This reader took out a low fixed-rate loan from Chase Bank only to see her minimum payments more than double. What can she do?
Pretty much anyone who has used a bank has, at one time or another, felt screwed. So you’ll probably be able to relate on some level to the following email I received a few weeks back…
Back in 2009, I was one of the Chase credit card customer victims with excellent credit and payment record, when they increased my principal payments from 2-5 percent for my high-balance low-interest “fixed” rate loan. I called and told them I didn’t have a job for about 4 years at the time and wasn’t able to make the increased payments on the “fixed” rate loan they had solicited to me 4-5 years earlier – and I had never missed a payment. Essentially, they said ‘Too bad, you must get the money somewhere and pay the 250-percent increased payments no matter what your situation is.”
Because I was searching for a job, I couldn’t afford to let my excellent credit score be ruined, so I took an early IRA distribution of $30,000 to pay down the Chase loan balance so I could meet Chase’s increased payment demands and maintain the credit score. Otherwise, prospective employers would eliminate me from hiring consideration due to bad credit rating -particularly for the finance jobs I was searching for. This distribution triggered $8,000 in income taxes that never would have been paid except for Chase’s unjustified action against me.
About 90 days later, Chase reversed itself and restored the old loan terms. But it was too late to return the $30,000 into my IRA because IRS only allows 60 days. Chase really screwed me over for no valid reason. I was an excellent customer with excellent credit and they treated me worse than a criminal.
I doubt the $8,000 is an adequate amount for a private civil action that an attorney would be willing to pursue, so I joined a class-action suit. No telling if it will be successful or what (small) portion there might be, and how many years it will take. Even with a favorable outcome – hopefully before I die (I’m 67) – I still suspect I’ll never see a dime of the $8,000 in taxes I was forced to pay due to Chase’s blatant wrongful adverse actions against me.
I would be very grateful if you know of any recourse I could pursue for these taxes.
I’m not a lawyer, Sondra, and you should talk to one before deciding. But I wonder if you shouldn’t take your suit to your local small claims court. That’s the technique California resident Heather Peters recently used to win $9,867 from Honda because her Civic didn’t live up the 50 MPG Honda had advertised. You can read about it in this article on MSNBC.
Like you, Heather also could have participated in a class action suit. But it’s one that Honda has proposed settling by paying the lawyers $8.5 million, while giving Civic owners peanuts: $100 to $200 each, plus a $1,000 credit toward a new car.
If you’re interested in learning more about suing in small claims court, Heather even started a website that could help. While most of the information on dontsettlewithhonda.org obviously pertains to Hondas, this page of the site has links to information on filing small claims cases in all 50 states.
But before we lay all blame at the feet of Chase Bank, or Honda for that matter, let’s pause for some personal responsibility…
If mileage was that important to Heather Peters, she should have done additional research before buying a Civic. The Internet is full of reviews and information. And while we don’t know the circumstances behind Sondra’s loan, we should all know that it’s unwise to place our fate in the hands of a bank or any other lender. We should never take out a loan if we’re only capable of making minimum payments. We should all know by now that lenders will do whatever’s necessary to profit at our expense. We should always read the fine print and plan for emergencies.
That being said, Sondra’s got plenty of company. To read more about what Chase did and the comments of nearly 700 consumers similarly affected, check out this article from About.com.