I have recently had the privilege of watching the documentary In Debt We Trust by filmmaker Danny Schechter.  The film is different than Maxed Out in that it takes an in-depth look at the credit-lending scene.  It touches briefly on collectors but discusses credit cards, predatory lending, cash advance/payday lenders and more.  The filmmaker also queries users to ask the question if the next bubble to burst is going to be the credit industry, much like the mortgage industry is going through woes (as a result of the subprime/predatory mortgage lending market).  He didn’t present this concept in a doom and gloom the sky-is-falling way but instead as a question that consumers must ask themselves.
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After seeing Maxed Out (a documentary) mentioned on several websites, I decided to check it out. What better way to spend a Saturday night than cuddling up on the couch and watching a movie about debt, right? The film, by director James Scurlock, provides an insider’s view of debt collectors and the credit card industry. In all honesty, as a user of credit, the documentary was a bit scary to watch. I’ve seen enough documentaries to know to take everything I see with a grain of salt but even if only a portion of what was presented is true, it is definitely the right time to stop using credit.
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As I’ve mentioned previously, I listen to the Dave Ramsey Show podcasts on a regular basis. Although I don’t always agree with what Dave says, I do feel motivated by listening so continue.  Several times a week, he will get a call from a person who is either divorced, or going through a divorce, and is looking for financial advice.  He is always spot on with that advice, the creditors don’t care what the divorce decree says and that financial agreement between you and the creditor supersedes the divorce decree.

I know I’ve mentioned this before, but back in the 1990s I was a collection representative for Discover Card.  I started out working accounts that were 30 days late and ended up working charge-off accounts and doing pre-legal screening on the high-number accounts for possible litigation.  As part of our training, we were responsible to keep up to date on the federal regulations as well as what information was in the card member agreements.  The divorce topic came up often and sure enough, when you signed up for a Discover Card you stated that you were responsible for the debt in the case of a divorce, regardless of what a judge said.

Today in my Google Alerts I received a link to an article from Kiplinger.com entitled “Handling Debt After a Divorce” in the “Ask Kim” section.  Author Kimberly Lankford offers some great advice, here is an excerpt:

Unfortunately, there’s nothing you can do about the harm that was already done to your credit report. A divorce decree is an agreement between the divorcing couple, but “it does nothing to separate their assets, accounts or financial obligations,” says Maxine Sweet, vice-president of consumer education for Experian.

Despite the decree, your name is still on the loan, so you’re liable for all the payments, and the mortgage company is unlikely to remove the delinquency from your report.

Read the entire story here:  Handling Debt After a Divorce. 

Personal finance lessons…high school.  Wow, you don’t often see those two phrases together in the same sentence.  Times are certainly changing; in a recent article published WSB-TV Atlanta website, Georgia’s high school economics instruction has been rewritten to include personal finance lessons.  From the Action News 2 article:

“As a society, we need to do everything we can to increase financial literacy. The need to understand the range of products, mortgage and credit cards is so pressing.”

Kudos to the superintendent of schools in Georgia, Kathy Cox, for making this important change to the high school curriculum.  When students go to college they are often bombarded with credit card offers.  From banks next door to dormitories to credit card company tables on campus, credit card offers are abundant.  I remember my first credit card, a Bank One Visa student card with a limit of $500 of which I promptly took out a $400 cash advance so three of my friends and myself could fly to California for a football game.  Due to extenuating circumstances I didn’t get to go on the trip and amazingly none of my friends paid me back. 

I wasn’t a stupid person.  I was 18 and attending college on a full-ride academic scholarship.  What I didn’t have was street-smarts, those came later and after many, many mistakes.  I think that offering personal finance lessons in high school, combined with parental instruction, will set these students up for a more successful life.  Now I don’t think credit cards are the devil, I think they have a purpose and must be used wisely.  However, very few 18 year-olds are prepared for the cause and effect that credit cards come with.