patrick.net

For hundreds of years, societies all over the world have protected borrowers by limiting interest rates charged by lenders.

But in today's credit card market, American borrowers are on their own.

Less than half of all U.S. states bother to cap credit card interest rates, and few credit card issuers are based in these states anyway.

Most major credit card issuers are based in states without usury laws and without interest rate caps on credit cards. Banks and credit card issuers based in these states can charge any interest rate they wish -- as long as the rate is listed in the cardholder agreement and the borrower agrees.

And thanks to a 1978 U.S. Supreme Court decision, these the-sky's-the-limit rate policies dominate the credit card business.

Nomograph says

You are a poster child for financial stupidity

Yes, I know ... that is why I posted. I am laughing at my stupidity. And the people who gave me the $90,000 unsecured loan ...........

Patrick says “Say anything you like as long as you are polite”. I guess you have a lot of anger inside.

Maybe a person like me is ruining it for everyone else – maybe someone like you. Am I a financial idiot? Yes, of course. That is the reason I posted what I did. Am I embarrassed? Yes, of course. Is it my fault? Yes, of course. I am trying to expose what is wrong with the country (or people like me). What were the financial wizards on Wall Street thinking? I would not give myself a loan - but they did. What business model were they following? Increase the interest rates to 29% because some idiot was a day late? Really! ….. how did that work out for you?

I know "Patrick says “Say anything you like as long as you are polite”. ". But what are you achieving by telling the world how you cheated?

MacombMichgan:
Congrats on screwing the system. You are obviously a victim, having been forced to lie & cheat your way to a home in Mexico. It's so sad that your credit card interest rate was raised to 29%, even though the rest of the card holders in the US are suffering the same fate. But you're special, because no one else has had hours reduced, homes they couldn't afford, credit card payments they couldn't pay, and so on.

Your "renters" are lucky, as you've displayed a rare bit of compassion for them by returning their deposit and not collecting rent on the unit you fleeced the bank on. Enjoy Mexico; they need more thieves who laugh at other's pain due to their own selfish actions. Please teach your children according to your moral structure.

You are

MacombMichgan says

Patrick says “Say anything you like as long as you are polite”. I guess you have a lot of anger inside.

You steal $90,000 and are upset because a guy on an interweb forum calls you financially stupid?MacombMichgan says

Yes, I know … that is why I posted. I am laughing at my stupidity. And the people who gave me the $90,000 unsecured loan ………..

Does that money include the loan against the condo with Countrywide? You're not stupid. You purposefully stole from the lender, the credit card companies, and everyone else you named in your bankruptcy. You're the poster child for our economic crisis.

Actually - you reduced your own hours and now you've increased them again. I'm so happy for you, if only all of the country could do so at will.

Have you checked into whether the house in Mexico qualifies you for the $8,000 tax break? I'll bet you have...

Credit is the biggest Joke in Modern history. At least in its current carnation.
It's a big astrological chart, and numbers game. The risk is scuttled by sweeping losses under the table to collection agencies, and justified by heft fees. But make no mistake, if you just step away from the table for 3 to 7 years, you can come back just as strong as ever and never pay a dime of it back. Some are more crafty at working the system, they are criminal in intent on scamming the system, filling bankruptcy. Then starting the rinse and repeat cycle.

I mean there are people that have gone from early 2000 bankrupts, and bought in the height of the bubble, foreclosed on in 07, and either in a new house already or approved for a mortgage.

Where as I, started 2000 out with building credit for the first time in my adult life. (I always just lived hand to mouth when I was single. Never had any credit revolving account or bought a new car for that matter) . But because I had no credit history I was more toxic than someone with a bankruptcy or repossession. Finally around 2002 I had my credit starting to build, but then the IT work in the States came to a grinding halt.
My debts were miniscule in comparison to most peoples standards a few $500 limit visa cards, one or two dept store cards 300 limit, and T-Mobile that charged me in full for the remainder of the contract. But living on Unemployment trying to feed and shelter a family of four, my 3K in debt might as well have been, 100K. I didn't have it. So for the year I was out of work, my accounts escalated to over 10K, and being tossed around to collection agency to collection agency, and as they flipped it on each other, my balance grew.

A year or two later, I got back on my feet, and would have more than been willing to pay back my accounts, and also pay reasonable late fees. I think that if the card company places your account in arrears, then by law, the accruing interest should either stop or drop considerable. It just creates justification for people like my self, to say screw you I'll just wait.

And just maybe, if they are lucky like I was, grow to appreciate being a cash payer, and having more disposable income and greater savings than ever in my life.

It should be easier to pay back the original creditor, it should be mandatory to be square with the house, and that should have a greater meaning on your credit worthiness than is currently not possible. In fact, paying back old closed accounts, actually will hurt you credit for longer in the long run, if you are closer to the statute of limitations, than they start of the collection date.

Credit scores, beacon scores, and fico scores don't mean crap. They rig the game and fudge how the numbers operate on the fly constantly, and we have to pay to be privy to information they are collecting about or life, and allowing a fascist state where people are marginalized and infringed on like finding work and getting insurance. All of which should never have a bearing on peoples employment ability.

The best crooks and scumbags have the greatest credit scores of us all.

I say bravo. He as well as I should be forced to pay our debt in a fair manner. With out 50 million goddamn lawyers and scumbags trying to make a buck off our economic hardships
screw em!

I agree Bravo.

Original poster has learned much from CEO, Banksters, and all our other "Masters of the Universe".

"Playing it straight" is for the suckers and the peasants. Everyone who thinks they can "lead by example" from the bottom is fooling themselves. Right from the top down everyone games the system and doesn't go to jail over it. Why should the peasants respect such a system? You'd have to be a platinum-plated fool to keep up all your payments and attempt to "do the right thing" when the Corporatocracy sticks it to their creditors all the time and says "it's just smart business, here I'll play myself a bonus".

Wow, look at all the hate mail I am getting – wow.

I think that is worth noting that it was not the plan to “cheat” the system. When the credit card companies raised the interest rates they sealed my fate. I would never be able to pay them off – ever. The previous month I paid thousands to the cards. Does this sound like a person out to “cheat the system”? The reduction in my hours was not my doing.

I did nothing illegal. The condo went back to the bank, the tenants lived there rent free (they lost their house, had bad credit and two small children). Funny … many others told me to still collect the rent from them. They told me living there rent free was a huge blessing.

The sale of the condo would have paid some of the debt – no buyers. The sale of the stocks would have paid the rest of the debt – sorry, market crashed.

The Banksters ran their business how they saw fit. The million dollar a month Bankers know what they are doing – correct? Packaging garbage and selling at AAA! Ha! Who is the crook? Who is cheating the system? Bailout money! Billions spent on wars per month!

Do I deserve some of the blame and the criticism? Yes, I do.

My post implied no criticism.

In an egalitarian classless society there should be no double standards.

If it's "smart business" for the CEO of Goldman Sachs or Delta then it should be for you as well.

Bankruptcy seems to be the accepted way of clearing the books now and I envision a lot more of it at the personal level.

Vicente says

Bankruptcy seems to be the accepted way of clearing the books now and I envision a lot more of it at the personal level.

Why go bankrupt, if you ignore the debt will simply just go away...

eventually.

I implied no criticism as well, in fact there's only one person in this thread that had moral objections to your tome.
Thou doth complain too much

If I were going to cheat the system, I'm reasonably sure that I could get away with much more than $90,000.00

I dont understand why you were laughing all the way to the bank(#27). I personally think only the people who met with unfortunate events(widowed, health issue etc) should be allowed to bankrupt. All others, they should keep paying the price long, so they can teach their kids to be responsible.

dont_getit says

I dont understand why you were laughing all the way to the bank

The debt would be impossible to pay back at the rates the banks were charging – not possible. I am laughing because I am trying to understand the logic the banks are using. I have read many stories about the same situation. People can’t pay when the payment triples. If they didn’t raise the rates maybe people could pay because it IS possible. What is their strategy, to make it impossible to pay? What is the logic?

IF they modified your rates, they might have saved themselves $90,000.

However, IF they did it for you, they would have to do it for everyone else. And for every $90,000 that slips by them, they probably make $5,000,000 from those barely scraping by.

If the risk to borrowing becomes too unattractive, then people will just avoid it. Who would ever risk getting into a position they couldn't get out of, ever? We have a lot of businesses that go out of business. If we made every one of them responsible for every penny, we wouldn't have that many great ideas, just the very basics of society would be out there. Anything more would be too risky. Everything would be left for really big businesses, who could risk a little to try out a new idea.

The whole bankruptcy thing isn't perfect, but it does the economy a lot of good as well.

What bothers me is the predatory practices that the banks are using. Tossing out your 90,000 in loans because they know they can make others pay the 30% and that will more than make up for your tiny loss to them. That bothers me that other people are unaware of their rights. That they're unaware of what they have signed up for. That people without the proper skills to identify what should really be called fraud, can't. Of course if we rectify the fraud issue, we're just introducing more government bureaucracy. All that will happen is that the people in charging of marketing and sales will figure out new ways to get that money from the uninformed.

People keep trying to drag some puritanical MORALS into it.

The bank loans you money to buy a house. They have the house as collateral. You stop paying, they keep the house. It's a BUSINESS DEAL in which the responsibilities of each party and their results are outlined. That is all.

Same with any other debts. As for example the CREDIT CARDS in original post. The financing entity has made an estimate of your likelihood to repay (or not) and assigned interest rates, penalties, fees etc. based on the simple fact maybe you won't. Why you think they jack up rates to 29% and demand fees at every turn, because they are looking for their angle to extract maximum blood from host.

Thus I find it laughable when people side with the BANKSTERS on moral grounds. Morality doesn't enter into it, they apply numbers and risk analysis. The attempt to lever some responsibility for you to eat Mac & Cheese and live like a pauper to keep up payments you can't really afford is just a veneer for them. It sometimes gets them the results they want, so they will use it. But how many banksters going around offering to pre-emptively cut payments or balance for people that clearly need it? None. Morals only apply when it benefits THEM. For something that won't benefit them, then they point to contract law. Contract lets them put people on the street and morality be damned.

Vicente says

The bank loans you money to buy a house. They have the house as collateral. You stop paying, they keep the house. It’s a BUSINESS DEAL in which the responsibilities of each party and their results are outlined. That is all.

Bingo, give Vincent the SMITR prize.

Houses are worth what ever the deal will yield.
That fundamental flaw will always keep houses over priced. Until they abandon that practice, there will continue to be neighborhoods, with 45K investor cash only deals, right next door to 435K listing.

Both only equally opposing far ends of the scale no doubt.

Vicente says

the financing entity has made an estimate of your likelihood to repay (or not) and assigned interest rates, penalties, fees etc. based on the simple fact maybe you won’t.

Vicente - Awesome ...... that is what I am trying to say but couldn't find the right words. The banks calculate the risk and charge accordingly. Part of their business model is that some people won't pay. They know this ... yes, hence the 29% interest rates. Some poor fool is paying this ....

Credit used to be a lot more importaint (valuable) than it is today. When people couldn't pay they were RUINED, not insulated from the reality of it. That's because money used to be real, not the crap we throw around. Wait until money isn't really money anymore.

I applaud the original poster for being true to himself. Congrats on your haul.

Given the actions of this administration and the fed, I believe that only drastic actions of people like MacombMichgan can put a stop to the outrageous lending practices of the big banks on Wall Street. Not only do these lending practices produce debt slavery, but the effects on the whole economy, house prices, costs of goods and services, etc. are disproportionately affected with respect to the base incomes of the average citizen.

MacombMichgan, you are my hero.

Hey,

Seems the poster played by the rules. If you were in his situation what would you do? Take advantage of what the law offered you. Hate the game, not the player.

Bravo, MM! I like your post. I am especially impressed that you returned the security deposit and notified your tenants. The haters on this forum seem to view the banksters (i.e. financial crooks) on the same level that you and I see your renters. The banksters get bailed out by Uncle Ben. Have you seen the latest post on Mish's site? I can't wait to see if MSM picks up the Senator's bashing of Bernanke.

Looks like MacombMichigan committed bankruptcy fraud. Did he dsisclose his interest in the Mexico property in the documents filed with the bankruptcy court?

Actually, you 'stuck' it to your fellow American taxpayer.. Thanks!

Macomb acted in his financial best interest. Shouldn't we expect participants to use the system as it is designed to further their own selfish interests? Isn't that what banks, Senators, lenders, lawyers ... well, everyone does? Show me the saints. Those who would appyling labels, like "deadbeat" and "dumbshit", are applying an expectation that people will not act in their own self-interests and implying that they would act differently in the same situation. I commend their courage.

Macomb, thanks for the post.

Interesting case study. Yes, it is very easy to game the system on all levels, from credit card fraud all the way to the trillion dollar heist Wall Street pulled of. But of course nobody did anything illegal, that's the main problem. As long as it is legal to pull stuff like that you'd be a sucker not to take advantage of the situation. Personally I advocate a return to debtor's prison. For deadbeat CEOs, go after their personal belongings, their house, their Porsche, their Yacht, etc. Only iron fisted punishment can restore any fiscal integrity to this society. But as long as stealing is perfectly legal it will be impossible to change behavior. Actually you'd be a sucker not to do it.

Husan Furst says

Looks like MacombMichigan committed bankruptcy fraud. Did he dsisclose his interest in the Mexico property in the documents filed with the bankruptcy court?

Pretty much. I like how he blames the credit card companies for raising his interest rates. My guess is he was using revolving balances to pay off his cards, and more than once rolled balances into a mortgage. He's a small-time leech riding the bubble. I think it's fine. I only wish I had the guts to basically shit on my self-respect and lie to myself by taking on more debt than I could afford. I wish I had the strength to do what I know is wrong, all in the pursuit to get whatever I want. I wish I couldn't do 3rd grade math. But I'm not that stupid, or vain, or jealous. Unfortunate for me.

Paint yourself into a corner and then just "oopsie, I can't pay, its your fault". Why not? When the most powerfull/respected elements of our society are committing the exact same fraud (bankruptcy, pension default, common stock dillution, ect) in broad daylight and getting away with it, the time for the serfs to rebell is upon us. We should all thank the original poster for lighting the way.

Hi Macomb,

I for one felt really happy for how things worked out for you. I know too many bankers who have had their mansions, jets, copters an yachts subsidized by the average taxpayer like me. If everyone in America jut stopped paying their debs then we could re-establish a new better banking system and drive those dishonest taxpayer supported bankers out of business

Husan Furst says

Looks like MacombMichigan committed bankruptcy fraud

No crime or fraud was committed. Everything was disclosed according to the time frame required by law. My contract with the banks and the credit card companies is very clear - I don’t pay, they take back the condo (they did not lose money on the deal). The credit card companies gave out unsecured loans. This is their business model that they make (made) billions on, now their money is made from fees. A certain percentage of people will fall on hard times and will not be able to pay – again this is what their business is and the risk of this is figured into their business plan.
Maybe it is important to point out. All payments were being made and on time until my work hours were reduced. When I was one day late on a payment they raised the rates to 29% - soon the others followed with the rate increase. The minimum payments went through the roof and I could not pay. This was the beginning of the end. I was an unsophisticated investor, wheeler dealer trying to play like the big boys – I lost.

Awww, you're a victim? Poor guy.

The reason that credit card interest rates shot thru the roof is because of savvy investors such as yourself. Go ahead and pat yourself on the back all that you want, but remember that your post is self-congratulatory about how you screwed the system.

I'll bet your mother is so proud of you.

Well done, sir.

Only when smart individuals start playing the game to their advantage will the silly Greenspan/Bernanke/Wall Street easy money shenanigans stop.

Hey, I mean it about being polite.

You can say you don't approve or don't like the guy, but don't just call him names. I'll delete some of the insulting comments.

gittinsm says

Actually, you ’stuck’ it to your fellow American taxpayer.. Thanks!

I disagree. The credit card companies are professional lenders. They are corporations without souls or emotions, not individuals. They should not cry when unsecured debt gets defaulted on, and they should definitely not get any bailout from our taxes. If interest rates go up because loans are being defaulted on, good. We need higher interest rates.

The bigger crime is corporate control of government, privatizing profits and socializing risk.

Don't hate the player, hate the game.

I personally would never do something like this myself. I live a relatively modest existence and don't buy things I can't afford. (Which unfortunately has meant not buying a house.)

But the way our system works, this type of behavior is not only possible but rewarded.

I do think it's bad form to brag about these types of financial dealings in a public forum such as this (where your identity is protected.) But let's not get too righteous about it. Ultimately, if you can make the decisions MacombMichigan did and live with them, more power to you.

Nomograph says

BTW, this story clearly illustrates that the CRA did NOT cause the housing crash. People like MM caused the housing crash.
It’s unfortunate that there are so many bad actors like MM that can’t govern themselves. This is EXACTLY what leads to more government regulation to prevent these people from stealing. Believe it or not, there are millions of people like MM that require a nanny state government to protect them from themselves. The only alternative is to throw them in jail. So unfortunate.

I think it's a bit short-sighted to blame MM for the housing crash. For every one of him, there are 100s of people who have no idea what the terms of their mortgage are. Banks in this country are set up to screw people. It's their business model. Only the smartest of us are able to see through it and avoid the danger. People like donald trump go out and borrow huge amounts of money for a business venture. He does this with 10 different ventures at the same time. 70% of them fail. Those 7 corporations file bankruptcy, and the other 3 just keep on making him richer. Everyone sees this as perfectly ok and business as usual. The business world operates on a different ethical and moral standard. To them, there's nothing wrong or bad about using the terms of any contract to screw your creditors. It's just business. The banks issuing mortgages and credit card debt to consumers operate with this attitude. But us consumers are expected to uphold our end of the bargain! We promised! It would be just wrong to not repay the mortgage! Why should the consumer operate with a different set of rules? They're happily excepting an unlevel playing field. If corporations behaved the way consumers are expected to behave, we wouldn't have this financial crisis. So I have no problem at all with consumers who use the rules of the contracts they signed, and the law, to improve their situation. Every time I hear "they shouldn't have signed up for a mortgage they couldn't afford", I hear, "the bank shouldn't have written a mortgage to someone who couldn't afford to repay it." The bank was in a far better position to determine whether a person is able to repay. That's why we (are supposed to) have a mortgage qualification process.

brdnrohan says

I do think it’s bad form to brag

You are correct, and I am finding myself back peddling to defend myself. The original post was written with cynicism and sarcasm. It is not something that I am proud of but felt the story should be told.

gittinsm says

Actually, you ’stuck’ it to your fellow American taxpayer.. Thanks!

The government and the banks controlling it stuck it to the taxpayer. Any bank that writes crazy mortgages and hands credit cards out like candy deserves to go under. Wall Street should be a wasteland right now. Smaller, smarter banks would be growing to fill the crater they left. Instead, fresh money and taxes were delivered to wall street by helicopter.

how much tax do you owe on all that forgiven debt?

I hate the bastards as much as anyone but 2 wrongs dont make a right

Hi Macomb,

I for one felt really happy for how things worked out for you. I know too many bankers who have had their mansions, jets, copters an yachts subsidized by the average taxpayer like me. If everyone in America jut stopped paying their debs then we could re-establish a new better banking system and drive those dishonest taxpayer supported bankers out of business