Credit and Debt

The ABC's of Getting Out of Debt: Turn Bad Debt into Good Debt and Bad Credit into Good Credit
by Garrett Sutton, Esq.

From the author of the Rich Dad's Advisors books Own Your Own Corporation and How to Buy and Sell a Business comes a guide to credit and debt issues.

Learn how to trade bad debt for good debt and maximize credit in this step-by-step guide. Get the details on the fastest ways to wipe out bad debt, as well as simple strategies to maximize one's credit rating. Whether trying to get out of debt, or making sure one's credit is in the best shape possible, readers will discover that this book can be worth thousands of dollars!

Chapter 1

Donny

Donny protected his country. As a firefighter trained to fight large forest fires he was sent around the country to protect people and property from the forces of nature. Americans could go about their daily business, could sleep safe at night with their families because of Donny and his firefighting unit, experts at fighting wildfires, preserving forests, and protecting family homes. He felt satisfaction in knowing what he did mattered.

Donny was a recent college graduate. Like over a third of all college graduates he had $20,000 in student loan debt to pay off. Like over half of all college students he had more than two credit cards with an unpaid balance of over $2,000. In Donny's case the amount was $4,500. His first card had been burdened with charges to impress a worthy coed. The relationship didn't last. The debt did. His second card was from a national department store chain. He received 10 percent off everything in the store when he applied for the card. He was still paying off several of the shirts he no longer wore. Donny had recently financed the purchase of a new Ford F-150. It was a great truck he needed to have. He was certain he could make all of the payments. The local fire department paid him like clockwork.

Donny was sent to fight a huge summer fire in Oregon. Another mission, another job to do. In the past, when on the fire lines, Donny had always been able to receive his bills and make payments on a timely basis. Then a white powder was found on an envelope at his local post office. It was anthrax. The post office was shut for three weeks while the matter was carefully investigated. The mail didn't move for another six weeks.

Donny didn't receive his bills. Meanwhile, the Oregon wildfire threatened towns and property in all directions. He was on the lines for seemingly the entire summer. Like all the other firefighters in his unit, he assumed that the creditors were aware of the situation and would arrange a grace period for payment. After all, they were serving their country.

But the creditors didn't care what Donny was doing. He was now two payments late on all his bills. That was all that mattered. Explanations, whether reasonable, justified, or good, were just excuses. And all excuses were bad. Donny's credit card had a Universal Default Clause, one of the most odious of all credit traps. By being one day late on any payment to any creditor, the credit card company could charge a default rate on any existing balance of up to 29.99 percent. This meant that in Donny's case he had to pay an extra $2,500 a year for being one month late on another creditor's bill.

Donny missed two car payments while fighting the huge Oregon fire and the F-150 was repossessed. Because he had just purchased it, the money owed far exceeded the artificially low value it was sold for at auction.

Finally the horrendous Oregon wildfire was brought under control. Donny and scores of other firefighters returned home from a very difficult mission. In gratitude, the country's financial establishment unleashed a torrent of debt collection sharks on the returning heroes.

The firefighters were incensed. They had served their country. Through no fault of their own the mail had been delayed. Under such circumstances a little leeway was appropriate. If they were in the military, the Service Members Civil Relief Act would have shielded them from credit sharks. Why shouldn't fire-fighters be equally protected? But the creditors didn't care. They had rules and standards. And they made a great deal of money when people were late in paying. Some of the firefighters were now being forced into bankruptcy. Many lost their homes; many had their futures seriously delayed. A number of them wrote their congressmen demanding relief from the ingratitude of the nation's credit establishment. But individual firefighters don't contribute to Congress. Credit card companies, leasing companies, banks, and other lenders spend millions and millions of dollars to influence Congress. There was no contest. Donny was forced to declare bankruptcy. The next seven years were financial hell. He couldn't borrow to buy a house or start a business. He had a black mark on his record he worried about and worked every day to overcome. All for the privilege of serving his country.

Dewey

Dewey liked to play the angles. If there was an opportunity for him to take advantage of a situation or of someone else he would do so. Especially if it meant easy money without the need for work. Recently, Dewey had turned to new credit card and bank account deals. The FBI called it identity theft, and claimed it was the fastest growing crime in America. Dewey preferred to call it selective borrowing, and it was so easy and so lucrative he wished he'd known about it sooner.

Dewey had learned that by obtaining someone's Social Security number along with basic personal information he could obtain a credit card and a bank account. The accounts would be in the unsuspecting person's name but available for the use and benefit of Dewey, who moved from city to city to ply his special talents.

Dewey had just obtained the personal information from an elderly gentleman named John Logan. It was all so easy. He called up Mr. Logan pretending to be a utility company representative. He said he needed the information to update the company's files. Mr. Logan was all too nice and willing and forthcoming.

Copyright © 2004 by Garrett Sutton, Esq.

About the Author

Garrett Sutton, Esq. has over twenty five years experience assisting and advising entrepreneurs, families and business in selecting the appropriate corporate structures to limit their liability, protect their assets, build their credit and advance their personal and financial goals through real estate investments and other means of wealth creation. Sutton is the owner of Sutton Law Center, Sutton Law which has offices in Reno, Nevada, Jackson Hole, Wyoming and Sacramento California.