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What is the Difference Between a Crack Dealer and a Creditor Soliciting a Bankruptcy Debtor?

posted by Nathalie Martin

The crack dealer leaves you alone once you're broke, right? I know bankruptcy debtors are seemingly better credit risks than average people because they cannot get another bankruptcy discharge for 8 years, and because they seemingly have less debt, but most people still find it unbelievable that creditors hotly pursue bankruptcy debtors in order to give them more credit. My view is that these creditors are also hoping to fuel credit addiction. One would hate to have people outside the credit market too long. They might get used to it. Katie Porter’s work on credit card solicitations and bankruptcy debtors is ground-breaking. I had almost forgotten about the intense solicitation of credit to bankruptcy debtors until I went back into the clinic this semester. A new thing since my last clinic semester (Summer 2003) is that the solicitations come sooner now, within days of the filing and certainly before the discharge. Also, the clear (rather than unspoken) theme of the solicitations is that the debtors have been through a hard time, that these financial problems are not their fault, and that the time has come to treat oneself. As both Katie and Elizabeth Warren have noted elsewhere on this blog, this is a far cry from what creditors said about debtors during bankruptcy reform. The ads also suggest that buying a car now, right after filing for bankruptcy, can improve your entire life. For example, check out this ad, received yesterday, just THREE days after filing for bankruptcy:

"As a soon to be discharged chapter 7 bankruptcy case, you will be receiving a lot of solicitations over the next couple of months. We here at Karl Malone Toyota are writing to you today, our neighbor, with an honest approach to selling you a vehicle. Karl Malone Toyota realizes that the last three months have been very hard for you and we would like to be the first to invite you to or showroom. Karl Malone Toyota welcomes the opportunity to show you what we can do to help you regain the excellent credit rating that you earned in the past.

First of all, I would like to dispel some myths about people who have filed bankruptcy. It will not take seven years to reestablish your good credit; this can be done quite easily, in less than a year. You will be able to once again have unsecured credit cards or a mortgage in the very near future. In order for these things to happen, you must act to rebuild your credit immediately. While you won’t be able to go and get a mortgage right away, you can easily receive a secured car loan today at Karl Malone Toyota. Our Automotive Finance Team here is second to none. They secure automobile loans for recently filed or open bankruptcy every day.

Are there advantages to buying a new or pre-owned car or truck today at Karl Malone? Absolutely! Aside from treating yourself to a new or pre-owned car or truck from our huge inventory, you will be immediately posting positive high credit to all three credit bureaus. A payment history of as little as three months on a vehicle will provide you with numerous unsecured credit card offers. As you continue to re-establish your excellent credit rating, the bankruptcy will no longer weigh in the credit decisions banks make about you. In less than two years, you can buy in the home of your dreams, with unsecured credit cards and a beautiful and reliable vehicle. It is all up to you. Give me a call today at… "

Please forgive the analogy, but this reminds me of ads for certain feminine products, claiming that with the use of these products, one can scuba dive, horseback ride, swim, and so on. Is the implication that one can do these things now, even if one could not do so before? Amazing all the good that one car loan can bring…


People who work hard as educators, counselors and guides to help people gain clarity about financial matters really need to adopt and use new language. We all need to set a goal that -- all of us and an ever increasing number in media -- will stop using the word 'credit'. The Toyota dealership -- like Visa, MC, AmEx and so many - too many -- others are not offering 'credit'.

They are offering 'debt'. These are not 'credit' cards. They are 'debt' cards. These are not credit-based purchases of cars etc, they are 'debt' based transactions that permit the use of the collateral.

All these companies out there are offering people the chance to become debtors. And, they are offering debt-related interest and fee rates that promise debtors the chance to run up their debts quickly to very high amounts.

"Karl Malone Toyota welcomes the opportunity to show you what we can do to help you regain the excellent credit rating that you earned in the past."

Doesn't this make Karl Malone Toyota subject to the Credit Repair Organizations Act? If so, are they complying with that Act?

Of course he sent them a letter! - he is, after all, "The Mailman".

Perhaps there is some special dispensation re: legal compliance that goes with that title....

Three years post-discharge and I'm STILL getting ads like that in the mail from local car dealerships. First of all, I have no need for another vehicle, mine runs great, and it's paid off. I don't care that it's 14 years old, it runs like a top, takes very little maintenance, and it gets VERY good gas mileage, better than most NEW cars today of a similar size.

The ridiculous car dealer mailings started coming into my mailbox daily just weeks after I'd filed, with similar claims. Unfortunately for them, I'm not that naive and certainly wasn't champing at the bit for a new car at rapacious terms. The worst of the bunch was a dealership about 20 miles away who literally mailed the exact same flyer EVERY SINGLE DAY for 2 weeks in a row !! On the 3rd week, when it became obvious by yet more mailings that these fools were not going to stop, I got really annoyed and fired back a letter that probably burned their fingers to touch it. I demanded that they take my name and address off their bankruptcy list... that I was not a fool and objected mightily to their daily garbage in my mailbox, but I wasn't quite so nice about it. They DID get the message, no more mailings came. It was just utterly ridiculous that I even had to do that.

There was also a spate of credit card solicitations, mostly for fee-harvester cards and other equally undesirable sub-sub-prime cards. I no need nor any desire for any credit cards, so they all went straight into the shredder. The credit card industry DOES thing we're all a bunch of crazed credit addicts that simply can't live life w/o a wallet full of credit cards!

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