A while ago, Gail Vaz-Oxlade put out a simple Facebook post that blew my mind, about debt cash grabs. The Hoyes Michalos blog has many similar warnings about banks’ rights to take your money.
I had heard that banks can ask for a debt to be repaid in full any time (i.e. a debt cash grab), but evidently, it happens a great deal, when folks build up large debts, or get too delinquent with their debts. The terms of your banking agreements make this all legitimate (so read them over closely to see what other exciting things your bank can do, I am sure there are others). It is attractive that banks want you to consolidate your banking in one bank. They want to entice you to do this with great “deals” on things.
Does this mean you should go out and diversify your assets and your debts so that they are at least arm’s length away from each other? Might not be a bad idea, if you are the kind of person that builds up large personal debt loads and is very likely not to pay those debts back (or has a tardiness streak in you), but then again, if you were that kind of person, would you think of this?
It seems there are folks who try to game the system, and will bounce around from bank-to-bank attempting to stay one step ahead of debtors prison (or the bill collectors), but I haven’t met many of those folks. Is your bank suddenly garnishing your money a real concern? Not for most folks, but it is something you should keep in mind, just like if you buy your lottery tickets with a credit card, it is treated like a cash advance.
File this one in your TIL file (Today I Learned), about banks and debt cash grabs.
Thoughts on Debt
My list of debt commentary articles is quite long, so let’s stick with the basics.
- Three Solid Ideas For Your HeLOC is a misdirection title. With interest rates going up, home equity lines of credit are becoming heavier anchors on your financial life.
- Pay Day Loans? Absolutely, positively NO! Go talk to a licensed insolvency professional before you do this.
- Surreal Paragraphs Found in Credit Card Bills, if you carry balances on your credit cards, you are in trouble. Look at their estimate for how long it will take to pay off the debt on minimum payments.
- A Mortgage Changes You, which is very accurate. When you get a mortgage, your life changes, and it will be a major element of your financial decision-making process.
- Make More by Reducing Debt with some elementary (maybe naive) arithmetic.
- Straight Talk on Your Money is not just a good book (and podcast). It explains how debt can get out of control quickly.
- Debt-shaming: Debt is Bad, but You Aren’t having a poke at the “influencers” who say my commentaries about Debt being BAD is debt shaming.
- My coup de grace There is No Such Thing as good debt. Debt is a tool, like a chainsaw, and must be respected.