Ready to make your credit card company an offer they "can't refuse?"

Season 6 of the Sopranos features an episode in which the newly incarcerated Johnny Sack asks Tony to pay a visit to the owners of a leasing company based out of New Orleans. Although it hadn’t occurred to them before, after a little “cajoling”, the business owners soon come to realize that it might be a good time to sell their company. You see, years before, one of them borrowed $50,000 from Johnny Sack to keep up with some gambling debts. Now, the New York Mob Boss has claimed a 50% stake in the six (6) million dollar business. Money is tight after his arrest and Sack is ready to cash out on his “half” of the business. As former President, George W. Bush, would say: sounds like “fuzzy math.” How can Johnny Sack claim to own 50% of a six million dollar business based on a $50,000 loan? It’s called loan sharking. Tony and his crew put “money out on the street” and then tally interest points like the scoreboard operator at a Golden State Warriors game. Borrow 2 bucks for a cup of coffee and next thing you know, you owe them $1,000. What happens when you can’t pay? First, you catch a beating, maybe worse, next you pay a visit to the pawn shop. Maybe they “bust out” your business, running up debts on company credit until bankruptcy is the only option.

Although loan sharking is very real, The Sopranos is just a TV show. Surely, Citibank and other credit card companies won’t “break your legs” if you can’t make minimum payments on your credit cards. True, Citibank won’t put you in the hospital if you fall a few months behind. So, what do Citibank and Tony Soprano really have in common? Usury. They both lend money, then charge “customers”excessive rates of interest. How can we define an “excessive rate of interest”? An interest rate that effectively prohibits repayment of principal. Fact is this: you can borrow money from the local chapter of La Cosa Nostra or open an account with a credit card company, both lenders are going to try to steer you in the same direction. They don’t really want to be repaid. Their preference is minimum monthly payments, bleeding the customer for an interest payment every month that never dents the principal balance. As San Diego Bankruptcy Attorney, John C. Colwell has pointed out, a credit card loan of $5000 with an 18% interest rate and minimum monthly payment of $100 would take 93 months to payoff! Sure, the Soprano family soldiers might charge 50-60% interest. Citibank might “only” charge 30-40% (although some credit card companies have been known to charge almost 80% interest in some cases). In the event that you can’t pay, the Soprano family associate will pay a visit to your home….with a bat. The Citibank method is a bit more subtle. You’ll still receive a visit at home, but from the sheriff, with a summons. The end goal is the same: try to sell your stuff to satisfy claims. The mobster will take you to the pawn shop ASAP, the credit card company will sue you and then wield the corresponding default judgment as a sword.

The only real difference (and granted its a big one) is that the credit card companies are obligated to respect exemption laws. Typically, consumer protection legislation doesn’t deter mafia types. Oh, and it probably should also be pointed out that while credit card debt is usually fully dischargeable in bankruptcy, loans from Tony will be a different story…