Bank Offers No Help in Reducing Debt

Last summer my business cash flow began dropping as my wholesale book suppliers increasingly competed against me, undercutting my prices. The wholesalers were also raising prices while cherry-picking inventory, and it became more difficult to find good inventory with a decent profit margin.

Amazon continued to erode the profit margin for used books by increasing discounts, promoting Amazon Prime (the shipping option where you pay $79 a year and get 2-day delivery on many products), and redirecting traffic to bargain pages (closed at that time to third-party sellers), which consisted of inventory they purchased from the same wholesalers. Half of my inventory became invisible overnight.

The first step I took to increase my income was to try and arrange an exclusive with a wholesaler where I would be the only seller carrying a particular publisher’s overstock. But my unpaid payroll taxes were building and I needed money for shelving. I was also getting more disorganized and having trouble keeping my finances up-to-date with so many bills. So I applied for a business loan at my bank. It was a rather large loan, $30,000 I think, but most of the money would be used to get caught up on payroll taxes (said debt increasing with penalties and interest), the rest to secure the exclusive arrangement.

The bank had three years’ history of my bringing in over $25,000 a month, but they turned me down. So I ended up applying for a store card at Jerry’s Home Improvement to buy $4,500 worth of shelving. More debt. I also hired two more employees to help sort, grade, list, and shelve the new inventory. One of them lasted two weeks and the other liked to call in sick on Mondays following three-day holidays. Finding reliable and hard-working employees in Roseburg was nearly impossible.

Next, I closed my personal checking account with my local bank and opened up an account with the credit union in Eugene that handled my car loan. That way I could easily make payments on the car by transferring funds over the Internet. I applied for a credit card with the credit union and wanted to transfer balances from my other credit cards so I would have only one payment with a lower interest rate. But they turned me down because my debt-to-income ratio was too high. Well, that’s the whole point of getting it on one card with a lower interest rate. So I would have a fighting chance to pay it off. They didn’t care. They weren’t taking the risk.

I called one of my credit card companies and asked them to lower the rate, because the high rate was making it extremely difficult to pay down the balance. They refused to negotiate the rate.

At this point I had three personal credit cards, one of them a Care Credit account that I opened when two cats of mine became ill and had to be euthanized. I was so relieved the day I paid that off earlier this year. One down and two more to go. But less than a week later a vendor without my knowledge or approval charged $5,000 on a business credit card taking me $4,500 over my credit limit, raising my rate, and costing me $39 per month in overlimit fees until I could pay down below my maximum limit. That completely wiped out my triumph of paying off one card and left me worse off.

Last week I went to the same credit union that carries my car loan, which is $590 a month. I had bought a new car when business was good even when I knew better, when I knew a used car would cost me thousands less. But my beloved SHO’s transmission crapped out on me and I needed something reliable in a hurry. I sat at the loan consultant’s desk (should be loan typist with absolutely no authority and no knowledge). An advertisement on her desk said, “Owner. Customer. Same thing.” Yeah, right. Another marketing lie.

I thought I’d tell the truth and see what they did with it. I explained that my business was insolvent, that I would be filing for bankruptcy and that I couldn’t afford my current car payment. I proposed to them that I use my car as a trade-in and purchase a van (in case I needed a place to live with my cats–imagine that!). I wanted them to finance the loan, which would be the same amount or less, and I would be able to halve my car payment. I also explained that new loans taken within so many months of a bankruptcy were not dischargeable, so they were safe there. I would still owe them the same money on a car whose monthly payments were more affordable. It makes sense, right? They denied me the loan.

These banks are more than happy to help you get into massive debt, but they don’t seem too logical or helpful when you want to get out. I have come to the point where I don’t feel guilty at all about never sending them another dollar. They’ve gotten all the money from me that they will ever get.

Tagged as: Bankruptcy, credit cards, Debt