Good morning! It sounds like what they did was give her the bank account, and then, a revolving credit account (like a credit card without the card) that would allow her to "cover" her mistake everytime she wrote a check when there was not enough money in the account to cover it. That offer of an overdraft revolving loan/credit account MUST come with terms as to interest rate - she may not have read it but agreed anyway, OR, they really didn't have her sign anything giving her notice, and THAT is what we need to hope for. But, in terms of blaming the high interest rate for the current debt load - it really sounds like she didn't treat it as an overdraft protection - rather, we mistakenly incurr an overdraft (i.e. our account was $10 short due to math mistake, when we wrote a check) and as soon as we are notified, we make sure it is covered, we don't keep a loan of it. Sounds like she may have made many "borrowings" of this credit under the guise of "overdraft protection. I suspect she used a debit card for her account, and regularly spent on it when she knew that money was not in her account effectively borrowing on that credit account to buy things. Read on.
Usually, when we write bad checks, we actually think that they are "good" and the only reason they "bounce" or get protected by overdraft, is because the money we deposited, close in time to that written check, hadn't sufficiently cleared. But when that happens, if we have overdraft protection, it is USUALLY by our OTHER bank account, so we are not borrowing money, just using our own to cover that check - i.e. "if this bank account can't cover, (for whatever reason) a check I write, please use my other account to make sure it does, so I don't get charged a "bounce" fee," which could be $30 from both her own bank and charged by the person she wrote the check to, making it $60 or more each time. Thus,having an overdraft arrangment is supposed to be a good thing. Here, it seems she didn't have it paid from her own 2nd account, but she borrowed money to pay the overdraft, meaning, she was writing checks she didn't have money for. Then, she didn't turn around and pay that "loan" each time she borrowed. Did she pay anything on it? If she erred, say, $100 over the course of time due to bouncing checks or not being well-versed in balancing her check book, the interest in year 1 of doing so, at 35%, would have been $35. If she paid that or more, and didn't continue to write bad checks, even at 35%, this would never have become near $7000, so something else must have occurred here. Can you learn what it was? Did she simply bounce checks all the time, ie overspending, and then not pay her loan used to pay for what she bought? Or not pay what she spent that month, plus the finance charge that month, so the amount got bigger? Finding out what she did or didn't do when she got that monthly bill would be a good start, because her explanation may hurt or help her. Now, that all being said, what if she didn't agree to 35%? What if they can't PROVE she did? She needs to look at all of her paperwork to see if the 35% was ever a part of her terms of doing business with that bank. Also, did she ever actually agree that they could LOAN her money for bounced checks, rather than pull the overage she unwisely spent from her OWN money account elsewhere? If she doesn't have those records anymore, she can try a few things:
1) She can sue the company for overcharging her (since she thinks she did not agree to 35% or someting else) - the company will have to prove that she did agree to that term. If they don't, she can feasibly get much of that interest back.
2) She can default and not pay them (which will impact her credit, but you say that is already happening), they will likely sue her, and she can defend on the basis that she never agreed to 35% if that is accurate.
3) If she can come up with SOME reasonable settlement (based on the amount of the debt, not suggesting that they are right and she should be paying anything), then she can offer to pay it on the spot IF they execute a Release saying all is settled and she has lived up to her contractual agreements. Sometimes companies will take 50% or less, but sometimes that is only after the person has demonstrated that they will not otherwise be paying. So, sometimes we actually have to default on that loan to get them to pay attention and work with us towards a do-able settlement. If this requires a second evening job or a weekend part time job to add to her schedule, that is often the best way if one doesn't have the money. It pays to work extra hours for a year or two than to have this bad credit issue hanging over one's head til we hit our grave.
If it was me and I didn't think that they'd pulled a fast one on the interest rate (i.e. no agreement), I'd probably opt for #3, since I'd lose on #1 and #2, most likely.
Lastly, if she actually hasn't made any payments on this debt in a long time (and that is why it is so big, due to late fees/penalties, etc), before I paid it, I'd check to see if the statute of limitations
has run on the bank's ability to successfully sue me in court for a judgement. I'd then weight the benefit of NOT paying at all, let them grumble, let them try to sue, only to have me get it dismissed based on the SOL. Not paying, again, DOES hurt credit, but only for about 7 years from the breach. That time frame could have been run by now, if she hasn't paid in a long time.
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