The long and slippery slope.

[reynardo]

This started as a response to binxcat, who mused that with the high dishonour fees charged by credit cards, it was no wonder someone in a little bit of financial trouble would quickly find themselves in lots of trouble.

And a rant ensues.

When I had da_norvegicus, I had half-pay maternity leave for a while, then leave without pay, which meant I was eligible for partial Single Mother benefits followed by full benefits. I had medical insurance taken out from my bank account fortnightly, the day after the benefits went in. (In Australia, it's very unusual for you to have medical paid by your work). I also had rent taken out.

The Benefits people stuffed up and stopped my benefits after the half-pay ended, instead of upping it. The money was due to go in on a Thursday.

The rent came out, was about $3 more than was in the account so the bank charged me a $30 overdrawn fee. This of course left the account $33 overdrawn, so they then refused the medical benefits and charged me another $30. I went to the bank on the Friday (the day after) to get money for food, to find it horribly overdrawn. They explained what had happened, so I trooped down the road (luckily it wasn't that far, me with a 2 month old baby), got to Social Security to ask what had happened. They went through the records and admitted that they'd made a mistake, but they would arrange the money to be in the account the next week.

Great.

The bank wouldn't, of course, refund the overdrawn fees. Social Security said that that wasn't their responsibility, so I borrowed some money from my parents and coped, luckily.

About four weeks later I took a claim into the medical benefits office, and they said "But you cancelled your coverage". I asked "what????" Turns out that they had never sent me a letter or contacted me when that payment was missed, and I hadn't noticed that the next one hadn't gone out either. They'd cancelled my benefits, and to get them back I had to jump and scream and write to the Ombudsman. They finally restored them, but I had to sign a document that said I agreed that I wasn't covered during that period, and that anything that turned up in future that was caused by events or first came up during that non-paid period wasn't covered - which meant of course that I wasn't covered for the item I had been trying to claim (I think it was about $100 worth, not a huge amount but not easy to deal with).

So yes. Very easy. Get a little behind, and it can be almost impossible to get back up again. If I hadn't had my parents to help, or friends I could have turned to, I might have had to find a pawnbroker or a shady loan guy. At that stage we didn't have the Payday Loan people, for which I'm glad. But that was $160 I was in no state to lose at that time.

Comments

:(

[mr-figgy.livejournal.com]

The long and slipp'ry slope
Leads me
To your door

[scascot.livejournal.com]

This is exactly how sarapooh and I found ourselves staring at bankruptcy back in 2001.

[pallagia.livejournal.com]

I hear what you are saying.

My mother declared bankruptcy because when my father died in 2000, after seventeen years with various forms of cancer (and seven years with a terminal case of melanoma - he lived 6.5 years longer than expected), my mother had many expenses that the life insurance didn't even begin to cover. She tried for four years to pay the bills, and paid them on time, but the cc companies continued to jack up her rates to astronomical levels. My dad had been the one with the college degree, and when he got sick, there went the potential for the higher income. My mom did quite well for herself, but it wasn't enough to cover all the bills, and make sure that her kids and her husband were looked after.

When she finally declared bankruptcy, the only creditors she had were cc companies. She owned her house, she did not owe anyone else, except the cc companies that had jacked her rates despite her never being late on a payment until the day it just became too much and she realized that she would NEVER be able to pay off the companies because it was mathematically impossible.

She HATED declaring bankruptcy. She had paid her bills on time until the day she finally wasn't able to cover all the minimum payments. But if you have no one to turn to, sometimes there's no choice.

I hate the way the little people get screwed like this, and the way we blame people for having the bad luck to have something go wrong that wasn't their fault.

Bankruptcy courts aren't populated with lazy people who don't feel like paying their bills. Certainly those exist, but there are just as many hard-working folk down on their luck who need a fresh start.

Anyway, I'm sorry you had to go through your own bad situation, especially at a time when you were recovering from childbirth and adapting to a new little person in your life.

[pallagia.livejournal.com]

Oh, and the date she started being late on payments was years after they jacked her rates.

AHHHH!!!!!

[binxcat.livejournal.com]

And it is that NOT MY RESPONSIBILITY crap that truly makes me understand the phrase "going postal." Great, its no one's responsibility- and probably it isn't one single person's responsibility- but at the end of the day a single mom with a two month old baby went home without money for food, rent or medical benefits. Hmmm, don't think it was HER responsibility either!

*pounds fists*

[nefaria.livejournal.com]

The best advice I can give to avoid situations like this is to keep a cushion of $1000 or so in your checking account and never, ever spend it. It keeps you from worrying about overdraft fees and other cascading events related to the balance getting too low.

[fluffy-cloud.livejournal.com]

But with many people who are forced to live paycheck to paycheck, any money cushion at all is an impossible thing to mange.

[fluffy-cloud.livejournal.com]

Amen.

There are banks that love to screw people over as well. My old bank always ran debits from an account before they ran credits. We would deposit money and it was sometimes 4-5 days before they would "credit" our account. Meanwhile, they would acknowlege several withdrawals from our account that resulted in many overdraft charges.

Add living from paycheck to paycheck, stir in a layoff and fun ensues.

[nefaria.livejournal.com]

If you can manage even a $100 cushion, that'll be enough to protect against overdrafts. It's a bit of a sacrifice to have money in there that you never use, but it does pay for itself over time.