Credit/Debt Recovery

"Big Spender" on A&E

I've been watching A&E's "Big Spender" the past couple of weeks. It's a very interesting show. Host Larry Winget has a Dave Ramsey swagger to him, but he's not as quick to call the debtors he's helping "stupid."

Which is odd, really, since he has more right to do so than Ramsey. I've only seen a few episodes so far, but it seems clear that he deals with a specific type of client; people who spend too much. That's great, as there is no shortage of that kind of debtor, and they need help, but man, I'd love to have clients like these. There's plenty of income to work with, and their debt problems can be solved in most cases purely with budgeting and discipline. I don't think we're going to see too many people in debt because of huge tax bills, sudden job loss, divorce, etc. The show is called "Big Spender", after all.

So tune in if you can, because Winget is very good at what he does. But unlike the people on the show, your debts probably aren't from $300 per month at the spa, weekly pedicures, or $400 bingo losses, so all of Larry's good advice may not apply to you. Still, the central theme of the show, that it is possible to live within your means, is absolutely worthwhile.

Unfortunate CCCS story from Atlanta

This story doesn't mention which CCCS franchise they're talking about, but I do know that CCCS-Atlanta is one of the biggest agencies in the country, and they're definitely a good agency. Good in the sense that they're not evil scammers, I mean. Obviously they weren't good at their jobs in this case.

They seriously dropped the ball with this client, and his score dropped from 680 to 540. I've said before that 680 is right on the cusp of "good" credit. Anything lower than that, and you're starting to look sketchy. So a drop from 680 to 540 is HUGE, by every standard conceivable.

Normal credit counseling clients who make timely payments, like this man did, would not see any decrease in credit score, so this is definitely an anomaly.

The question I'm left with is: did this guy never look at his credit card statements? I tell every CCCS client, whatever agency they're with, to check every credit card statement they get carefully, and compare it to the progress reports they get from the counseling agency. If this guy's payment was too small for the creditor and it was going on for over a year, it would have shown up on his monthly statements from the creditor. That's not meant to excuse the CCCS' failure in any way, but credit counseling is a 3-way relationship, and all three parties have to do their part, including the client. If you're with a CCCS, it's not enough to set up automatic payments and then forget about it for a year. You have to read the credit card statements and make sure everything is proceeding as it should.

Creditors on campus

Earlier this week I posted a note from Joe Onesta about the return of 2-cycle billing, a practice that seemed to be on the wane.

Another creditor practice that's on the rise is on-campus solicitation of college students.

Some years ago I was eagerly working to help colleges in California comply with the student fincial responsibility act. One of the effects of that law was a ban on credit solicitations on campuses, but the real intent was to get more personal financial literacy education to students. The idea was that the college and the creditors would get together and present some financial education before handing a kid a credit card offer. Colleges financial aid officers I spoke to found it easier to prevent the credit card offers altogether, thereby absolving them of the responsibility to provide the education part.

It was a big story across the country for a while, with various colleges across the country opting to ban credit solicitations.

Now a few years have passed and the stories are back. Creditors worm their way back onto campuses by cutting deals with the colleges, which causes some controversy, but not as much as when the creditors offer incentives directly to students: (Chase offering free food to Ohio students who apply for credit). (Citibank offering free food to Iowa students who apply for credit)

I don't even know whose side I'm on in this. The colleges are a joke; they've lost all sense of their mission. They don't really care about protecting or educating the students, they just want their cut. For their part, the creditors are scrambling to indiscriminately sign masses of new borrowers with little or no credit history. We know where that can lead.

Mike Gravel: Deadbeat Debtor

Mike Gravel's answer when asked about his personal bankruptcy (quoted from Byron York's piece at the NRO):

...who did I bankrupt? I stuck the credit card companies with $90,000 worth of bills, and they deserved it..."

If you were against bankruptcy reform legislation, and were wondering how the bill was voted for by so many Washington politicians, consider this:

They all know Mike Gravel.