The Elder Law Forum Sending polite â�?�?cannot payâ�? letters to banks By Michael Myers
USD School of Law Credit card banks should be more careful. They should be more responsible. They should not loan money to low-income seniors living on limited social security and having no attachable assets. They cannot, after all, extract blood from a turnip, nor can they extract $670 a month from a couple in their late-60s living on $1,320 a month. "We're in a financial bind," said a 67-year-old woman who called my senior legal helpline. "My husband quit working three years ago because of a disability and I was forced to retire two months ago. We owe $9,000 on one credit card and $6,200 on another. One company just increased its interest rate from 18 percent to 31 percent. We now have to pay $360 to one and $310 to the other." "We can't do it," she lamented. "Should we take bankruptcy?" "You can," I advised, "but first, what assets do you and your husband own?" They live in an apartment, own no real estate, and have no savings, stocks, bonds or other investments. "We just live month-to-month, particularly now with neither of us working," she said."Our combined monthly income is $1,320 from social security." "Can they increase your interest rate whenever they want to?" she asked. "Just about," I replied. Credit card banks can use the following as triggers to unilaterally increase rates: • Credit score gets worse. • Paying mortgage, car loan or other creditor late. • Going over credit limit. • Bouncing a payment check. • Too much debt. • Too much available credit. • Getting a new credit card. • Inquiring about a car loan or mortgage. I suggested she write respectful letters to both banks explaining their situation and offering to pay a settlement amount of, say, $2,000 to one and $1,500 to the other over a period of 30 months. Banks understand this couple can walk away from their loans because they have no attachable assets. Social security payments are exempt from judgment creditors. Credit card banks should be more responsible. Borrowers should be better informed. (Pro bono legal information and advice is available to persons 55 and older through the USD Senior Legal Helpline, 1-800-747-1895; firstname.lastname@example.org. Opinions solely the author's and not the University of South Dakota).