Credit Cards

Americans have credit cards at unprecedented rates. It is very easy to pay with credit card. According to CardRatings.com, around 640 million credit cards are in circulation in the United States with about $750 Billion to $800 Billion in credit card balances based upon Federal Reserve figures.

“Living with significant levels of debt has become an acceptable part of everyday life”-- Dr. Robert Manning, a leading credit expert. People proudly refer to "my credit card".

When the credit card due some people get behind on the payments, then the company accelerates the interest rates to very high numbers, e.g. 25%-30%. Late fees are added and the required minimum payment may jump up to several hundred dollars.

Stops Making Payments

Often at this time, the card holder who is unable to make the larger payment gives up and stops making payments at all or attempts to contact the credit card company to work out a solution but is unable to get an acceptable resolution.

Two Reasons

The two reasons most frequently reported to me as to why the folks get into these debt problems are some setback in the job situation (loss of jobs) or health issues (hospital stays & bills) or a combination of both. They tell me it became impossible to "pay my credit card".

After the card holder quits making payments or his payments are rejected, the account goes to the lender’s collection department for awhile and may later be sold at a discount to a debt buying company. If this company is also unsuccessful in settling the debt, they may later sell the debt again to another debt buyer at an even lower rate.

Stories of Abuse

While there may well be some collectors that operate ethically, the stories of abuse that I hear suggest to me that in many cases, the collectors lie, deceive, and abuse the rules of acceptable collection practices. I hear stories of collectors threatening to garnish the credit card holder’s wages and put a lien on their homes.

In Texas, the law does not allow for either of these procedures.

Lawsuit Filed

Eventually, a lawsuit for collection may be filed and the litigation process begins. By this time three or four years may have gone by and the debt with the addition of late fees, over limit fees, & high interest rates has about doubled the amount owed. So where the person may have charged up $4000.00 in goods and services, they now face a debt of $8000-$9000 plus attorney fees.

Courts delegate the case to a mediator:

So many of these cases are being filed with the courts (hundreds per court per month in some areas), that the courts can not handle the caseload. So the courts order the cases to mediation as an alternative means of resolving the dispute.

The mediator’s challenge is to help the two sides find a settlement option that they both can agree on, so that the trial can be avoided and the matter resolved.

By the time the cases come to me, the debtor has been called 30-100 times and talked to multiple collectors who are perceived by the debtor to be liars and crooks. The debtor has become angry, distrustful and considers himself to be the victim in a dirty business that is totally unfair.

Sometimes he has distorted the situation in his mind and conveniently decided that the credit card company is to blame for all his problems. He is very aware of, and concerned about, the impact on his credit of this negative credit situation.

What we do and how we are different:

Many of the courts assign some of their cases to us for mediation. We approach our work as a ministry. We have the opportunity to help people at a time when they are down on their luck and feeling very discouraged. (The scriptures call for us to be encouragers.)

In terms of experience, we have mediated over 1000 cases, several hundreds of them have been credit card cases, (more of these cases than anyone we know). We have worked with all the major credit card companies and their attorneys and have developed a feel for what offers may be accepted and what will not.

What we can do for you:

When a lawsuit is filed against you and a judge orders the case to mediation, you are required to attend. By coming to the mediation, you will be able to improve your situation. You will be able to get some or all of the following benefits:

• Discount the debt

• Avoid an embarrassing & costly trial

• Work out a payment plan (Even if you haven’t been able to do so previously)

• Get the account frozen to avoid additional attorney fees for trial and stop or reduce future additions of interest.

The mediation conference:

The mediation starts with the parties in the same room, in joint session. The mediator begins with introductions and an opening statement by the mediator as required by law.

The creditor will be represented by an attorney. Often, a decision maker from the corporate office of the creditor will accompany him/her. During this joint session, the parties are given an opportunity to present their views, history, concerns, proposals for settlement etc.

The mediator may go over all the options of the card holder in joint session or may wait for the private session (called caucus).

The first option is to choose not to settle. The mediator will explain why the person might wish not to settle.

Other options will include discussion of discounts, lump sum payments, payment plans, & freezing the account. The creditor’s attorney will answer all the questions that the card holder may have.

After all the information has been made available and all the questions the card holder wishes to ask have been answered, the mediator will move the parties into separate rooms for the caucus. The mediator will then discuss in private and in confidence, the issues of the case and move back and forth between the rooms with proposals, offers, and counter-offers until settlement has been achieved.

When the parties have come to agreement, a Rule 11 Settlement Agreement is drafted by hand for the signatures of all the parties and attorneys. All parties get a copy of the Rule 11 before they leave, and the original is conveyed to the court by the mediator.

When the court receives the Rule 11 and supporting documentation, the trial will be cancelled.

Do you need a lawyer?

Most card holders come to mediation without a lawyer. Usually it’s a matter of not being able to afford one. We prefer to see you represented by a lawyer because they can advise you as to whether you have a good legal reason to choose not to settle. There might be a violation of the statutes of limitation or documentation issues.

The mediator is a neutral party and can not and will not give legal advice to the card holder.