Montel Williams Will Still Loan You Money: How To Inherit An Elderly Relative's Credit Card Debt

The first thing I noticed the day I moved in with my grandmother was Montel Williams sitting on top of her unopened mail.

She's been in and out of the hospital over the past few months. After 84 years, her body just isn't holding together anymore. Worse, her memory and cognition are becoming unreliable. She was in terrible shape when my parents first hospitalized her, in denial about how poorly she was taking care of herself and the three-bedroom house my father built for her. Dirty dishes in the cabinets, a layer of dust over all the furniture, floors stained with what could only be dried vomit or worse... but she insisted that she could still take care of herself.

When she was first admitted to the hospital, my mother started handling her bills. Many of them were months overdue or, more worrying, paid more than once in the same period. One of the overdue bills was a credit card statement from Capital One, a card that my grandmother denied having, a card that was still being used while she was in the hospital. When my mother said she was going to report the card stolen, my grandmother admitted the card was hers. She'd given it to a neighbor who said they needed money. One of her “friends,” like Montel Williams.

Leafing through pages and pages of my grandmother's credit history, we were horrified to find that the $500 Capital One card was the least of her credit card secrets. At one time, she owed Bank of America a little over $20,000, but that account had been in collections for almost two years, purchased by a company called Asset Acceptance, that had bumped her debt all the way to $28,000 and put a lien on her home, the one my father built for her just a few years ago.

The envelope with Montel Williams on it was from a company called MoneyMutual. Montel promised, “Get up to $500 deposited into your account by tomorrow!” The information in the envelope was confidential, exclusively for the “member,” and assured my 84-year-old grandmother, who believes the city inspects her garbage for recycling and will fine her if they find any, “Your Emergency Cash Card has been activated and is ready for you to use. Keep it in your wallet or near your computer so that your personal Reservation Number is always handy.” Much like the neighbor running up her Capital One card, Montel Williams was her “friend,” always ready to lend her money if she needed it. On the back of the MoneyMutual letter, the fine print reads, “www.MyMoneyMutualNow.com is not a lender, an agent, a broker, or a representative of a lender, and does not make cash advances or lending decisions. MyMoneyMutualNow.com will provide your information to lender(s) that offer short term loan products.” In other words, MoneyMutual would happily give my grandmother's name and finances to whoever was swimming in the low end of the shark pool. Thanks, Montel.

My grandmother lives on food stamps and social security checks, but companies like Aspire Visa, Bank of America, HSBC, Chase, Upfront Rewards and even Barclays Bank of Delaware have been extending her enormous credit lines over the past five years. She had limits as high as $15,000 dollars on some of these cards, which she would use and then roll onto another card as soon as she had trouble making the payments. Some time during 2009, she stopped being able to keep track of which cards were canceled and which were due, and stopped paying all of them. The companies wrote off the debts, and various collection companies scooped them, including Asset Acceptance, a collection agency notorious for its tactics. The lien on the house is likely their doing, but my grandmother can't tell us anything about how it happened.

According to a recent article on the New York Times website, heavy credit card debt among the elderly is exploding in recent years, with seniors “regularly swiping cards to pay for things like gas and groceries.” The balances pile up, leaving it difficult for them to cope by themselves. The same article cites a study by Demos, a public policy research organization: “The growing reliance on plastic has driven the average credit card debt for people over 65 to $10,235.” My grandmother owes three times that amount.

A few years ago, when my grandmother was just starting her life in Florida, she mentioned a few of the credit card offers she'd accepted as though it wasn't a big deal. “I asked my lawyer, and he said that no one has to pay those bills after I die. So why not?” My parents were skeptical, but neither of them believed a credit card company would extend much credit to an old woman on social security. I tried to tell them that these same credit card companies extended credit to freshman college students living off SallieMae loans.

My grandmother's lawyer was only half right. In a column posted on www.creditcards.com, a woman named Roberta wrote in asking about a similar situation with her elderly mother's credit card debt. Roberta's mother and my grandmother are both what Harry S. Margolis, Boston Attorney and president of ElderLawAnswers (http://www.elderlawanswers.com/), call, “'Judgment proof,' meaning the credit card companies may be able to sue her, but they can't collect anything if there's nothing to collect.” Credit card debt is unsecured debt, which is why collection agencies will try so hard to convince you to pay them. Unsecured debt won't live on after my grandmother's death, but somewhere between running up almost $30,000 in credit debt and now, that unsecured debt became firmly anchored by her house through a lawsuit or a home equity line of credit she doesn't remember agreeing to through a lien. When the house passes completely to my father, the lien and her $30,000 worth of debt will go with it.

Every morning, I remind my grandmother to take her pills, and every morning, she asks a short while later whether she took them or not. Despite a failing memory, she gets mail almost daily from her “friend,” Montel Williams, who wants her to borrow more money. Her calendar on the refrigerator still shows the due date for the last cash advance a local check cashing store forwarded her against her social security check. My grandmother used to keep a detailed record of every phone call and transaction in a notebook. I've read through the entries during the period where she stopped paying her credit-card statements, trying to find a clue to how the debt became so huge, why it became tethered to the house. All I found were a few confusing scribbles about lost credit cards and this note, dated March 19 of 2010, “Letter from Bank of America Attorney – left message, no way I can pay them, do what they want.” Her handwriting grows erratic after that point, and the notes stop altogether in early 2011. One of the last entries was that she sold some of her custom jewelry for $100.

My grandmother's phone never stops ringing, but it's not collection calls. Those must have stopped when Asset Acceptance placed a lien on her house. The calls are from dozens of my grandmother's “friends,” all the people she used to do favors for. “I've done a lot of good for a lot of people,” she said to me the other day. I believe her. $30,000 worth of favors, including credit cards to friends and paying other people's bills and lending borrowed money to people who neither me nor my parents have ever met. My mother wants me to be polite when these friends come to visit because we don't know the whole story. We'll never know the whole story. So I smile and shake the hands of these strangers, like the woman who borrowed the credit card, but whenever Montel Williams pays a visit, I tear him in half and toss him in the trash.

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Tips On Selling Stuff On Craigslist

I used to love selling stuff on eBay, but I lost my love for that site years ago. Selling via online auction on the Internet's #1 auction site should be very efficient, but for me it's not.

First of all, the fees are too high. IMO, eBay used to be great for both eBay and sellers, but these days it's only a good deal for eBay. They dominate the market, so, of course, they're going to charge whatever the market will bear. For sellers, the economics of this can only work if you're selling big ticket items. Otherwise, it's almost always a waste of time. IMO, selling anything for less than $100 is tantamount to selling lemonade on the sidewalk in summer. Cute for while, and great for anyone who just wants to stay busy, but otherwise it's child's play.

So I'm very happy to report that I'm enjoying moderate success selling on Craigslist.

Craigslist is far more efficient than eBay. Not only do you not have to pay to list your items, but you also don't have to waste time running to the post office to ship your stuff. The lines at my local post office are furious more often than they're tame, and driving to another location would be a waste of fuel.

Moreover, when you sell on eBay, you're probably going to receive payment via Paypal. In my experience, more often than not, I've had to take yet another hair cut via PayPal's transaction fee. Poo!

With Craigs, you list, you sell and the buyer comes to you with cash. Love it. Another thing I love: the buyer doesn't have to worry about shill bidding, something that still happens every day on eBay (the clever scammers know how to setup shills that are virtually impossible to detect.)

I have a few tips to share for listing on Craigs:

• Include lots of detail in your post. The more detail you add, the more prospective buyers are going to feel that you are honest and honorable. If you can't remember the exact date when you bought your item, include a reasonable estimate, and make it clear that it is in fact your best guess.
  
  Also -- and this may seem old fashioned -- but I always include a "reason for selling" at the end on my posts.
  
  
• Tell A Story: If you can tell a story about your items, do it! Buyers will appreciate it. Selling that great bike because you developed a pinched nerve and can't cycle anymore? Tell them all about it. Selling that sowing machine because your ex moved out years ago and left it? Share those details! Buyers often like the idea of telling their friends and family the story behind their Craigslist purchases. Human nature.
  
  Not a good idea, however, to post any fiction. Savvy buyers can often tell when a story is made up, and if they detect even the faintest whiff of BS, they're likely move onto something else in a flash.
  
  
• Always include an image! If you can't include an image with your post, the odds on a successful sale go way down. I love photography so I always add high quality pics. But even if your images are far from perfect, include at least something. If your image(s) are blurry, have weird tints or are poorly composed, you should make an effort to do better. If you can't, just use whatever you've got.
  
  If I have a receipt, I like to scan it, blot out sensitive details with Paint Shop Pro, and include it in my post. I believe this adds much to my credibility as a seller.
  
  
• If you know your price is fair, stick to it! Some buyers will stop by your house then inject as many complaints about your item as possible. Then they'll say something like, "I think I'm going to pass" to get you to lower your price. Bottom line: if you know your price is fair, then don't fall for any such manipulation, especially if others are interested in your item. I very recently let someone walk out my door when he tried this on me, then later sold my item (a Fuji road bike) a few days later at the price I wanted.
  
  
• Pricing really isn't that hard: Setting the right price can seem like a daunting task, but don't stress out about it. Search eBay for similar items and see what they are going for there. You can also search Craigs to see what others are listing for.
  
  If what you're selling is very unique, and you can't find any comparable items anywhere, I recommend setting a price point that you know is competitive, but also won't have you crying tears of regret after the item sells. Don't lowball your stuff. If it doesn't sell at the price you're comfortable with, just relist the item after a week or two (Craigs makes it easy to relist. In your account, click the [manage] link next to your item to delete your post, then return to your account and click [manage] again to relist it.)
  
  Caveat: relisting your item will cause it to rise to the top of your chosen Craigslist category, which is great because that translates to a lot more eyeballs on your item. But if you relist your items too often, it'll be seen as "excessive bumping" and Craigs may delete your post. I recommend waiting at least 7 days before relisting any item.
  
  
• Check The cash: Don't trust anyone. Someone may try to pay you with counterfeit money, and not even realize that their money is fake. Happens all the time. Check each note -- especially the big ones! -- under a bright light. For example, for a $100 bill, check for the watermark, red and blue threads, the plastic USA100 strip and the sparkly/raised 100 in the bottom right corner on the front side of the bill.
  
  
• Scammers are not hard to detect: you may be wary about using Craigs because of all the scammers lurking on the site. It's true: there are lots of scammers on Craigs, but, IMO, they are easy to thwart.
  
  The simpleton scammers will reply to your post with something like:
  
  

  "I'm very interested in your item. I can't buy now, but I'm willing to pay you an extra $30 above your asking price if you can hold it for a few days. Please send me your name, address and phone number so I can contact you when I'm ready to pick up your item."
  

  Have a good laugh at these, and delete them right away. These idiots are so lazy they can't even be bothered to include details of your specific item.
  
  Some scammers are a bit smarter, and will reply with something simpler like:
  

  
  "Is your bike still available?"

  This could easily be a legitimate buyer, but if they later ask for your name, then you know you're dealing with a scammer.
  
  On Craigs, it's very, very simple: NEVER GIVE ANYONE YOUR REAL NAME! You have no reason to. I always sign my emails with either my first initial or one of my nicknames from college. When a potential buyer stops by, again, I use my nickname. You won't be able to avoid giving strangers your address (unless you deliver), but as long as they don't know your real name you don't have much to worry about.
  
  I also don't mind giving out my cell phone number. Makes communicating much more efficient. However, I only reply with it after at least some trust has been established in the initial email conversation (one or two replies if often enough for me.)
  

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No Balance Transfer Fee Credit Cards

I'd really like to see 0% intro APR, no fee balance transfer credit card return to the U.S. Credit card offers have been improving, but, these days, banks are very keen on charging a fee for all kinds of services, including credit card balance transfers.

I know from experience that the best way to raise your credit score above 800 is to spend plenty of money with credit cards, then pay all that money back. That's what I did during the last decade, as I built my business. As of last month, my TransUnion credit score is still above 800; 804 to be exact.

I very rarely use my personal credit cards these days. I use my business cards for business spending, and for personal stuff I use my personal debit card.

I was thinking of transferring some of my business-credit-card debt to another business credit card that includes an attractive, no fee balance transfer, 0% intro APR deal, but I can't find any. And I can't transfer my business debt to a personal card, since, technically, that would be breaking the rules.

Before the financial crisis of 2008, there were plenty of no fee balance transfer deals out there, with both business and personal cards. Bank of America, Citi, Discover -- they all had at least one no transfer fee 0% card.

So I guess I'll just have to wait and do my best to pay down my business cards, so that I don't get overwhelmed with finance charges.

Used My Citi Personal Card, Just In Case

Last weekend, I decided to use my Citi personal credit card, just to use it.

My Citi card has a credit limit above $30,000. The APR isn't good, but I keep the card as a backup in case of a financial emergency, and to keep my credit score high. Closing a credit-card account that has a zero balance and a high credit limit would almost certainly cause my credit score to drop. As you probably already know, having lots of credit available to you, and not using it, looks very good to credit scoring algorithms.

So I used my Citi card to keep the account active. I don't want Citi to close it due to inactivity.

Spent a little more than $69 on some gas, then paid it off right away via an online payment.

I don't drive anymore (sold my car) but I was riding shotgun in my friend's car on a trip to New York. Trip was mostly benefiting my todo list, so I paid for the gas.

I was very surprised to find that at Sunoco stations, you can't use a credit or debit card more than once in a day. This is true even if you use a credit card to pay for fuel in one state, then try to use it again in another. VERY annoying.

So I found myself with limited cash and a debit card that I can't use to pay for gas. Seemed like the perfect opportunity to dust off my Citi card and send a clear signal to the good folks at Citi that I want to keep this card alive!

Why do I insist on using Sunoco? I like the quality of the fuel, and I also very much like the fact that the company gets not a drop of crude oil from the Middle East. Does all Persian Gulf oil money fund radical Islam? Of course not! But if even $0.01 goes to support terrorism, I'm spending my money elsewhere.

January 10, 2011 UPDATE: No Fee Balance Transfer, 0% credit cars are back! Check out this YouTube clip.

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The Financial Crisis: Blame It On The Government, Of Course!

Found this interest video clip on the WSJ's new Opinion Journal Live:



What I find truly unbelievable is that at one point, half the mortgages in the U.S. were either subprime or ALT-A. Yikes!

I also find it very....err....interesting that the commission places most of the blame for the financial meltdown that led to the Great Recession on institutions that really don't matter anymore, like Fannie Mae and Freddie Mac. IMO, they are letting way too many fraudsters and other super-greedy players off the hook.

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New Credit Card Rules

Consumers are now familiar with the Credit Card Accountability Responsibility and Disclosure Act of 2009 or CARD and how it protects borrowers against unfair interest rate hikes and other exorbitant credit card fees. However, most consumers are not aware that the Federal Reserve enacted new rules for credit card companies on February 22, 2010 to ensure that consumer rights outlined in the CARD Act of 2009 are truly protected. As the regulatory agency of America’s banks, the Federal Reserve has to police the banks to make sure that they don’t try to exploit potential loopholes in legislation and thereby exploit consumers.

The February 2010 regulations enacted by the Federal Reserve provide the following protections to credit card consumers:

Credit card companies must tell you how long it will take to pay off your balance. Now your monthly credit card bill must include a breakdown of how long it will take to pay off your balance if you only make the minimum payments as well as what you would need to pay each month in order to pay off your balance in three years.

No interest rate increases for the first year. Credit card companies can no longer increase your rate for the first 12 months after you open an account, EXCEPT IF:

• Your card has a variable interest rate tied to an index.
• There is an introductory rate, but it must be in place for at least 6 months.
• You are over 60 days late in paying your bill.
• You violate a payment arrangement agreement.

You MUST be notified when they plan to increase your rate or other fees. Your credit card company is now required to give you 45 days written notice before they can

• Increase your interest rate;
• Change fees that apply to your account
• Make any significant changes to the credit contract terms.

If you do not agree to the new terms you now have 45 days to cancel your card before the changes are put into effect. However, if you do choose to cancel your card your credit card company may close your account and increase your monthly payment, with certain limitations.

Your credit card company DOES NOT have to give you 45-day written notice if:

• You have a variable interest rate tied to an index and the index goes up.
• Your introductory rate expires.
• You violate a payment arrangement agreement and you experience a rate increase as a consequence.

Increased interest rates can only be applied to new charges. If after 12 months your interest rate is increased it cannot be applied to a balance accrued before the rate increase itself.

Restrictions on over-the-limit transactions. You must now opt-in to allow transactions above your credit limit to be processed; otherwise the charges must be denied. If you do not opt-in and your credit card company allows your card to be charged above your credit limit, you cannot be charged an over-the-limit fee. Also, if you do go over your limit you can only be charged one over-the-limit fee per billing cycle, and you can opt-out at any time.

Payments must be directed to highest interest balances first. If you make more than the minimum payment, the difference must be applied to the balance with the highest interest rate, with one exception:

When you owe a balance on a deferred interest plan, the credit card company may give you the option to apply payment in excess of the minimum balance to the deferred interest balance before other balances. Otherwise, for two billing cycles prior to the end of the deferred interest period, your entire payment must be applied to the deferred interest-rate balance first.

No double-cycle billing. Interest charges can only be applied on balances in the current billing cycle.

Standard payment dates and times. Your credit card bill must be mailed or delivered at least 21 days before your payment is due. Furthermore,

• Your due date must be the same date each month
• Payments must be accepted until 5 p.m. on the due date.
• If your payment due date falls on a weekend or holiday you will have until the following business day to pay.

New caps on high-fee cards. If a card comes with fees such as an annual fee or application fee, those fees cannot total more than 25% of the credit limit. The 25% cap does not, however, apply to penalty fees.

Protections for underage consumers. Applicants under the age of 21 must prove that they have the income to pay their balances or they must have a cosigner in order to open a credit card account. Also, if an underage cardholder wishes to increase their credit limit and they have a cosigner, the cosigner must agree in writing to the limit increase.

The Fed also announced in October 2010 that it would amend Regulation Z, the regulations implementing the statutes of the Truth In Lending Act, in order to stop certain predatory practices enacted by credit card companies in attempts to maneuver around the CARD Act rules and earlier Federal Reserve regulations. The amendments will clarify matters of compliance for card issuers on the following:

Promotional programs that waive interest charges for a specified period of time. Reduced interest rate promotions are subject to the same protections as promotions that employ a reduced interest rate for a specified period. Credit card companies have recently used a ‘bait and switch’ approach to certain reduced rate offers, not disclosing that the promotion rules would allow them to revoke the benefit at any time.

Fees charged before a credit card account is opened. Application fees and other fees that are paid before a credit card account is opened are covered by the same limitations as fees charged during the 12 months after the account is opened to further avoid predatory lending practices.

Proof of ability to pay must be proven for the cardholder as an individual, not household income. Predatory lenders often issue cards to individuals who do not truly have the ability to maintain their accounts based on household income or other income credits, locking these consumers into a debt trap.

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The Life and Death of A Mortgage-Backed Security

Listened to a great episode of the NPR radio program This American Life earlier today. Truly excellent. The show was about the life and death of a mortgage-backed security (MBS), which was given the innocuous nickname "Toxie."

Basically, a group of Planet Money reporters pooled their money to buy a bond backed by mortgage debt. This is same type of investment that caused the financial crisis of 2008 and the global recession that followed.

5 reporters contributed $200 each, and bought the mortgage bond for $1,000. During the housing boom, that same bond was worth about $75,000! The investment -- essentially a big pile of paper drawn up by lawyers -- actually does OK for a while, producing a stream of income in the form of a monthly check. Eventually, however, the monthly checks dry up, and the MBS dies. In total, the investment returned $449.06, so the MBS ends up losing $550.94. Each of the five reporters gets back $89.80 from their $200 contribution. Ugly!

The reporters decide to invest what they have left in a gold coin. Much smarter, considering how gold has been doing since 2008. Moreover, the Fed just announced a new round of quantitative easing: printing new money out of thin air to buy Treasury securities. These purchases will, among other things, weaken the dollar, and will very likely contribute to gold's rise.

To read more about this episode of This American Life, and to download the free MP3, visit this link. There's also a fascinating interactive timeline here. Highly recommended!

Toxie's Dead from Enkhtulga on Vimeo.

Here's a cartoon we made for NPR's show, Planet Money. It's about Toxie, a personified toxic asset that helped burst the housing bubble. enjoy!

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The Punisher, from VH1's "I Love Money" (aka Sharay Hayes)

I've always been impressed with people who make money in unique and interesting ways. Take, for example, Mr. Sharay Hayes, a man who I know and respect a great deal. Sharay uses his unique talents, excellent business instincts and love of life to make a great living -- and he's having a whole lot of fun doing it. How's this for a unique and interesting mix:

• Real estate entrepreneur, based in New York City
  
  
• Exotic Dancer: on stage, Sharay's is known as The Punisher. He has a truly electric stage presence, and is a lot of fun to watch.
  
  
• Reality TV Star: Sharay The Punisher can currently be seen in the current season of the VH1 Reality TV show "I Love Money"

Sharay is an American renaissance man, and is easily one of the coolest guys I know. He's very successful because he knows what he wants, follows his instincts and doesn't let any kind of negativity hold him back.

With the unemployment rate as high as it is, we can all learn a thing or two from enterprising folks like Sharay. You can't teach ambition, but anyone can rethink and reexamine the way they perceive life, work and money, and find opportunities in places that once seemed outside their universe. Fortune favors the bold, and, in my opinion, it always will.

You can read more about The Punisher here.

Sharay The Punisher Hayes has a new website @ www.GetPunished.com (warning: it's a bit racy!)

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