Solution to Credit Card Debt, by Marcus Addison Valverde

Golden Financial Services Scholarship Application Submission

ABOUT THE STUDENT: Marcus Addison Valverde

Del Valle High School – El Paso, Texas

Class of 2017   –   I plan to major in economics/Pre-Law

I realize that there are going to be many applicants for this scholarship and I think that is a wonderful thing.  I have no problem working and fighting for something I really desire.   I believe I should be the recipient of this award because I plan to use it to get my education to help others in my community.  My plan is to go to the University of the Incarnate Word in San Antonio, Texas.   I will use this money to help me get my degree in Economics with a minor in pre-law or accounting.  After, I plan to attend law school in order to become an attorney. As an attorney I want to be able to provide a voice for groups of people in the legal system that have been historically under-represented.  I want to make my parents, my school and my city proud that I will never forget where I came from and that I am always willing to lend a helping hand.  Scholarships like this one will help to provide me with a chance to “show what I’ve got”.  I believe I am the best candidate for this scholarship because I will never let you down.  I always start what I finish and I never quit.

Thank you for this opportunity…….

SUBJECT & ESSAY:

New Viable options for Credit Card Relief 

Credit cards have become a staple in the American economy.  Most people use credit cards as part of their every day spending patterns.  As convenient as these cards are to use, they are often the rope which people use to hang themselves financially.  Holders of credit cards can get behind on payments and find themselves in serious delinquent credit card debt.  This is of course to the detriment of the credit companies and banks that issue the credit cards to its customers. To alleviate and hopefully solve this problem I would like to suggest the following options.

The first option for the credit issuing companies is to simply make it harder to qualify for a credit card.  I am an 18-year-old student and I do not presently have a job.  I am already getting credit card offers in the mail that say that being a student IS my job so I qualify.  I find this amusing because the last time I checked; the “job” of being a student doesn’t pay anything.  I just wonder how a company would expect me to pay a monthly payment when I don’t have a job.  This easy access credit granted to students who have no income can easily lead to unpaid credit card bills and accounts that become seriously delinquent.

The second option that may help to solve the problem is to tie payment options to the payroll departments where the holders of the credit cards work.  When a person applies for a credit card, the company issuing the credit card can check to make sure the applicant is employed.  Once employment and level of income are established, the applicant can give the credit card company permission to draft monthly payments directly out of a recurring paycheck.  Credit companies can also determine credit limits based on verified income.  If the employment status changes, the credit card company can be informed and the credit account limit can be lowered or canceled altogether to prevent a lapse in payment. By doing this, the credit card company can be protected against seriously delinquent accounts.

A third option involves the assistance of the United States Government.  When a person applies for a credit card, they can be required to sign an agreement that allows a lien to be placed with the Internal Revenue Service if the debtor has an account or account(s) that fall into serious delinquency.  This would mean that a person would agree to provide a potential creditor with a type of insurance with the federal government that protects the interests of the business.  This could include wage garnishment or liens on future tax returns.

Option four is to require any person who wishes to apply and receive a credit card account to attend mandatory financial responsibility classes.  These could be held by local banks and credit unions for the sole purpose of letting customers know the responsibilities of having a credit card.  Let’s face it, the notices and disclosures sent with credit cards in the mail are not being read by consumers.

A final option for trying to solve the problem of delinquent credit card debt takes a page from the playbook of the auto finance industry.  Today, each purchase that is made with a credit card is kept and saved as a spending history.  This idea is to categorize each of the purchases into one of three categories.  The first category is consumable purchases which can include buying food from restaurants and even items to cook at home from grocery stores.  The second category will include services purchased using the credit card.  This category can include things from doctor or pharmacy visits to lawn care and car washes.  Category three will be the durable goods purchases.  Items in this category include things like televisions or bicycles or pretty much any good that does not spoil.  For the first two categories, there is very little that can be done to retrieve items that have already been consumed and difficult to get payment on past due accounts.  But for category three, a system of repossession can be put into place.  I see this being effective in the auto industry as companies sell the service of retrieving vehicles whose owners’ accounts have become delinquent.   The owner can then either pay the past due amount or the bank can keep the vehicle and resell it to hopefully get back some of their loss.   Repossessing the big screen television in someone’s home for lack of payment may get the word out to people that they need to make their payments.

Obviously, credit cards are here to stay as a major method of payment.  Although it is true that credit card issuing banks are owed tremendous amounts of money from delinquent accounts, I feel that implementing some of the ideas presented above can help them in their attempts to protect their interests and those of their stockholders.

Learn about debt relief programs in the United States by trying this national debt calculator tool that illustrates all options.