Monday, June 10, 2013

Why can't alleged Credit Card Defaulters plead voluntary or involuntary default in front of a judge?

The term defaulting basically means missing a payment or being unable to make the monthly minimum payments for an extended period of time.

Alleged credit card defaulters should be allowed to plead voluntary default, involuntary default, or innocent when it comes to credit card default court cases.  

If a credit card default was involuntary, and the credit card defaulter proves to the judge that the default was involuntary, many good things would instantly happen, and not just for the debtor, but for the debt collector as well.

Our judges would finally have some latitude to do more than simply rubber stamp the alleged credit card debtor as a defaulter. Involuntarily defaulting on a credit card means the debtor had a legitimate life circumstance beyond their control occur that the judge could view as a plausible reason for involuntarily defaulting. 

Credit Card companies have held a 15 year monopoly (or longer) on credit card debt suspension insurance that resulted in such severe overpricing of their credit card debt suspension insurance product. Most sensible people saw credit card debt suspension insurance for the monumental rip-off that it was. 

However, the damage was done either way. Either the consumer agreed to be ripped off above and beyond what was reasonable and pay the severely overpriced credit card debt suspension insurance monthly premium, or they went without credit card debt suspension insurance and if a situation caused them to involuntarily default, they were then rubber stamped into default status by judges who have had their hands tied for the past decade and a half, or longer when it comes to how they rule.

Once evidence is entered by the alleged credit card defaulter that results in an involuntary credit card default verdict, the judge would then have the leeway to basically freeze the credit card debt at the amount it was when the last payment was made (plus any final purchases), while also freezing interest rate charges, penalties and fees going forward.

Even debt collection companies could benefit from discerning between voluntary and involuntary credit card defaults. Instead of viewing every credit card defaulter as being the same, debt collection agencies could now actually use all of those relatively worthless repeat calls to instead verify who is involuntarily defaulting, and  who is voluntarily defaulting. 

This would streamline debt collection  litigating costs and allow them to focus more time on those who truly want to rip off the credit card companies, aka the voluntary credit card defaulters. Collection agencies could actually decide that if a debtor defaulted involuntarily, they could simply get a promissory debt instrument from the defaulter with repayment terms without ever going to court.

In turn, Involuntary defaults could be considered credit score neutral and even turn into a benefit if over time the frozen amount owed was being paid down. Whereas right now, making a payment on a defaulted credit card account actually adversely affects a debtors credit score for as long as they keep making payments on that account, how crazy is that!

Take a moment and ponder how amazing it would be if Judges no longer were forced into a position of simply rubber stamping all credit card defaults as being the same. Take another moment and wonder why hasn't this been thought of before. 

Or maybe allowing a credit card defaulter to plead involuntary default has been thought of before, and simply shunted aside by the financial elite in the name of higher profits and lower civility to the common person.

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1 comment:

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Hi, Your comments matter greatly. If you post anonymously it helps if you briefly explain how your prior experiences relate to the comment you are leaving. Please no link ads unless you contact me first.