different forms of credit all the way back to the Crusades and the Knights Templar, but credit cards are a recent invention. If you think it about this way, the greatest generation never used credit. They saved until they had the money to buy stuff. My grandparents never had credit cards, a…

> If anything, you should use them only to maintain your credit rating. Keep a small balance (under $100) and use them to make small purchases. That way, you can reap the benefits to your credit score, without putting yourself in a huge hole. Don't leave the balance, pay it off every month. It doesn't benefit your credit score. From a Bank of America FAQ [0]: Fiction: You must carry a balance on your credit cards to…

It's hard to know exactly goes into the credit score calculation since the algorithm is proprietary but, anecdotally, you can carry a small balance (e.g. <10% of your credit line) without it having a negative impact on your credit score.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#44

Post by hnal943 »

smtddr wrote: post #29
joshuaheard wrote: post #21

People don't wake up one day and find their wages garnished. They must have a lawsuit filed against them, be served with a summons, get a judgment against them, and finally have their wages garnished. And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice.

>>And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice. I wouldn't describe a big CC corp bringing a citizen to near-financial-ruin as "justice". While you are probably factually right and all the legal procedures more or less followed, this article still highlights a problem with our current system. That it drains people who are…

Of course the option is to not extend them credit at all so they avoid these Faustian deals. Of course, denying poor people access to credit is going to be politically unpopular.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#45

Post by gabzuka »

misaelm wrote: post #25
gabzuka wrote: post #16

Earlier quoted context omitted.

And even the relevance of the credit score depends on where you are and what you're planning to do with it. Where I live you can get mortgages without a credit history as they value more that you can live within your means than having a history of going over it.

Lenders do rely on a variety of factors when deciding who to lend money to but the credit score (as in FICO in the US) doesn't depend "on where you are and what you're planning to do with it".

Yes, of course, that was a typo from me. I meant to write "... the relevance of the credit score". Thanks for pointing it out.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#46

Post by bryanlarsen »

zo1 wrote: post #24
kolev wrote: post #13

Reading the responses here, I think you guys are completely disconnected from the reality, because you (like me) are lucky to have a high-paid high-in-demand profession! There are people in America who go to bed hungry - and not because they overspend or manage finances poorly. Just go over at http://www.feedingamerica.org/ as starters!

"overspend or manage finances poorly" The sort of debt that you're talking about goes way further than the narrow perspective that most take on it. It begins before you are even born, and I think we should all ruminate on that. Let me elaborate a bit, despite consistently getting down mods for expressing this point of view before. The debt begins with the parents that choose to have kids when they are unsure of their…

For many, choosing not to have a kid means choosing not to have an abortion. So you appear to be saying that having an abortion is the moral high ground. I'm not saying that you're wrong, but I am saying that you shouldn't be surprised when people react vehemently

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#47

Post by DanielBMarkham »

joshuaheard wrote: post #21

People don't wake up one day and find their wages garnished. They must have a lawsuit filed against them, be served with a summons, get a judgment against them, and finally have their wages garnished. And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice.

>>People don't wake up one day and find their wages garnished.

Guess what? I woke up one day and found my wages garnished.

Back in the day, when my kids were little, I broke up with my wife. I kept the kids. She did not.

Due to a mix-up at child support, since I was the dad, they thought I was the one who left. So they started running up a bill. First I ever heard of it was when my boss told me to report to HR -- which threatened to fire me. I was behind in child support by over four thousand dollars.

Took over 3 years to get the state government to pay me back. Hell, I was a deadbeat dad! (And people wonder why I'm a libertarian)

But to your point, it takes two to tango, a creditor and a lender. The creditor is supposed to be the one taking the risk. That's why they charge you for borrowing money. It's not supposed to be a sure shot. Today in the states, however, the Republican-controlled Congress back in 04 passed something called euphemistically The Personal Responsibility Act or some other such horseshit and the credit card companies can chase you to the ends of the earth. Just like child support did with me.

Look, I have no problem with people paying what they owe, as long as they can pay it, of course. But with this many people getting wages garnished, and the collections agencies getting more and more draconian? The social balance is off. We're making it so if you run a credit agency and lend out money, you're guaranteed something back. Aside from who's responsible for what, that's not the way we want the economy to work.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#48

Post by Someone1234 »

joshuaheard wrote: post #21

People don't wake up one day and find their wages garnished. They must have a lawsuit filed against them, be served with a summons, get a judgment against them, and finally have their wages garnished. And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice.

> And the money that is being garnished is to pay back the creditor for the money and/or services that the debtor received. It's called justice.

Not even close, take the example from the article, the debtor owed 110% of the original debt (7K Vs 15K) and that is with some payments in the interim.

Is over 100% of the original debt "justice" or exploitation? With fees, fines, and other penalties rolling over (i.e. fines on fines on fines) and with no real limits, the system is set up to kick those who are down (often resulting in bankruptcy which nobody "wins").

Even if fines and fees were capped at 100% of the original debt (with only central bank interest being charged above that) I'd call that a win. I'd want to see a 50% cap ideally however (so 150%+interest has to be paid back, no more).

The profits banks make on some debt is criminal right now. They don't get away with this in much of the EU, but the EU (and members) aren't shy to regulate consumer debt.

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#49

Post by onion2k »

hughes wrote: post #8

It's hard to see these "millions of americans" as victims in this matter. It's almost always possible to just _not buy_ something if you can't afford it.

That depends on what it is. Food, shelter, electricity, water, healthcare, and transportation are inelastic[1] - we buy them regardless of price because we can't live without them. Whether or not we can afford them is largely irrelevant.

Also, don't underestimate change. Buying a house or a car that you can afford now is one thing, but that doesn't mean things won't change in a way that means you can't afford them in the future. Things happen that can negatively impact your income.

[1] http://www.investopedia.com/terms/e/inelastic.asp

Re: Millions of Americans Get Wages Garnished Over Credit Card Debt

#50

Post by allegory »

gretful wrote: post #9
jschwartzi wrote: post #2

The more I learn about what happens to people who are in debt and fall into hard times, the less I want to buy anything with credit.

Credit is a trap for the unwary and those that fail to plan ahead. I include myself in that group, as I have credit debt. Don't do - save your money.

Been there. I now have no debt after spending 14 years paying it off.

14 years lost.

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