It seems to be happening more and more every day. Creditors are changing the rules in mid stream.
Americans like their credit,
and the laws for establishing such are getting more complicated by
the day. Dealing with loans used to be just a matter of a handshake.
More likely than not back in those days, creditors would get their
money back including interest and payment on time. Not so today in
this world of big business and giant financial institutions.
Financial business used to
be driven by trust in the consumer, but now it is more often than not
being driven by statisticians, credit reporting agencies, and legal
departments. A financial contract use to be relatively simple, but
today, there can be pages of small print in legalese. Add to that
fact the addition of a wide variety of legal binding contracts, some
of which are implied, there should be no wonder that people will
change the rules in mid stream when they can.
Changing the rules in mid
stream can be a very stressful situation for either the creditor or
debtor, depending on who does the changing. Filing for bankruptcy
protection is one way of changing the rules by a debtor. This often
stresses out the creditors who once trusted the debtor enough to
extend them credit.
While it is true most big
lending institutions build into their system a certain percentage of
bad debt, nothing has shaken the monetary system in America like the
financial crisis of 2007-2008. Therefore, it may be understandable
why some creditor’s have acted out of character in the past five
years, or at least, acting in a manner that some of us have not
observed in times past.
For instance, a blogger just
reported on a bankruptcy website that his government student loan
service provider changed the rules in mid stream after him faithfully
paying for 10 years on the loan. The government loan transferred the
loan to a new service provider who promptly changed the 25 year
original loan to a 10 year loan with higher payments. The young
struggling chemical engineer could not afford the new payments. He
wanted to know if there was anything he could do about it.
I am relatively confident
there was some loophole written in fine print that may or may not
have allowed the student loan service provider to do what they did.
At first thought, it doesn’t seem reasonable or fair to the guy who
was paying his debt. Yes, the man was filing for bankruptcy
protection, but you should all know that the student loan lobbyists
won out in getting their loans exempted from bankruptcy discharge.
That means he is stuck with the debt.
The company did have a
provision that allowed the man to refinance the loan for 20 years to
afford his payments, but this increased his original principal amount
by an additional thousand dollars. He originally borrowed $30,000 ten
years ago, and no he is refinancing the loan for $31,000. Fees,
interests, penalties, and loan points account for the new loan
I suspect this young man
needs to consult with a good trial lawyer, and one that is very
hungry. In my opinion, creditors shouldn’t change the rules in mid
stream no matter what their excuse.
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