I used to have perfect credit and multiple credit cards from American Express, Bank of America, Citibank, Chase Manhattan and many other little companies for the past 20 years that they absorbed or merged into their too big too fail banks. And then over 3 years ago, literally overnight the banks cut my credit lines. This will flag on your credit report that you are maxed out on a credit card even though you were no where close to the limits the previous day.

For me American Express reduced over $80,000 worth of credit down to what I owed. Then later Chase cut my credit lines all to $1000 each. Then they cancelled it later. All these actions literally pushed my credit score down. Then Bank of America followed suit and cancelled my credit cards. Those were scary times back then. Of course, Citibank followed the other companies and cut my credit limits to the balance owed if any and then cancelled cards with zero balances.Once this happens, there is a good chance the other credit card companies will follow suit with software that scans for such changes.  They all do it and that is why credit card companies can ruin your credit rating.

You are probably in the same boat now if you are reading this post and came here from a search engine quest. You must be wondering why did Chase reduce my credit limit? Or why did Bank of America cancel all my credit cards or credit lines? Or why is American Express suspending my account and requesting my last 2-5 years worth of tax returns to do a financial review? Why ask why, right?

Your profile: perfect credit, same job and steady income for last 3-5 years or more, and possibly even less debt than before. Why would they target you the perfect customer who has been with them for 10-20+ years and never paid them late? There are a bunch of links and comments to other people in this post who have experienced the same thing. Maybe you are at the stage where I am at today. I pay cash for everything and avoid letting these banksters profit off of me anymore. It’s nothing personal and strictly business will be their robot answer for the ugly experience they put you through.    Just remember you decide how your dollars are spent and whether you will continue to support them in making money. Simply boycott them now and in the future.

The federal deficit is closer to 15 trillion dollars and our big states like California and New York can’t balance their state budgets without drastic cuts.  I do believe many of municipalities will start to default later this year in some form based on the last Meredith Whitney video I watched.  She makes a lot of sense.

Unemployment has gone from 7% in 2009 to over 10% and is supposedly back down to just under 9%. The truth is the numbers are much higher and we know this because not everyone unemployed is counted in the numbers. On top of that the real numbers are closer to the BLS or Bureau of Labor Statistics u-6 numbers which is double the reported rates we hear on the news. The real US unemployment rate may be 22.1 percent for February, not the 8.9 percent reported by the government, according to economist John Williams, author of the “Shadow Government Statistics” website, who has argued for years that the federal government manipulates the reporting of economic data for political purposes

If you are employed right now, then you probably feel we are living in a recession.  The feelings come from the lack of job security, high food and gas prices, and realizing we live from paycheck to paycheck.   Now, if you are unemployed the feeling will be closer to living in a depression.  This is based on scarcity of jobs,  abandoned and foreclosed houses in our neighborhoods, and a general feeling of helplessness.

Either way, if you feel like you are living  in a recession or depression, then take immediate action to protect your family and savings.
Once you are either laid off or your hours are cut, pay only the necessities like rent/mortgage, car note, utilities and food. Everything else needs to be put off because you want that cash to last as long as possible. This is putting your family and yourself as a priority.

If you read about the hardships people are experiencing in this recession, you will notice a pattern. They either had been laid off or hours have been cut. They use their money and drain all their retirement accounts to try to keep all their bills current which includes credit cards and personal loans. This will burn your reserves fast if you have no other source of income coming in.

Yes, you will get collection calls and letters, and your credit score will take a temporary hit, but that is still better than becoming homeless or not having enough food to feed your family after the basic necessities are paid. Not only that, credit profiles in this environment seem to have become worthless. The banks and credit card companies themselves are struggling to stay afloat. We are bailing them out with taxpayer money.

Trust me and not the experts on this one. You can have perfect credit, a high FICO score, and a long term job, but the credit card company will eventually reduce your credit because they need to manage their portfolio and reduce their risk which means cutting credit lines even with their perfect “customers”.  It is no longer just Amex doing this, but Visa, MC and Discover are all doing the same thing. Remember once your credit is gone, you will wish you had put that money in the bank and not pay down your credit cards. Cancelled credit cards and zero money in the bank means no more emergency fund or financial cushion.

Read other blogs or sites that tell you how to survive in this economy. Knowledge is power. Do not depend on the government to bail you out, because you will be disappointed.

Blogs and sites that have great ideas you might be able to use:

Being Frugal

Frugal Living

The Cheapskate Guide

Better Budgeting

WiseBread

You are probably in the same boat now if you are reading this post and came here from a search engine quest. You must be wondering why did Chase reduce my credit limit? Or why did Bank of America cancel all my credit cards or credit lines? Or why is American Express suspending my account and requesting my last 2-5 years worth of tax returns to do a financial review? Why ask why, right?

Your profile: perfect credit, same job and steady income for last 3-5 years or more, and possibly even less debt than before. Why would they target you the perfect customer who has been with them for 10-20+ years and never paid them late? There are a bunch of links and comments to other people in this post who have experienced the same thing.

At first you may take it personally like a relationship. Why did my credit card company dump me? I have been faithful and never cheated. I take my credit cards with me everywhere, use it to buy flowers and and occasional dinner, and then one day the bags are packed and the card is gone with no trace except for a balance accruing interest. sigh.

Then you may actually go through another stage and yell out obscenities. This is bull crap! Then you may read the forums and start looking for someone or an attorney who has started a class action lawsuit against all these banks we bailed out with our taxpayer money. I blogged about it here and there are some suits happening right now. I suspect it will take 5-10 years to get through the system since they have plenty of attorneys to fight us little guys.

Maybe you are at the stage where I am at today. I pay cash for everything and avoid letting these banksters profit off of me anymore. It’s nothing personal and strictly business will be their robot answer for the ugly experience they put you through.    Just remember you decide how your dollars are spent and whether you will continue to support them in making money. Simply boycott them now and in the future.

Basically, accounts that are in the collection cycle (30-179 days) tend to stay in collections when the debtor is making minimum payments.    Most consumers will be able to obtain a payment but not pay off the balance.  So if a person who is 60 days past due makes a payment, he or she becomes 30 days past due. Same thing applies to anyone in the 6 month cycle of credit card collections before they are charged off (150 days >120 days, 120 days>90 days, 90 days>60 days, 60 days>30 days).

However, once a credit card is charged off, any payments thereafter are applied differently.  The defaults are no longer counted in the delinquency numbers which then becomes lower overall.  What this actually indicates is that more accounts are defaulting because of unsuccessful attempts by collectors to mitigate the accounts.

Wall Street Journal:

Monthly data released Wednesday by major credit-card issuers, including Capital One Financial Corp. (COF), American Express Co. (AXP), Discover Financial Services (DFS), Bank of America Corp. (BAC) and J.P. Morgan Chase & Co. (JPM), indicated that delinquencies, a closely followed gauge of future losses, declined to their lowest point so far this year.

The rate at which lenders wrote off loans they likely won’t collect on remains elevated, even rising for some. The loan write-offs come as seasonal factors that bolstered payments on card loans — such as tax-refund checks — are behind the card industry.

The challenge now for card issuers is to bolster the size of their loan books; the more that cardholders charge on their plastic, the more the companies earn by way of fees, so the amount customers spend is critical. Card-loan balances — and, as a result, revenue — have been falling as companies, stung by steep losses during the economic slump, scaled back on credit and toughened lending standards.

In addition, the clamor for credit may be tempered by consumers, hit by the recession, borrowing less. Borrowers reduced their revolving credit lines — mainly card balances — by about $5.6 billion in October from September, according to the Federal Reserve. That’s an annualized rate of 8.4%. Since the end of 2008, these balances have shrunk by about $157 billion to $800.5 billion.

Credit-card issuing banks are also facing an erosion in profits and revenue stemming from new expansive rules curbing income on credit- and debit-cards.

At Capital One, a card-lender-turned-bank, U.S. borrowers at least a month behind in their card payments fell to 4.26% in November from 4.45% in October. Charge-offs in its U.S. credit-card business rose to an annualized 7.56% last month from 7.26% in October, according to a regulatory filing Wednesday with the U.S. Securities and Exchange Commission. Its shares were down 1% to $41.70 in afternoon trading.

Charge-offs are loans that a card issuer deems uncollectible because borrowers can’t repay them; they are based on past delinquent balances. Delinquencies are loans that may be written off in the future. The delinquency rate is important because higher delinquencies force issuers to squirrel away capital to cover potential losses.

At American Express, which has an affluent cardholder base, the 30-day delinquency rate continued to fall, at 2.2% in November from 2.3% in October. AmEx in a SEC filing said it wrote off an annualized 4.4% of its U.S. card loans last month, down from 4.7% in October. It shares recently traded at $46.44, up 0.5%.

Discover said charge-offs in November totaled 6.72% of credit-card loans that have been packaged into bonds, down from 6.83% in October. The 30-day delinquency rate fell to 4.15% last month from 4.34% in October. Its shares rose 0.7% to $19.28. Discover and its bigger rival, American Express, also process card transactions in addition to issuing credit cards.

J.P. Morgan Chase said charge-offs rose to 7.16% last month from 7% in October. In the same period, total delinquencies fell to 3.68% from 3.81%. The shares are down 0.9% at $40.43.

Bank of America, at a write-off rate of 9.92% in November, had the highest among its peers. But the write-off rate was lower than the 10.15% in October. Bank of America has consistently reported a higher write-off rate than other major U.S. card issuers. Total delinquencies were lower at 5.47% last month compared with 5.6% in October. Bank of America shares recently traded at $12.38, down 0.2%.

Citigroup Inc. (C) is slated to report later Wednesday; its stock is down 1.6% at $4.62.

Collections:

A woman saying she was harassed by Capital One for a disputed $4,000 credit card debt has filed suit after the bank demanded more than $ 286 million dollars. Attorney Craig Thor Kimmel of Kimmel and Silverman, P.C., an Ambler-based consumer law firm, has filed the suit on behalf of Patrice Perry in Philadelphia County, Pennsylvania. (Case ID# 101200540, Philadelphia County Court of Common Pleas)

According to the complaint, Capital One first demanded Perry pay $3,845 for purchases on a credit card. Perry disputed the debt and turned the letter over to her family lawyer, who wrote Capital One to cease and desist contacting Perry directly. Disregarding the letter, Capital One allegedly stepped up collection efforts, placing more calls to Perry and claiming that it was doing so because the lawyer did not make a substantial settlement offer to resolve the account. Telephone calls were made to her home and workplace, where she alleges, her employer does not allow personal calls.

Subsequently, Perry received more letters, each demanding different amounts, some higher than others, all threatening legal action if not paid promptly. The letters failed to state how the varying amounts were calculated or if amounts sought were based upon any contract between Capital One and Perry authorizing such charges. After a second cease and desist letter from the family lawyer was disregarded, Capital One in response sent a letter demanding immediate payment of $286,651,237 from Perry. The letter went on to instruct Perry to mail full payment in the envelope provided. It was at this time that Perry’s family lawyer contacted Kimmel, who assumed representation.

The complaint alleges the $286 million demand was so outrageous that it could not be the result of a computer glitch, and that it required human intervention to be sent. Perry alleges the basis for sending it was embarrass, humiliate, intimidate and cause emotional distress, of amounts incapable of being understood.

The lawsuit alleges that Capital One was compelled to cease communication upon receipt of the initial letter from her family lawyer and used false, deceptive and misleading communications to collect a debt.

Perry further claims that Capital One threatened to report the disputed debt to the credit reporting agencies, which would adversely affect her FICO credit score and unnecessarily make her other creditors insecure.

“Harassing calls, disregard for a lawyers written instructions on two occasions, demands for payment of differing and arbitrary amounts and the final letter seeking more than $286 Million, demonstrates serious abuses at the collection office of Capital One.” says Attorney Kimmel. “From this example we see how a financial terrorist works in today’s economic times and that is by escalating tensions, pushing the person to the limit, and making threats, without regard for civility, accuracy or the legal rights of the individual. No one should ever suffer the indignity and humiliation my client has experienced.”

Kimmel advises consumers to be guarded with creditors and debt collectors working for them. He recommends seeking legal advice before paying disputed debts, entering repayment agreements or providing/confirming personal information. Under the federal Fair Debt Collection Practices Act consumers have substantial protection from this type of behavior with the debt collector, who must pay all legal fees of the consumers lawyer”, says Kimmel, “and most states, like Pennsylvania in this case, offer similar protections from creditor abuse of the type Capital One undertook with Ms. Perry.”

CLEVELAND - Ohio consumers are getting phone calls from someone claiming to be a debt collector. But, is the caller legit?

“Fast talking foreigner and he said I was delinquent and we’re going to take legal action,” Tim Swancer remembered.

Swancer is a college student working full time, and figured a payment from an online payday loan slipped through the cracks. He had no reason to doubt the debt collector, so he paid it off.

“He knew who it was from. He knew how much. He knew the last four digits of my social security number. He knew my birthday and place of employment,” Swancer explained.

Under the law, Swancer has the right to request documentation of the debt before making any payment. Swancer didn’t exercise that right.

After he paid, he looked through his paperwork for proof of debt. Swancer didn’t find anything. The debt also didn’t appear on his credit report.

“Two days later, I got a letter from CashNet USA saying we value you as a customer,” Swancer said. The letter offered a promotional rate if he took out another loan.

The timing didn’t add up for Swancer, so he called CashNet USA.

“They knew exactly what was going on. They knew there were fraudulent phone calls,” Swancer said.

CashNet USA warns consumers about these phony calls on its website and says the calls are not being made by anyone affiliated with the company.

The parent company of CashNet USA did not return our repeated calls for comment. According to the company’s website, customers of Payday Advance, Cashland, Cash America, and SuperPawn are also getting calls. Some people who never did business with these companies are getting calls.

The Illinois Attorney General also issued a warning for bogus debt collectors using a variety of names beside CashNet USA including: Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, America Legal Services, Quick Cash, and ACS.

Swancer just wonders why he never got a letter warning him about this problem.

“I’m afraid someone might have my information,” Swancer said.

Swancer is lucky. His bank refunded the debit card payment.

CashNet USA refers consumers to the Federal Trade Commission, but that agency won’t say if it’s investigating.

Then a few weeks ago, the Department of Justice decided to sue American Express.  Since then this is the only news item on the amex fighting a lawsuit.  My prediction will be Amex will settle with the DOJ in the future without admitting guilt.  Pretty much like all the other banksters that are caught.

DebtAmerica:

Credit card issuers American Express, Visa and MasterCard face uncertain futures after the U.S. Justice Department brought forth lawsuits that accused them of violating antitrust laws, according to the Bedford Report. Visa and MasterCard both opted to settle the lawsuits, which were related to the fees they charged to merchants for every credit card transaction they processed. Now, retailers can offer lower prices to consumers who opt to pay for a purchase without taking on credit card debt.

However, American Express, which makes more from any transaction involving credit card debt than other issuers, has decided to fight the lawsuit, throwing even more doubt over what will become of its policies, the report said. If AmEx were to lose the lawsuit, it’s not clear how their new policies would affect consumers.

Prior to the suits, merchants had protested these interchange fees for months, saying that they cost them thousands of dollars a year, even for smaller businesses