Beware the "old debt" credit card offer

Posted by BeenThereStillDoingThat (24.187.170.238) on August 21, 2004 at 21:52:13:

Several collection agencys through garbage banks offer a kind of "credit card" which they claim is "pre approved" and offers you a way to pay off your credit AND get purchasing power. They state its an "exciting opportunity" to get your credit paid off AND may make you eligible to get more credit.

DO NOT BE SUCKERED INTO THIS SCAM.

First your new "credit card" basically takes your old credit card account and makes it brand new through another creditor. Its as though you just charged the full amount TODAY and not years ago. The old account is pretty much done and the new one is all that matters if they go after you in court. Obviously they will have every document about this new card AND will have rights to contact you in any way they like as they are now the original creditor and not a collector.
You also lose certain legal protections that you had because of the prior collectors limitations.

Second you owe the whole balance right away at the rate they choose, which is usually 19.9% but can go higher at THEIR discretion. So if you owed 10k with the old card before collections and the collectors ran it up to 15k you will now pay a monthly installment on the 15k PLUS 19.9% interest OR HIGHER.

Third, you must pay the monthly minimums each month in full or they keep adding the months together until you cannot afford to pay anything. Since your card is already "maxed out" it is very easy to go "over limit" in one or two missed payments. Since you couldnt afford to pay the old card and its fees imagine what the new card and its fees will be like. You will be right back in the same mess all over again.

Fourth, the card allows them to hit you with late fees and overcharges plus any increase in interest rate far higher than what a collection agency would have been legally capable of charging your old debt. These fees, penalties and rates can go as high as they want because they are an OC and give you the "right" to cancel your card anytime, providing you pay it all off of course, which is impossible.

Finally remember that this new "credit card" is a re-creation of your original debt that was charged off plus collectors fees and not what the new collector paid when they bought the debt. Since the collector paid what amounts to pocket change for your account, when you accept this credit card you are allowing them to convert the debt amount into a new credit card debt in the full amount THEY CLAIM. So now they legally have the right to demand it all even though they did it in this slimy manner. You cannot go back and try to dispute the old interest rates or any other fees that were racked up by the past collectors.
Once you have paid them for 3 months on this new "credit card" you are bound to this credit card and cannot go back to the old debt.

There are many other things which should make you run in the opposite direction if you ever get one of these, but I think the above is enough.

Hope this helps some of you as I just got my THIRD one this year and if I wasn't educated from coming to places like this I might have almost signed up for it.

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