Bye Bye 27.99%

Image via WikipediaSo I finally zeroed out the Amazon Chase card that was charging me 27.99% interest because of a universal default clause that got triggered when I missed payments to other creditors. (The back story is here and here.)

I paid a lot of it off, but I also transferred some of the balance to other, less usurious credit cards (like those I have with credit unions). And I haven't made any purchases on those for months. Good girl.

And now my highest interest rate is 10 percent. I still have lots of debt at that rate, but I can actually pay it off now.

The couple of hundred a month I was paying to Chase will now go to the IRS and the State Department of Revenue for back taxes. Once that's paid off, I'll start chipping away at the other credit card debt. Whew...

Strange Bedfellows--Oh the Debtor and the Lender Can be Friends

This post has been included in the Carnival of Debt Reduction hosted by the Financial Wellness Project. Visit the carnival for more information on getting your financial house in order.

One man likes to borrow now
The other likes to charge him, Wow!
But that's no reason why they can't be friends.

A bizarre coalition of consumer advocates and credit card lenders has asked the U.S. Comptroller of the Currency to change the rules and allow lenders to forgive up to 40% of the credit card debt of folks in serious trouble.

The coalition isn't asking for bailout money, although they do want to change the rules so that the forgiven debt wouldn't be taxable as income. The proposal is for a pilot program that could reach 50,000 people. The lenders could write off the debt. The borrowers would have to be receiving credit counseling and not otherwise eligible for existing credit card repayment programs.

Here's an example where I think it might help. In the summer, when Mr. Poorhouse was working part time because he hadn't been able to find a full time job, we talked to a credit counselor, who told us that we were not eligible for a repayment plan because our expenses exceeded our income. Obviously, entering into a repayment plan when you have negative cash flow isn't a good deal for anybody. The counselor suggested we try to improve our income or consider bankruptcy.

Luckily for us, Mr. Poorhouse and I have fixed our income problem. But it looked pretty bleak for a while there.

I have already heard people criticize this plan because it rewards the irresponsible. I think that's too simple.

I'd be interested in seeing how a pilot program would work.

Further reading from Credit Card Debt Law

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• Banks asking for credit card debt forgiveness

Sounds Familiar--Business Failure Leads to Personal Finance Problems

The story in this article from ABC news about people having trouble with subprime mortgages reminds me of me. Well, except the subprime part. This is exactly how I got into trouble when my business wasn't generating enough income, I'd rack up the credit card debt. It finally caught up with us.