When an animal makes a mistake and bites the hand that feeds it, it soon discovers it’s error when it’s stomach starts to complain. The question is are banks as smart as animals or not.
There is really no polite way to put it, but banks are screwing (not the word of choice) people over. They are doing this because people fear damaging their credit rating so grabbing their ankles and being raped by the bank is often the lesser of two evils.
However after the long economic down turn, significant numbers people have lost just about everything and being raped by the bank is just kicking a man when he is down. When that point is reached, some have just up and said enough is enough and simply stopped making payments. They simply do not care anymore about their credit rating or other negatives that sprout from this voluntary action. Once that point is reached, the leverage changes in favor of the person withholding payment.
When you stop and think about it, if someone owes you money, you tend to kiss their ass a bit so payments continue. In this case, banks have clearly set out to piss people off, and as a result they may end up eating the debt if this level of anger is reached.
Once that banks suddenly figure out the stick is no longer working, they will switch to the carrot providing the proper information is relayed to the bank when they finally get around to calling asking for their money, with the now astronomical interest rate for missing a payment. One you inform them of this and make it perfectly clear that you have absolutely no intention of sending them another penny while they are biting your hand, you may be a bit surprised at the result.
The banks know that taking you to collections may not provide any fruit. And depending on how much you owe them they may just ask for the principal, wipe out any late fees and kill your credit card. In many cases That can be thousands of dollars in interest saved, and if you are already down there is nothing to lose and a lot to gain.
So this option although extreme does have it’s advantages. Remember you have the upper hand as you have their money, and they should be kissing your ass and not kicking it. So if you have nothing to lose, you may discover you have a lot to gain. Also don’t take their first offer, there is often more for those who wait.