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San Diego Lawyer Refuses to Pay Card Debts to Bank of America

By Faye Mergel
Published: Friday, January 8th, 2010

San Diego Lawyer Ben Pavone sent a letter to Bank of America last week telling the card issuer that he is not paying his credit card debts unless his interest rate is lowered. He also threatened to sue BofA if they try to ruin his credit. Late payments and delinquencies on card debts is one of the major black marks that lenders do not want to see on a credit report, specialists note.

San Diego Lawyer Refuses to Pay Card Debts to Bank of AmericaPavone is not happy that his card issuer has raised his interest rate to 27.99 percent while his credit limit was reduced to just above the balance he carries. The attorney at law commented that banks need to have some obligation not to extort the public. As he continues to delay his payments, he now expects penalties to come his way.

Pavone recalled that last October, he asked Bank of America to increase his credit limit as he got squeezed for cash. The bank replied with a letter declining his request, and instead of raising his limit, it has cut it down from $32,100 to $30,400. BofA cited the economy as its reason for coming up with those decisions.

Pavone immediately responded with a letter saying he considers this decision an “anticipatory repudiation” of his contract and announced that he will not pay the balance due on Jan. 3, 2010. He explained that he got the idea from the Red Bluff woman Ann Minch, who has won many supporters after launching a “debtors’ revolt” through YouTube. He believes that charging him with a very high interest rate is unfair and against some federal and state laws. He also views it unfair for BofA to cut his credit limit by $2,000 when it is borrowing billions of dollars from federal aid and is paying huge bonuses to its executives.

Finance experts comment that cutting down a limit would damage a credit report since it would cause debt-to-credit ratio to go up drastically. They say Bank of America may have breached good faith by deciding to reduce Pavone’s credit limit since it would put his credit report in a very bad shape.

Specialists explained that people who have high debt-to-credit ratios, delinquencies, and late payments on their credit report will find it difficult to qualify for a loan or any line of credit.

As for Pavone’s plan to file a lawsuit, Ira Rheingold, director of the National Association of Consumer Advocates, commented that banks are good at finding ways to make the plight of consumers even more difficult without making themselves legally liable. She remains uncertain whether the lawyer will succeed or not.

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