Credit and Debt, Part 2

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

(Page 2 of 2)

Dewey's friend could forge a driver's license to perfection. His friend's business used to be geared for underaged teens who wanted to go bar hopping. The market now was for sharpies like Dewey. With Dewey's photo and driver's license carrying John Logan's information and an address controlled by Dewey, the plan was put in motion. Dewey opened a bank account in John Logan's name. He paid a few small bills and maintained good credit for a time. Then Dewey obtained a credit card in Logan's name. All was ready to prime the credit pump.

With the credit card Dewey bought as much electronics as the card would allow. TVs, stereos, and computers were easily fenced for cash. Dewey felt no remorse. The credit card companies and the national electronics retail chain made more than enough money. They could easily afford Dewey's hit. So could old Mr. Logan for that matter.

With his bank account Dewey wrote a large number of checks on one weekend to a number of small retail outlets around town. The smaller stores didn't have the ability to check cash availability. It was the weekend. The banks were closed. They took down John Logan's driver's license information and Dewey loaded up a rental U-Haul truck with his purchases.

By the time the checks started bouncing Dewey was hundreds of miles away getting ready for his next selective borrowing.

Unlike the credit card charges, which were absorbed by the credit card company and passed on to consumers around the world in the form of higher prices, the small retailers Dewey hit were not so lucky. When the bounced checks came back the retailer was responsible. They were out the money they paid for the goods they handed over to Dewey.

This type scam also costs the John Logans of the world dearly. The calls from the creditors and collection agencies, even when one is innocent, take their toll. The crushing financial and resulting emotional stress of a stolen identity is too much for many to take. For John Logan a stroke followed. He died shortly thereafter.

The cases of Donny and Dewey serve to illustrate the extremes and the ironies of credit and debit issues.

The credit industry actively entices all comers, especially the young and inexperienced, with the promise of credit. Critics charge their aggressive practices border on predatory lending, taking unfair advantage of those who shouldn't be borrowing. Whatever the case, the easy availability of credit encourages two types of people to sign up who shouldn't: those represented by Donny and those represented by Dewey.

Donny, fresh from college with student loans, two credit cards, and a truck payment, is starting his career on the edge of the credit abyss. If he doesn't work he is in trouble. Dewey, always ready to play the angles, has found a career taking advantage of the credit industry's willingness to lend, allowing him to work causing trouble. To combat the Deweys of the world the credit industry responds with rules and a rigidity that moves the Donnys closer to the abyss. One missed payment, anytime, for any reason, be it anthrax or cows in the road slowing the mail, and the machinery of negative credit starts to grind. A free fall ensues. Lives are ruined.

The irony of this scenario is how the credit industry treats each individual. Dewey is a cost of doing business. His fraud is known and accounted in their budgets as an expense factor. The cost is spread out over the entire industry with millions and millions of consumers footing the bill as increased costs.

Donny, on the other hand, the deserving and ethical individual and a victim of circumstance, is a casualty of doing business. He had his chance, argue industry experts, and he missed a payment. He will be punished until he can be trusted once again.

And so in this upside-down world where criminality is a cost and inadvertence amounts to a crime it is important to know the rules, the motivations, and the road map for winning with credit.

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.