New topic: Credit Cards
Credit Cards are the bane of human existence.
Credit Cards allow the user to have what he wants rather than what he needs. Credit Cards are a mortgage on ones future. Credit Cards make credit card companies huge profits.
I have a client who is on ODSP. ODSP stands for the Ontario Disability Support Program. It provides income of about $1050.00$ to developmentally, physically and mentally challenged individuals. The funds are not taxed and are exempt from seizure under any circumstances.
This client has a $2000,00 Sears Credit Card at 28.8% (2.25%/month) with a minimum payment of 5% of the balance. He has no problem with this card and treated it like gold.
While he was not the brightest bulb in the package, he understood what he had to pay on the card based on his statement. Realistically, he had no idea about interest or borrowing.
Sears Canada sold their credit portfolio to Chase Mastercard. Chase sent my client a replacement card... a mastercard... with a $2000.00 limit at 18.5% with a 3% minimum payment. If he card were used to the limit, the payment is $60.00 with $32.00 of interest. It would take my client assuming he never used the card again about 150 months of minimum payments to pay off the debt. If he paid the maximum payment of $60.00 and never used the card again, he would pay about $4200.00 over 48 months. By the way, any reasonable assessment of his actual expenses and the source / nature of his income would have determined he did not qualify for the credit card.
I sure you know what comes next. He used the card. Chase kept raising his credit limit eventually to $7000.00 and never actually spoke to the customer. Once other credit card companies saw her had a mastercard, they sent him preapproved cards hoping he would give them his Chase business. He got $5000.00 in other credit.
Now the Dr. Phil question: What were they thinking? Lets give $12000.00 to a person on disability welfare even thought he hasn't asked us for it.
One note; The majority of the $12000.00 in credit is interest and payments. My client used the cards to pay the cards.
Result: Client declares bankruptcy and credit card debt is discharged. At the date of bankrupty the credit card debts were up to date.
Post Bankruptcy Event:
Chase sues client in SCC for $1400.00 being the amount placed on the credit card in the 60 days prior to bankruptcy alleging that the he knew or should have know of his desperate financial situation at least 60 days prior to his assignment. Chase alleges that use of a credit card is a representation at the time of use of the ability to repay. The suggest that the client knew he could not pay, deceived them by not disclosing his true circumstances and represented that he could, they relied on the representation and suffered damages. They wanted the court to rule that this portion of the Chase balance was not discharged.
The matter went to trial and Chase lost. The judge concluded that since Chase never spoke to him either when he received the initial card or thereafter when the credit limit was increased he never made a representation to them. Each time he used the card he did not reaffirm any initial representation. The issue of a fraud does not deal with a person's ability to do something but their intent to do something. Ability does not equal intent.
A case in support of this view was introduced. A unemployed person owed $50000.00 in credit card debt. He has about $5000.00 left under his credit limits on these cards. He took the $5000.00 the local casino with the intent of parlaying the $5000.00 into $50000.00 to pay his credt credit card debt. He lost his $5000.00He declare bankruptcy. Credit Card sued him alledging he did not have the ability to repay the $5000.00 when he gambled with it. The court concluded that the bankrupt has no ability to pay. The court also concluded that the bankrupt's intent, however misguided, was to repay his creditors. The court concluded that the debt was discharged in the bankruptcy.
A credit card is a defective product much lile tobacco. It is legal to use. It can become addictive. It attacks in small amounts growing to a large dependence. In many case, the user cannot stop using it.
Let's talk about this
