A second chance for subprime borrowers

An Oregon company offers credit cards to those with bad debt. It's good business, for both sides.

from the May 5, 2008 edition

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Levin says his company's philosophy stems partly from a golden rule mentality, but it's also good business. "You're giving people a chance and a hope, and that's good," he says.

Consumer-advocacy groups, however, have reservations about deals like the one Genesis offers. The Genesis approach might be unique, says Ruth Susswein, a spokeswoman for Consumer Action based in San Francisco, but that doesn't necessarily make it good for the consumer. In many cases, debtors don't have a legal obligation to pay debts that have passed a statute of limitations, she says. By signing up for a new credit-card account that has rolled over old debts, the customer can unwittingly revive those debts.

"I wouldn't pay an old debt unless they could present me with the original contract that I signed – my John Hancock on that original loan or credit card," Ms. Susswein says.

Levin acknowledges that that situation can happen. Still, he says, his firm offers a way for customers to repair their credit and use credit cards that don't cost a fortune because of their credit histories.

"Try renting a car or a hotel room without a credit card," Levin says. "It's become much more than a lending tool. It's become a method of identification and access."

 

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