I received a sobering notice of the latest scheme that credit card companies are using, so be aware of this!
This info is quoted directly from an email from website, which sells debt repayment software. This is not meant as an advertisement or an endorsement-I have not used it-I only receive his email newsletter. But do read the following:
“Reaffirming Old Debts…
You’ve heard of gift cards — they come pre-loaded with cash — but have you ever heard of a credit-card that comes pre-loaded with DEBT? That’s right… It comes with a balance due!
“Reaffirming” an old unpaid debt makes this possible.
Assume you have an old $2,000 unpaid, dormant, debt that hasn’t reached the 7-year Statute Of Limitation on collection. Perhaps it’s a disputed debt that was never resolved. A credit-card company can purchase your debt from the original creditor for pennies on the dollar. Any money collected from you that exceeds their cost of buying your debt from your original creditor is pure profit.
This credit-card company then sends you an enticing credit-card offer. When the card arrives, it has a $2,000 balance due, reflecting your old unpaid debt!
It’s now a new unpaid debt to a new creditor and the 7-year Statute Of Limitations clock is reset. Not to mention whatever credit limit you were granted has been reduced by $2,000.
This is legal if the credit-card company discloses their intent to resuscitate this debt in their solicitation. If you agree, that is, if you apply for their credit card, you have “Reaffirmed” this debt and re-committed to paying it.
If you search for “Reaffirming old debts” on a search engine, like Yahoo!, you’ll see hundreds of results associated with bankruptcy. Reaffirmation is most common in bankruptcy proceedings, when you are agreeing on which of your debts you are going to pay after bankruptcy.
You won’t see many results associated with credit-cards. This is a new credit card company profit strategy, but one likely to grow in popularity. It combines low cost, low risk, capital appreciation, high interest potential, and FICO score pressure.
…if you find yourself with an unresolvable debt situation and have chosen to let the statute of limitations on collections expire, be aware that you’ll become very interesting to credit card companies as your expiration date approaches.
That new credit-card may come with a very sturdy string attached.”
Hope this helps!