‘Ruthless defaulters’ walking awayby Tim Manni
Some say it was inevitable. First came the wave of mortgage defaults, in which some borrowers essentially just mailed in the keys and stuck the lender with the mortgage… and the property.
Perhaps it was just a matter of time until some credit-card borrowers did the same thing:
Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.
They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. They could continue to pay for a while longer but instead are walking away. “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com.
The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.
Anyone who’s been delinquent on their bills, and especially credit-card bills, knows what happens. First come the letters. When they don’t result in a payment, the calls begin. Eventually, your credit record suffers. The ‘repo man’ might even come a-calling.
But what blows me away is that these people are being seen by some as some sort of latter-day Robin Hoods:
“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”
(That’s certainly true in the mortgage crisis. According to a Quinnipiac University poll in February, 62 percent of those polled blamed lenders “who loaned the money to people who may not be able to pay it back.” Only a quarter blamed homeowners.)
Perhaps I’m unfashionably old-fashioned, but this doesn’t make sense. To me, the fact that someone else seemingly got a better deal than you (”…while the lenders get government bailouts”) is irrelevant; people are using that as a convenient excuse to claim that they’re somehow relieved of your responsibility to live up to the deal they made. One might be able to make a case that Evil Mortgage Lenders suckered tens of thousands of wide-eyed borrowers… but credit cards? You borrow money, you pay it back; rinse and repeat. if you find that you’ve spent too much, you… stop spending. It’s not complicated — unless, like the mortgage high-fliers who maxed out their equity, you suddenly find that the gravy train ride is over:
With credit cards, this type of chest-pounding seems less evident, at least so far. Ms. Birks, 43, readily admits that no one forced her to use her cards. “Some people are good with money,” she said. “I was stupid.”
Still, just about everyone made mistakes during the boom — regulators, Congress, Wall Street. If Bank of America got a bailout for making bad loans, Ms. Birks figured, she deserved a bailout for accepting them.
Even leaving aside that Ms. Birks largely wrong about that (it was Bank of America’s forced acquisition of Merill Lynch that triggered the BofA bailout), she’s off-base. She got in debt over her head — and she admits no one forced her to do so — and the only thing she deserves is a plan to pay it off.
What say you, readers? Tim may have a soft spot for (and I’ll call ‘em as I see ‘em) deadbeats, but I don’t. Am I too harsh? Read the entire NYTimes article and let me know.