Business & Professional
FINANCE
Don't Get Mad
Get Even
D
edined." So stated the readout on
the credit card machine. Standing
there, it is as though 1,000 bells
and whistles have gone off and there is a
flashing beam of light circled around you.
You respond, "Impossible, I have never
been late paying and there is over $2,000
of available credit:' What happened?
Without notice to you, the credit card
company lowered your available credit to
$25. You learn this after being declined
when you call the company and the rep-
resentative explains that a letter has been
sent advising you that your credit line has
been cut and that you should be receiving
it in a few days. Their representative then
says, "Can I help you with anything else?
Thank you for being our valued customer."
Over the last two years, this story has
repeated itself millions of times. My ques-
tion is, "Why don't the credit card com-
panies call or e-mail
you when this deci-
sion is made so you
are aware and can
avoid being embar-
rassed by trying to
use the card? They
have your telephone
number and your
e-mail address. If you are a day late in
paying or if there is suspicious use of the
card, they call immediately. So why don't
they contact you?"
The answer, unfortunately, is simple:
In many cases, they don't care if you are
embarrassed. The fact that you are their
customer, that you have paid your bills
on time, that you pay them interest, and
that without customers they would not be
in business, doesn't matter. They are too
self-serving to notify you in order to avoid
embarrassing you.
Years back, I learned a lesson from
one of my professors: "Don't get mad; get
even:' This adage was intended for the
young lawyer when encountering another
lawyer who played "dirty:'
Over the years, I've learned that the rule
has broader application. Some credit card
scenarios present an ideal opportunity
to get even by implementing a planned
course of debt resolution. In basic terms,
this is a process of not paying the credit
cards and then settling them in a range
that varies from 15 percent to 50 percent
of the amount claimed.
Recently, I settled $150,000 of credit
card debt for a client for $42,000 (28
percent). His monthly payments to ser-
vice this debt ran $3,000 per month. I
had him stop paying in January and save
the $3,000 per month. We then used this
money to settle.
By February next year, we'll have the
debt covered on the settlement. In 14
months, he will owe nothing. Had he paid
the $3,000 monthly payments, $30,000
would have been interest ($150,000 at 20
percent) and his balance would still be
$144,000 with no available credit. This
client got even the best way. He will owe
nothing and the credit card company
absorbed a 72 percent loss.
I'm not saying this is the right strategy
for everyone; you have to protect against
adverse tax consequences and be in a
position where you can sustain a short
term hit to your credit score. But the les-
son is that when faced with fundamental
unfairness, rather than be angry you
should look at ways to turn the card on
the other guy — and get even. 0
Ken Gross is an attorney with Thav, Gross,
Steinway & Bennett in Bingham Farms and host
of the Financial Crisis Talk Center, a radio pro-
gram that airs weekly at 8:30 a.m. Saturdays
on WDFN "The Fan" 1130 AM.
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38 October 14 • 2010