Let’s talk about the lawsuits.
The first is from American Express. Eight months ago, I consolidated all my credit card debt. This is where you get a third party, called a Consumer Credit Counseling agency, to negotiate a payment plan with all your creditors. Mine is called Clearpoint Financial Solutions. They work out a lower interest rate, and a lower monthly payment, with each creditor. Then, you send the agency a check each month, and they take care of distributing the payments.
For someone like me, who lives in chronic stress and chaos about money (and is completely disorganized with paper), this is a lifesaver. I currently have five credit cards being handled by Clearpoint. Suffice to say that it can be very stressful to keep up with that many creditors on one’s own. Rather than juggle five different credit card bills each month, and scramble to keep up with minimum payments I can’t afford, I can just send one check out to Clearpoint each month, and forget about it until the following month.
This is a huge relief on two levels. The first is that I can’t lose track of the bills, and accidentally miss a payment. The second is that I can’t put off paying one or more of the bills, paying some on time but not others. I just pay Clearpoint, and I’m done. It’s so easy; one bill, one check, and I’m finished with my creditors until the calendar turns.
I’m also making more progress on paying down the debt, because the interest rates on each account are better due to their deals with the agency. Sounds good, right? Well, it is, but back when I started with Clearpoint, we encountered a problem: American Express wouldn’t play ball. We begged and pleaded, but they refused to participate. So my other five creditors got rolled into Clearpoint, and American Express, a card with a $15,000 balance, went into limbo.
At first, I tried to keep paying them, but I wasn’t able to keep up with the $300 monthly minimum payment on top of the $470 I was paying to Clearpoint each month. It wasn’t long before I started to fall behind with American Express.
I stayed in communication with them throughout this process, and at first they were nonplussed. They were actually surprisingly polite about the whole thing: “Okay, Mr. White,” they would say. “I’ll note it in the computer that you’re not able to pay at this time, and that you intend to pay as soon as you’re able.” “How nice of them! This is great,” I thought, “I guess it’s no big deal. They’ll keep being nice to me, as long as I keep in contact with them.” I was engaging in what we psychotherapists like to call “magical thinking” (also known as denial). I had the idea that things were going to happen according to my rules, rather than the rules of the real world (an aspect of the diseased thinking most debtors engage in). I thought American Express would allow me to continue to not pay them, for the rest of my life, because we were such good friends. After all, like any good debtor, I didn’t think the rules really applied to me.
As it turned out, of course, American Express eventually ran out of patience. In the real world, separate from my magical la-la land, this of course makes sense. American Express is a business, and their business is to collect on the money they loan to people. So, after four or five months of not receiving payments, their tone suddenly (but in retrospect, not surprisingly,) changed for the worse.
All at once, I started getting nasty letters in the mail. These letters stated that my account was seriously past due, and that there would be consequences if I did not pay my minimum balance due (by now up to around $1,800, including penalty fees, on a $15,000 balance). I began to panic, and thought that if I kept in touch with them via letters and phone calls, something would change. I was still being nice to them; why had they stopped being nice to me? Why were my good friends suddenly acting so cold?
Despite my efforts to get things back to a good place, there was no real movement in that direction. American Express was not willing to lower my monthly payment, and I wasn’t able to pay it, so the late fees and penalties kept racking up, until the minimum payment due was well over $2,000. Over time, the balance on the account, due to the penalties and fees, went from about $15,000 to about $16,000. As you can imagine, my anxiety level was growing right along with the escalating balance. I had no way to pay the minimum due, let alone the full amount I owed. With each passing day, I felt more and more anxious and depressed.
It’s clear to me now, after all I’ve been through, that the credit card companies do not have our best interests at heart. As one MasterCard vice president put it, credit card companies are looking for customers with a “taste for credit (who are) willing to make minimum payments – forever.”[i] Credit card companies spend an average of $58 to sign up a new customer.[ii] This is not so they can be your friend. It’s so they can make money off you.
And in my case, it worked. After seducing me into using their product, and helping me get deeper in debt than I ever dreamed I would be, American Express had me right where they wanted me. It was then that they stopped talking to me, leaving me scared, lonely, and depressed, waiting for the other shoe to drop.
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