Wow, Suzie Orman really told an 81 year-old woman, who earns only a fixed $600 a month from social security, to make sure she protects her FICO score and continue to pay the minimum balances on her credit cards. In the Oprah Magazine this month, Ms. Orman was asked, “After taking out cash advances on her credit cards, my 81-year-old mother is out $8,000. She lives on $600 a month from Social Security and cannot keep paying on this debt. Can you advise me on how to proceed? How do I get her out of credit card debt?”
In response to this question, where clearly the Debtor’s income was protected, and there was no reason to believe based upon the question that any assets would be attached, Ms. Orman responded: “It’s fruitless to try to talk your way out of this; the card issuer has every right to expect repayment. To regain control of her debt, have your mom keep paying at least the minimum due on the monthly credit card bill. On-time installments are vital for protecting her FICO credit rating. That’s important because if her score is at least 700, she has a good chance of being able to transfer the entire balance to a new card with a lower interest rate. Many card issuers offer zero percent interest for the first year when you move your balance to their card. At CardTrak.com, click on Credit Cards, then choose Balance Transfer to find issuers offering the best deals. But only sign up for one card—multiple applications made at the same time can actually hurt her credit score.”
I would like to say that I cannot believe that Ms. Orman would give such bad advice, but in all honestly I can believe it. I have watched her show on and off and read a few of her articles, many of which drive consumers to the same advice. So Ms. Orman’s great advice is basically, try to make payments that you can’t afford at the expense of possibly not paying for medical bills or food, in the hopes that some other unsuspecting creditor will extend this woman more credit to transfer the balance and pay a lower interest rate for 6 months. This is yet another example of why you should speak to a qualified consumer debt attorney who understands the legal ramifications of different courses of action, rather than a talk show host or even just friends.
Had this Debtor come to me, I would have reviewed her situation in a bit more detail before handing out any advice. In all fairness, I understand Ms. Orman did not have that luxury, but even still if I believed the Debtor to be judgment proof, presuming she had no assets that could be liquidated by the Creditor, I would have advised her of several options, none of them though would have been to make minimum payments. Trying to save your FICO score at 81 years old, just to abuse the system by taking out a new credit card, is absurd!
This woman could possibly file a Chapter 7 bankruptcy and discharge her debt. If she did this, her income would be protected. Another option would be to obtain third party funds and settle the debt for a small lump sum. She may, frankly, stop paying and wait to go to Court and even be able to challenge the validity of the debt. However, Ms. Orman did not feel it necessary to inform her reader of any of these options.
It just goes to show you why it is always better to speak to a licensed professional attorney who has an obligation to tell you about all of your options, then a talk show host or author who is more concerned with selling her books then looking out for the true interest of those who rely on her advice.