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Jewish World Review August 11, 2000 /10 Menachem-Av, 5760

Bruce Williams

Bruce Williams
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Consumer Reports


Yes, a contract means something


http://www.jewishworldreview.com -- DEAR BRUCE: We operate a small water treatment company. A couple ordered a system that, because of its large size, had to be specially ordered. They paid using their credit card. We received the system. Nine days after they signed their contract, they decided to cancel the order. Because it was a special order, we still had to pay for the system. I tried to explain to them that the three-day recision period was over, that this was a special order and they could not cancel. They said that they talked to the attorney general and the credit card company, who said that we have to honor their cancellation even beyond a three-day recision. Is this true? Doesn't a signed contract mean anything anymore? -- D.H., via e-mail

DEAR D.H.: I don't know where they are coming from, but after the three-day recision period is over (and that only applies to items over $50 signed away from the vendor's place of business), they are on the hook. They are blowing smoke. I doubt very seriously if they had any conversation with the attorney general since this is a civil matter, not a criminal matter, and I am quite confident that no one told them they can cancel just because they feel like it. If you want to hold their feet to the fire, go to it.

I think people have to recognize that when they sign a contract, it cuts two ways. If you called them nine days later and said, "Sorry I don't want to sell it to you at this price", they'd scream bloody murder.

DEAR BRUCE: I was sitting at a traffic light, minding my own business. The fellow behind me was talking on his cell phone and wasn't paying much attention when he rammed into the back of my 6-month-old car. He apologized and said it was his fault. What else could it have been? He hemmed and hawed about his insurance. My car was mangled, and I wanted to get it straightened out as quickly as I could, so I collected from my own company and had to pay the $200 deductible. My company says that they are going to sue him, and if they are successful and get back all of their money and the deductible, they will give it to me. Otherwise, I am stuck. If I don't get the money back from my insurance company, can I go after this guy? After all, he's the one that caused the damage. -- T.S., Topeka, Kans.

DEAR T.S.: It is true this fellow did the damage, but you assigned your rights to him under the terms of your policy when you collected on the collision. The company is going to subrogate, which means that they are going to take action against him to try and recover their money. You gave up your right to pursue him when you took the money from your company.

DEAR BRUCE: I always have tried to be honest and meet my obligations, but I have done something that I realize was foolish and I don't know how to get out of it. I have always wanted to own my own business, the American dream. I thought that I knew exactly what I was doing. As it turned out, I was a babe in the woods. That's the good news. The bad news is that I financed it with four credit cards, accumulating more than $80,000 in total owed on these cards. I am doing a fancy dance just to make the minimum payments. On my income of $37,500 a year, there is absolutely no chance that I will ever pay them off even if I could maintain the minimum payments, which I don't believe I will be able to do. I have always been taught that if you borrow money, you must pay it, but at 28 years old, I shudder to think that I will have to pay off this debt for the next 25 years. I have no assets whatsoever other than my paycheck, which comes every two weeks. I am mortgaged to the hilt. What would you suggest? -- N.C., Yorktown, Pa.

DEAR N.C.: I am not in favor of bankruptcy when there are alternatives. But in this case, given the magnitude of your debt, I don't see any alternatives. Yes, what you did was foolish, and yes, the credit card companies deserve to be paid, but they are in business and they know that a certain portion of their lending is going to go sour.

At your age, my inclination would be to sort things out and be certain to use a bankruptcy attorney to make sure that everything is done correctly. Then start out with a clean slate. My readers take note: The idea of financing a business on credit cards is an extraordinarily risky one and not a risk that I would ever encourage you to take.



Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).

Up

08/10/00: Her shopping will ruin us
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06/30/00: I'm buying my dad's house
06/29/00: How social security seniors should invest
06/27/00: Waiting before re-establishing credit
06/21/00: Insuring an older car
06/19/00: Take the money and run!
06/16/00: Utility company incursion
06/15/00: Insurance settlement is no bargain
06/13/00: A straightforward form of bankruptcy
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06/01/00: The truth about nursing home insurance
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05/25/00: CDs for security, not investment
05/24/00: Battling with collection agency
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05/09/00: Mutual-fund investigations
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05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
05/02/00: You know you are in trouble when ...
05/01/00: Can primary residence be rented out?
04/28/00: A full refund after five years?
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04/10/00: Married couples should share windfall
04/07/00: How not to blow an inheritance
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04/05/00: Beating the look-back period
04/04/00: Providing for retirement
04/03/00: Readers disagree on time shares
03/30/00: The road back to good credit
03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
03/20/00: Tax on foreign gifts?
03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
03/07/00: Don't expect compensation for ideas
03/06/00: Too rich for a Roth IRA?
03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
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02/01/00: Can we KO a custodian?
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01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
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12/31/99: Out of state ain't that great
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12/13/99: Termite company not liable for termites?
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12/01/99: Long-distance rentals a bad idea
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10/29/99: What do you want from insurance?
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10/11/99: If it ain't broke...
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09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
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08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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