Finally watched Maxed Out
I have wanted to watch this documentary for some time now. There was even a post about Debt Documentaries awhile back when I started this blog. Well I have seen it and this could be considered a review from my perspective.
This documentary is emotional because not only do you see what debt does to people, but that you see what it does to people. Blogs make it easy to hide behind a veil of being relatively anonymous on the internet. If we passed each other on the street you would not know who I am and I wouldn’t know anything about you. I think it is the people that make the documentary so powerful.
Part of this documentary focuses on people who buy up the bad debt people defaulted on. They operate out of a small office where their collectors are busy calling (harassing?) people through the phone to get money out of them. There is a whiteboard and they make the comparison that it is a game and it is all about making a touchdown or scoring. What bothers me more is they feel it is legit to call up neighbors and family members of the individual they are collecting on. There are laws out there called Fair Debt Collection Practices Act which their victims don’t seem to know much about.
One story with an older lady having a garage sale to come up with enough money to keep her house is very sad. I don’t know much about the background of her situation, but the reality is she needs to be selling her house and not trying to hold on to it. There are also stories of two other ladies and the financial happenings of their children which was very powerful.
Then there is the political side of this in that the government is making it more and more difficult for people. Credit card companies don’t have regulations in place to prevent giving a college student with no income a credit card. President Bush signed a new bankruptcy law into place but the bill was funded by MBNA. The debt that I have got myself into is my debt and I have nobody to blame but myself. I’m not going to pretend the government is going to fix my problems with credit card debt. Our own government is in so much debt and the problem is not going to correct itself over night, but one day it could blow up on us all.
seem interesting. I’ll check it out.
You are correct in saying your debt is your debt. As my debt is mine.
But when a predatory bank keeps raising the interest rate on a credit card, for example, because of a universal default clause it’s time for the government to put a stop to that practice and all predatory practices like it.
Nelson, thank you for bringing up universal default. Banks over the recent years now makes as much if not more money on the fees and other charges than the interest alone. They want people to be late, go over limit, and the fees themselves increase. If you’re late the fee can be $39 and then over limit on top of it, another $39. I also hate that universal default clause that every card issuer has snuck into their fine print. My Bank of America card recently had a universal default and my APR went from 17% to 32% and I was floored. They did not process my payment correctly and at least reduced the penalty rate to 24% which I recently got it lowered back to the original.
What I am saying regarding the government is these banks make very large campaign contributions to the Mandarins (look that one up) and they just listen and discuss without doing anything. The government is not the solution to the problem, however I am all for anything they could do for the consumer. Bankruptcy laws became stricter because a large majority of people who file are not bankrupt. They gave up and see that as their only way out. People need to take responsibility for their actions and their debt, which is going to cost more money in the long run, but paying that debt off is their responsibility. That is my overall point.
Correct me if I’m wrong, but the problem with the interest rates is not on the Federal governments shoulders. Individual states have their own rates, and the credit card companies simply set up camp in states that have no limit on how much interest they can charge. Usury laws in my state cap it at around 10%, quite lower than the average credit card rate.
It is those states that have cut their laws at the expense of consumers in order to draw corporate business (and corporate tax dollars) to their state that have created most of the problem (South Dakota, I’m looking at you!).
The government can’t control the interest rate other than the infamous PRIME we all have watched creep upward. Right now it is 8.25% which is up by almost 50% since 2004 when it was only 4%. What ever happened to ‘fixed rate’ APR on credit cards? Most banks can’t offer a low fixed rate anymore because it doesn’t make them money. They tack on their own rates to prime to give us the lovely double digit variable rates today. I think it’s all the fees they tack on if you’re late, over limit, etc. Not to mention, the fine print now says if you’re late even once they can bump you up into the default rate. Odds are most certainly against people who cannot keep up with even the minimum payments, but those fees tacked on top of the payment makes it near impossible to get back on track.
The government may not be able to do much about the interest rates. They could but they won’t, there’s too much money being made right now. I’m not sure when things will start to correct itself, but it looks like it will be on the verge relatively soon.
There are already usury laws in place to prevent gouging of interest rates, but another law says that you only need to obey those laws in the state that your business operates out of. The problem is only with a few states in the US. Otherwise, we wouldn’t see these high rates.
I also noticed that fixed rate credit cards seem to be a thing of the past, but I don’t see how it really matters. In just about every agreement I’ve seen, the terms allow the card company to change the rate for whatever reason they can come up with, whether it is fixed or not, with a short 15 day notice.
I have to say, that I could not agree with you in 100% regarding , but it’s just my opinion, which could be wrong
I couldn’t understand some parts of this article , but I guess I just need to check some more resources regarding this, because it sounds interesting.