Millions of consumers opened their credit card bills 3 years ago to find that their payments had more than doubled as did their rates.
Mr. Phillips of Portland, Oregon had a monthly credit card payment of $250 and suddenly they were over $1,500 an amount close to his mortgage payment. The payment and rate had hit the ceiling.
How could this be? He paid on time and was considered a good customer. Now struggling with being able to pay for all of his overhead expenses plus this credit card debt, he is concerned about losing his home and dealing with the added stress at work.
“I can’t believe it; I don’t know how long I can do this. That’s outrageous!” said Mr. Phillips.
Mr. Phillips is not alone with his worries. Also from Portland, Oregon is architect’s assistant “Jane” who experienced the same thing her rate skyrocketed to 36% and her payments were increased to $500 per month on a $7200 debt.
Both Mr. Phillips and “Jane” called their creditors to request rate and payment reductions if even temporary to pay off the debt completely and close the accounts. The creditor refused negotiation.
The pleas to the lender of not having the additional funds fell on deaf ears. The creditor placed both borrowers on telemarketer collection calls which flooded in up to 20 times per day, every day.
“Each time I answered the phone to talk to them I informed them of my prior conversation with their office and I asked them to stop calling and they didn’t. At one point I was at work and the Wells Fargo employee called and demanded the “new” payment. I didn’t have the budget for the entire payment and sent a letter stapled to my check asking for negotiation. They added high fees and the next month by monthly payment was over $900, the following month it was $1,400.”
“When I received a call at my workplace I told the telemarketer collection agent that she could not call my workplace she stated that she could call anytime anywhere and as many times as she wanted. I hung up and she called be twice. I always tried to reach an agreement and it was made clear that it on their terms not mine even if I didn’t have the cash flow to support it.”
“Jane” sent over 100 pieces of written communication and kept a log of phone calls and communication efforts. The documents generated to address the file is now a foot high. Regardless, her efforts to resolve the issue fell on deaf ears too.
“Jane’s” home mortgage is with Wells Fargo Bank too, when she informed the credit card department that the payment of $500 for unsecured debt places her ability to pay for her Wells Fargo home loan in jeopardy and contacted the mortgage division for help in communicating with the credit card department. Wells Fargo Mortgage customer service responded to “Jane’s” letters and phone calls requesting help with communication, however their interest was in preparation of foreclosure.
“Jane” stated “Wells Fargo didn’t care and told me that they would take me to court. I spoke with LuAnn Jones of Wells Fargo Customer Service Group for the credit card division in the corporate office who was handling my account and she felt the circumstance was amusing as she laughed and put me on hold to talk to the in-house attorney. No adjustment was made to the amount requested per month.”
“Jane” said she filed complaints with Helpwithmybank.com when she felt that she had reached a point of near breakdown with her phone ringing several times per day from her lender at her home and workplace and the fact that the small debt wasn’t being negotiated.
Wells Fargo hired a collection attorney GHR Lawyers out of Salem, Oregon after 4 months which proceeded to sue for the $500 per month even though proof of income was provided which substantiated that the highest payment affordable was $200. Wells Fargo had refused to accept any offers. At the soonest opportunity Wells Fargo attorney proceeded with garnishment proceedings.
When Mr. Comstock, attorney was asked why did Wells Fargo hire GHR Lawyers to pursue the collection, there was an indication that it was a result of the online complaint to the Treasury Department made by “Jane” and that they didn’t settle for a lesser payment because as Mr. Comstock put it “They don’t have to”. Mediator Ron Guy also an attorney stated “Wells Fargo settles debts like this every day and reduces the debts in half this is really a sad case”.
Today “Jane” is being garnished over $600 per month for the unsecured debt plus attorney fees. Her Wells Fargo Mortgage is as predicted…in jeopardy.
“This entire experience has caused me so many unnecessary problems. What makes me more upset is that I know that I am not alone and that other people are suffering this same problem. I can’t comprehend why they didn’t settle the debt on any of the 30 offers I made. All I really wanted them to do was to lower the payment and rate so that I could pay the debt off quickly. Now all of my other credit and car insurance is high because of Universal Default and my credit that I’ve worked hard on is sabotaged. Why haven’t our politicians cared about this?”
Millions of consumers are in the same debacle and are being advertised as “bad borrowers” when they can no longer afford the “new” monthly payment or rate. This problem plagued non-related debts as well. Universal Default rules allowed all other creditors to be notified and they too raised their rate.
Consumers affected by the hikes had monthly unsecured debts quadruple in cost. “Jane’s” monthly unsecured debt was $267 and after the effects of Universal Default the same debt cost $1000 extra dollars per month.
What did banks gain? Millions of new sub-prime borrowers to which they can legitimately charge ceiling rates and high annual fees for the next 7 to 13 years. Many more foreclosures are expected as a result of consumers no longer being able to afford the “new” cost of old debt.
Oregon Politicians David Wu and Ron Wyden wrote letters in response expressing their concern but, have not pursued the issue. The Credit Card Reform that was recently passed does not address any of the issues reported to the Treasury Department with exception of Universal Default and notice of rate hikes on existing debt.
Should banks be able to jeopardize a consumer’s ability to pay his mortgage and other crucial expenses?
Should banks be forced to mediate debt payments and make them affordable to the consumer?
If you are a victim of credit card hikes send your contact information to [email protected]