Here Today... Gone To Hell!

"Maxed Out," a documentary that opens nationwide next week, examines the dark side of America's love affair with debt.

By turns humorous and heartbreaking, "Maxed Out" exposes the targeting techniques of credit card companies (the most profitable customers are broke); the gold rush mentality in the business of debt collection; an influential credit scoring industry riddled with errors; and the power of the credit card lobby at the highest levels of government. (MBNA, the biggest campaign contributor to President Bush, was behind the restrictive bankruptcy legislation of 2005.)

Submerged in Debt

"Maxed Out" is directed by filmmaker James Scurlock, a Wharton business school dropout and entrepreneur. Scurlock also wrote a book based on the film, which is due out next week from Scribner, a division of Simon & Schuster.

Scurlock says he started out hoping to do a lighthearted riff on consumer irresponsibility, but was shocked by what he found: College students and housewives committing suicide over their credit card debt, and the nation's biggest banks involved in predatory lending schemes.

In one case, the film shows Citigroup's lending arm foreclosing on a Mississippi shack owned by developmentally impaired woman and her severely retarded 44-year-old son after they were refinanced into a loan they couldn't afford.

"I wanted to know why people are living so close to the edge," says Scurlock. "A lot of people just haven't been able to keep pace with expenses like health care, education, and housing. Credit cards become the life raft that people don't even have to reach for -- they're just there." Scurlock points to new "medical" credit cards, for example, which invite consumers to dive deeper and deeper in debt.

Conservative Consumer Advocacy

This indictment of the industry comes from a 34-year-old who was voted "most conservative" by his business school peers at the University of Pennsylvania, and who worked on the election campaign for George H.W. Bush.

"It's not in anyone's interest to have a financial industry that behaves like a used-car dealership," says Scurlock. "I think it's conservative to expect that credit will be regulated in this country. People need to have to have a strong financial industry that's trusted -- and to the extent that that erodes, that's very bad for the country and the economy."

In the film, Scurlock interviews the two young founders of People First Recoveries, a Minnesota collections and debt purchasing firm, who purport to represent the "kinder, gentler" side of the debt collection business. And yet they describe themselves as "pirates" -- using swashbuckling techniques like calling neighbors and relatives to intimidate debtors into paying.

In another interview, Harvard law professor Elizabeth Warren recalls a presentation she did for financial services executives in which she discussed how many bankruptcies could be prevented simply by eliminating those customers on the financial edge. A member of the firm informed her that those consumers comprise the most profitable part of the business.

The Personal Accountability Gap

Unfortunately, Scurlock never directly addresses the personal-accountability aspect of debt in his film. I was hoping he would ask at least a few hard questions about the consumption choices that lead people into the red.

"A lot of people we talked to said, ?Gee looking back at the level of debt, there should be a Mercedes or a Ferrari in my driveway, but I have nothing to show for it,'" Scurlock says. "Most Americans are very optimistic. They think things will always get better from here, they'll make more money, they won't have any emergencies. Credit has become so ingrained in the culture that so many people can't imagine living without it. Once you decide you're never going to be out of debt, you can afford anything."

Other than my mortgage, which is fixed for 30 years at a low interest rate, I don't do debt. No revolving credit card debt, no auto loans, no home equity borrowing. Would I like to bust out the back of my home and create a designer kitchen and family room? You bet. Am I going to sacrifice my children's college savings or retirement goals on the altar of my extreme makeover? No way.

I had the good luck to have wise parents born during the Depression, who drew a very clear line about debt. They taught me that you buy things you can afford -- not things on which you can afford a monthly payment. You don't shop for recreation. And the only thing you should borrow to buy is an appreciating asset that will very likely, over time, pay you back more than you put into it, such as a home.

Anything But Maxed Out

Here's my problem with taking on debt: I have a profound respect for the unknown. For instance, my husband and I work for ourselves. This is an excellent way to avoid ruthless bosses and layoffs. But if one of us were to get injured or become ill, it would be pretty hard to keep business hopping.

Meanwhile, I'm optimistic that if I work hard, my income will continue to rise. On the other hand, I have dozens of friends and acquaintances who, despite their hard work, were downsized or squeezed out after a merger, spent long periods unemployed, and/or returned to jobs that paid less. The rosy scenario of a steadily climbing income that peaks just before retirement is the stuff of economic models -- not the real life of the middle-income Americans I know.

Here's the other irony: Credit card companies market their products by claiming they offer you a world of choices -- take that dream vacation, buy the 60-inch television. But by steering completely clear of credit card debt and saving on a regular basis over time, I found myself with much richer options -- choices about how I would balance work with family, health, and friendship. That satisfaction is more enduring than anything I could have purchased with plastic.

Buying with Blinders On

Why, I asked Scurlock, don't people understand this? Why do so many consumers buy things on credit and then pay double for them over time? Why do they sacrifice what they want most in life for what they want this very second?

It's pretty simple, Scurlock says: "I think there's a lot of denial. Most people can't do the math. There is very little, if any, focus on the balance sheet side of the equation."



http://finance.yahoo.com/expert/article/moneyhappy/25516

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

please tell me you are joking.

debt is a great and necessary thing. it's not a dirty word as people try to make it.

but just like a good beer, an enormous amount of it causes problems.

I wonder how my friend was able to rack up 20gs of online gambling debt before he was even of legal age to declare bankruptcy (which he did the second he was eligible).

Debt is necessary in the business world for financial leverage, the real trouble is caused when individuals can't control their spending with credit cards and loans (even with the ridiculous interest rates).  I think the situations of people around me will have steered me clear of getting in this kind of trouble.  I'm set to get out of school with zero debt, I just need to work off a couple hundred dollars to get my credit card balance to zero.  I think I will be able to maintain this, I don't like the feeling of "owing" money... anyways, this documentary looks like it could be interesting.

you should know that for a society to work out you "always have to think about the worst case"

if the world was full of people me, heroin could be legal, rape too, there wouldnt be a problem, but the world is more like full of people like you :)

therefore credits sucks ass
and i was so shocked that the nobel price went to someone who praised that kind of process (in theory) for the poors.
yeah let's start there what fucked up here.

Tell me you're joking.

Loaning at fair rates to start a business or buy a home is necessary and a great thing. Making you loan money at criminal rates just to buy a jacket or a pair of pants is not necessary and it's not ok. The private banks and financial institutions has to much power and it should be dealt with. The purpose of a loan should be to help people, make them prosper, not to enslave them in lifelong debt for petty bullshit.

so you agree with me - you call debt a "great thing".

consumers have all the power. unfortunately, many consumers are stupid, careless, greedy, and materialistic.

gambling is another perfect example of a GREAT THING that gets a bad rap cause people overdo it.

without debt we'd all be living in apartments and taking public transportation everywhere.

No, I do not agree with you that our current system is a great thing. Debt in principle is great, but that's not what we got.

And you blaming it on stupid people is ludicris. So that's it then? We have a fucked system in the society and that's ok since it only affects 'stupid' people?

so we have to GREAT Things, that are in the end BAD things because of people mis-use .... hum .... interesting .....

I tend to agree with Sandman here....for the most part, not all cases, if you rack up a ton of debt you are simply careless, immature and stupid.  its the consumers responsability to know that if they get a Macys credit card and save 10% on their purchase that the interest rate is also going to be probably around 30%

if you buy someting with your credit card, you are going to have to pay it back someday.

its amazing how many people can't grasp these simple concepts.

i think finance/credit/savings should be MANDATORY for all High school curriculums in america.  by educating people when they are young on the power of saving and living as debt free as possible they won't grow up to be mired in debt when they are 23 years old.

having debt from college or a home is one thing - having it b/c you like to shop or "need" an expensive car is entirely different.  don't blame the companies, MOST consumers have a choice. 

if you are a lemonade stand and someone is willing to buy a glass for $20 when you are selling for $1, would you not want to make the bigger profit?

Laws and rules are made for the weak ones, not for the strong ones.
do you guys understand that?

Why is it illegal to kill, why do you get punished for that?

Not because of me, you, and every sane person around, who are ab intra - wow cool latin ! - aware of that
These rules are made for the weak ones, the crazies, the simple who could fall and misjudge.

That is "harmful things" - debts, gambling - should be illegal. Then you can restrict it to people whom we make sure are "strong" enough ...

oh wait ....

Personal responsibility is always the argument in these cases. To what end I ask?

Of course people aren't going to think for themselves. The local tv ad tells you you need that car, I guess you need it then. The credit card company tells you you can have that car, and it doesn't have to cost you anything. Forget about the fine print at the bottom that reads 30% interest.

A great man once said never underestimate the stupidity of the people. Preaching personal responsibility is one thing, continue to preach it when it's obviously not working is another.

but you can't hold the companies responsible for that - sure, its in the fine print, but what do "they" always say....

READ THE FINE PRINT! :)

Making people feel that they need things they don't is just good advertising.  Why make a car and then an ad for it saying "this car is way over priced, you could just buy this car for thousands less....only guys with small dicks are going to buy this car.."   Great, you're 100% honest, but you won't sell any cars....Well Wat-Ever might buy the car  :hihi:  I kid, I kid  : ok:

Go back to my lemonade stand example....if you're stupid enough to buy for $20 when I'm selling for $1 then shame on you - I'll take the $20 every chance I get.

questions for all


who is the credit card companies and what are they?


i find it funny that it is said that the entire banking system needs to go yet all that is talked about is credit cards as being bad.


i think the banking system of canada and the US.... both are very similar ..... works rather well..... in canada we have this stupid user fee on non bank brand ATM usage, where you are charged $1.50 by the bak that owns the machine and another $1.50 by your own bank.... and now there are some locale that charge up to $2.50 for the same. on top of that you are dinged if you go over ATM usage amounts $.50 per usage of your debit card. banks are making record profits and say that these fees are required for maitance of the machines. fee income is $420 millin a year industry wide, industry maintance costs only $100-120 million a year.......


what should be looked at with respect to credit cards is how easy it is to bump up your credit line. just max out your card and pay it off fast, then cary a balence of half the value of your credit line for 2-3 months and they tend to double your balence. why not actually see if people can really afford it... christ

How about reading my fine print? It's not even fine, it's just there.

You can throw around theoretical arguments all you want, it doesn't change the fact that the system doesn't work. When corporations start to rule the government is when our democracy seazes to exist.

The credit card companies are the extension of the banking system, created to suck you dry in every facet of your life. This system derives from the European banking elite/cartel which have taken our money since the beginning of time. It's not democratic and it's not free.

Think about it. With all of our revolutions and fight for freedom, why is that it's always the same old banks that come up on top? America created their own money for over a hundred years and did just fine. The bankers couldn't have that. Which is why today america uses the same old tired banking system that europe have been slaves to for centuries and the government is in record debt to them.

Sometimes you can't see the forest for all the trees.

i agree about that, but i thought we were talking about consumer responability, not corporations taking over the govt.

as for my "read the fine print" i was referring to consumers not doing that in ad disclaimers, not to anything you or I was writing.

LIke i said, i think it goes back to teaching people when they are young about money/finances/credit.  My parents taught me the value of a dollar.  I'm a saver with zero balance on my cards.  my girlfriends parents were spenders and gave her money whenever she wanted, didn't make her get a job etc....   shes a spender.   Guess which one of us has more money?  Guess which one of us has debt....?

not saying "blame the parents" but consumer responsability stems from consumer education.

same thing with smoking and eating - nobody is putting that cigarrette or big mac in your mouth - consumers TODAY (in the past i think we were lied to/misled) have enough info about the harms of smoking and eating fast food to know they shouldn't be doing either in excess.

And that's all fine and good, but you're still missing my point. The reason why people fuck up is because they live in a system designed for them to do just that. You ever wonder why the education system doesn't teach you the value of a dollar? It's because it's all part of the same rotten and corrupt system designed to limit your freedom, ability of free thought and lifting your pockets in the process.

well, thats an entirely different topic and I for one don't truly believe the corporations own the schools too.  Some schools DO have a business class as an elective.  There is an entire industry where people give out financial advice via books, tv, radio.....consumers can get educated if they choose to.   There are plenty of people who DO NOT fuck up b/c they are responsible for themselves.  The system isn't perfect, but its not designed so we all fail.  You can definitely succeed if you are smart enough to realize you don't need the best apt. you don't need the best car, you don't need the best clothes etc....

I think too often in todays society people point the finger at everyone else but themselves.  You have to own up to your own accountability.  Its not the system that made you go out and rack up $20,000 on your credit card - its your own inability to realize you don't need a 1,000 Prada hand bag....

There is a problem in todays society with people blaming everyone but themselves, I acknowledge that and I despise the liberals for focusing on it. But that does not change the fact that the system is corrupted and wrong. I don't know who manages our educational systems, but I do know that it's based on repeating the information you're being told instead of encouraging creative thought, and that's a system that benefits the corporations. The old romans always asked one question when facing a criminal trail Who benefits?.

Just look at the greatest contributors to the Bush election, oil and arms industry. That isn't proof of anything, but every intelligent person can see the smoking gun.

And it's true you can succeed in society if you're smart, that's one of the greatest things about America, but when the country has a system that deliberately tries to marginalize the 'smart percentage' something is wrong. You gotta look out for yourself, but it's also our responsibility as human beings to look after the ones that can't.

The problem is not the credit system, or debt per se.
The wise use of credit and a reasonable level of debt can enhance one's life and not cause financial hardship.

The problem is greed by banks and credit  card  companies. They are irresponsible in the distribution of credit cards, either to people  who don't have the means to pay back, or to people  who are entirely too young. It is commonly known that in the US credit card companies target college-age people  for cards, even though these people do not have well-paying jobs (though they might in the future) and may not have the maturity to use cards wisely. Now, there are stories that high school students and even students in junior high (middle school) are being targeted! That is ridiculous.

The problem is that banks and credit card  companies are too lenient. They are willing to hand out cards to virtually anyone, as long you are breathing. We went to a hockey game a couple weeks back. The arena was freezing, and there was a display table that said sign up for a credit card (with the team's logo) and we will give you a free blanket. The line was very long.

The point is, aside from that anecdote,  that credit card companies need to be more strict in distributing to people who can handle the responsibility. How might that work? Well, there could be a law that no one under "x" age (18?) could get a card. Or no one below a certain level on their credit score. Or no one who makes less than XX amount. Period. NO exceptions for credit, although secured cards might be allowed.

But card companies won't restrain their greed; they want everyone to have a card so the sucker who can't pay his  entire balance each month gets hit with 22-26% (or more) interest. And the bankruptcy option as a way out of debt is harder than ever, thanks to Bush (which actually is one of the few good things he has  done).

So I believe in personal responsibility, but the problem is deeper than that. It even goes beyond the artificial needs that are created through advertising.

Both sides are to blame.

Both are guilty of the same thing: GREED.

Consumers want instant gratification and are told they deserve it from the time they are able to watch tv. The feel a sense of entitlement about these things and are in deep denial about what credit really cost them.

The banks use predator type loans that can change on a whim, sending your interest rate well into 20 percent-hitting you when you are down. They extend credit to those who have no business having any in the first place.

Some people are forced to use credit cards to bridge the gap, and that is unfortunate-but rare. But I also see these same people going out to eat, buying new clothes, buying big screen tvs, while carrying the debt and being "broke" (no savings.)

Excellent post.

I do think the blame should be more on the consumer though.  Ultimately you are responsible for the actions you take.  like i said before, can we blame the tobacco and food industrys for giving us cancer and making us fat? or can we blame ourselves for knowing the dangers and still ingesting that garbage.  Those chubby kids who sued McDonalds for "making them fat" was a farce.  Some older people who can claim they weren't made aware the dangers of smoking have a case, but anyone born in the last 2-3 decades should just know better by now.

I know what you guys are referring to by them targeting people who have trouble paying their bills or have low income and "need" credit - but lets be honest.  is it hard to pay bills on time?  is it hard to know that if you have 100 in the bank and that new ipod you just bought cost 500 that you are going to be in debt?  I don't think so.

i dont think its asking the consumer to much to be their own advocate and ask questions.  if you don't know that credit cards have interest rates and you get a new one without knowing the interest rate, i just can't feel too sorry for people like that....

Here is what I hate.



My Mom had great credit for almost 30 years. 5 cars over that time period bought and paid for, never missed a payment, Mortage paid off, then a 2nd mortage paid completely off, Credit cards paid completely off, never late on a bill such as utilty,phone,water etc.

Small business loan which she paid back.


BUT YET she co-signed for my brother a car when he was younger and he messed up and got it repossessed.

Her credit is now all but ruined thanks to that.


So what is the point of building up amazing credit and doing great if one small minute thing can absolutely cripple it?

I can't believe it hurt it that bad. At the same time, if she is debt free, then having a ding on her credit really isn't going to hurt her that much in the long run. What are they going to do to her? She's all cash and carry now!

Lesson is: never co-sign. I would straight up buy my kid a car cash, before co-sign.

YES! You are dead on with that one.  Credit rating is such a powerful number and yet most people probaby have NO clue what theirs is. 

In your specific case I wouldn't say thats a "little thing" though.  its not like she was past due on a cell phone bill or something.  A car, i'm assuming it was a big investment, getting repossessed sounds pretty serious as far as paying bills/loans goes.  Whats more fucked up is your brother ruined her credit....

Still, I agree with you completely - i hate how there are only 3 companies who control all of that stuff and access to it costs money (in most states) and is difficult to come by.  cleaning up your report is even more difficult.

i have a friend at work who's college roommate took credit cards in my friends name, maxed them out and fucked up his credit rating so bad that years later, with a successful job and plenty of money in the bank, he can't pass most credit checks to even rent an apt.

I can.  While i'm far from an expert, the littlest things can have a big effect on your score.  having a car repossessed sounds fairly serious.

it would effect her now if she needed a loan or wanted to buy a house or rent an apt. 

you insist on assuming we have a "fucked system". i disagree.

and don't forget that banks take on a TON of risk when they loan money to high risk consumers. many are getting hit hard now with bad debt due to mortgage forclosures.

My point is, u borrow and pay off 20 big purchases and then u co-sign and that person messes up and yet all the great things u have done are for not.


Granted her credit probably isnt completely screwed. Im sure she could get a new car or something since she has lots of collateral but that was an example of how one slip up can devastate you.



I was 18 years old and a credit card company sent me a Phone/Credit card.

I told them over the phone that I was a college student with no job and yet they still sent me a card.

Being young and dumb and poor my entire life, it was a marriage made in hell.

Didnt take me long to run up a decent amount of debt that still haunts me till this day.

Im not gonna blame them though, They didnt put a gun to my  head and make me use it but the finance charges and all that absolutely kills u.

Here is what I hate about Credit Cards:

U will call and see how much credit u have available.

They may say 500 dollars.

Catch is, if u charge something 480 dollars, the time they drop the finance charge on u, u are over your credit limit and they then charge u an over the limit fee which is usually like 30 bucks or more on top of the monthly payment.


If they say u have 500, u should have 500.


My brother use to work at a bank and he said that credit cards are automatic debt whether u use them or not. So if u have a card with a 5,000 limit, your credit shows up that u are 5,000 in debt whether u spent a dime on that card or not cause u have the ability at anytime to charge that amount.

That is messed up.

D - i understand what you're saying, and it does suck. and yes, companies try to suck people in so they can make money on them.

but i'm guessing that at that time, you knew you shouldn't be borrowing all that cash. that it seemed too good to be true, and you just said "screw it - i'll deal with it later". especially since it sounds like your mom is smart with money.

i've never paid a penny interest on a credit card. and i have my parents to thank for that, for educating me and for forcing me work and save money my whole life. 

agreed - i've carried balances but i will never do so anymore.  the time to fuck up IS when you are young and dumb.  some fuck up a lot more then others unfortunately, or worse, never learn their lessons.

my parents were the same sandman, i HAD to get a job and they took 3/4 of EVERY paycheck and put it into a bank acccount so i'd have spending money for college.  Of course I blew most of it my freshman year.....so what happened?  When i called home for more money from good ole mom and dad I was told to get a job at the campus dining hall washing dishes :)

Senate panel scrutinizes credit card practices
Wednesday March 7, 5:11 pm ET
By John Poirier

WASHINGTON (Reuters) - With the threat of new regulations looming, some credit card issuers on Wednesday promised lawmakers they would ease penalties and simplify tiny-print disclosures that few consumers read.

At a Senate hearing on credit-card practices, a top executive with JPMorgan Chase & Co.'s (NYSE:JPM - News) Chase Bank USA apologized to a 29-year-old Ohio man who repaid twice the amount of a $3,200 bill because of interest and fees.

"It just seemed like there was no end in sight," Wesley Wannemacher told the Senate Permanent Subcommittee on Investigations.

Wannemacher, director of operations at his family-owned Double A Trailer Sales Inc. in Delphos, Ohio, said he was trapped in a cycle of ever-growing fees and penalties for wedding-related purchases. A few days ago, Chase erased another $4,400 he owed as of February 2007.

"Our policies failed, and we deeply regret it," Richard Srednicki, chief executive of Chase Bank's card services, said.

Democrat Carl Levin, the Senate panel's chairman, said legislation may be needed to stop what he called predatory practices by credit cards, such as when companies charge interest and fees on money that has already been repaid.

"Our investigation found that even accounts in good standing are socked unfairly by little known ... practices that inflate interest charges," Levin said.

The high-profile hearing was held a week after Citigroup (NYSE:C - News), the third-largest card issuer, said it will stop automatically raising rates for people who default on payments not directly related to their credit card. The practice is known as "universal default."

Bank of America Credit Card Services (NYSE:BAC - News) President Bruce Hammonds said his company has never used universal default.

Sen. Norm Coleman of Minnesota, the top Republican on the subcommittee, said he was concerned about some industry practices. Coleman praised Chase for erasing Wannemacher's debts and eliminating a practice known as double-cycle billing, which includes tacking on fees based on two prior months.

Alys Cohen, a consumer advocacy attorney, said credit card practices are predatory because of the payment structures. "They can't pay back the small amount of principal and they're buried by the fees and interest," she said.

Outstanding U.S. credit card debt amounted to more than $750 billion in November 2006, according to estimates based on Federal Reserve figures. The industry has more than 640 million credit cards in circulation.

The Federal Reserve is already working on new requirements for companies to disclose various payment and fee schedules, lawmakers and executives said.

"We believe it should be a priority to shorten and simplify disclosure language and to focus on the most relevant terms and conditions," Bank of America's Hammonds said.

Levin said he would work with the Senate Banking Committee on legislation to protect consumers from overzealous credit card companies.

The PBS show "Frontline" did an episode on the credit card industry, which was very interesting.  And, of course, can be freely viewed:

http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/

I saw that a few months back, it was very good.

They have some great pieces on that website, you can watch for hours.