Finance guru Scott Pape, otherwise known as the Barefoot Investor, was left gob-smacked by a reader’s suggestion about how to get out of debt by simply refusing to repay it.

Pape published a letter in his Sunday column from ‘Lisa’ who claimed she and her husband had prospered by not taking Pape’s advice to work more and instead employing an underhand method to get out of debt.

In her previous letter to Pape, Lisa had told him she and her husband were heavily in debt and found it ‘overwhelming’.

‘Now my husband and I are debt free, our credit score is excellent, we have money in the bank, and we’re paying off a mortgage,’ Lisa wrote. 

‘How did we do it? 

Barefoot Investor Scott Pape was appalled at one reader's advice that the way to get out of credit card debt is to simply not repay it

Barefoot Investor Scott Pape was appalled at one reader’s advice that the way to get out of credit card debt is to simply not repay it

‘Not by listening to your advice, which was to get two jobs each and slug it out paying thousands in interest and principal to banks to pay off our huge credit card debt. 

‘No, instead we simply stopped paying the credit cards back.’

Lisa said the coupled owed $30,000, which with accruing interest grew to $50,000.

However, she said as credit cards ‘are unsecured loans, you don’t actually have to pay them back’.

‘So we sat and waited for seven years and, lo and behold, we are no longer in debt, and have excellent credit scores,’ she said. 

‘I would love you to share this with your readers – unlikely, I know!’

A Barefoot Investor reader called Lisa claimed she and her husband racked up $50,000 in debt on credit cards but got out of it by simply not paying it off (stock image)

A Barefoot Investor reader called Lisa claimed she and her husband racked up $50,000 in debt on credit cards but got out of it by simply not paying it off (stock image)

Lisa ended her letter gloating about her alternative strategy.

‘It’s probably a better tip than working your bum off giving billion-dollar profitable companies money they don’t deserve,’ she wrote.

In reply, Pape expressed his disbelief at what Lisa claimed to have got away with and said it was a first for him in all his years as a financial counsellor.

‘I’ve never seen a lender roll over and not try and recover a $30,000–$50,000 debt (which they have every right to do – because you are legally liable to repay the debt),’ he said. 

Pape said in his experience he had never known an institutional lender not take legal action to get back money it is owed

Pape said in his experience he had never known an institutional lender not take legal action to get back money it is owed

Unsurprisingly he was not impressed with the morality of Lisa’s approach.

‘Let’s be clear about what’s going on here: Someone lent you money in good faith … and you intentionally ripped them off,’ he wrote.

He said Lisa’s parting shot about not ‘working your bum off giving billion-dollar profitable companies money they don’t deserve’ left him speechless.

‘I can’t help but wonder how having this mindset spills over to other areas of your life,’ he wrote.

‘Like, how you fill out your timesheet at work, how you write in financial questions to a newspaper, and what sort of example this sets for your kids. 

‘You may think you’ve got away with this, but you really haven’t. 

‘You went bankrupt seven years ago.’ 

The Australian Banking Association advises that if you fail to make credit card repayments over a period of time, a bank can cancel the cards.

‘In rare circumstances, your bank may sell your credit card debt to a debt collector,’ the advice says.

‘Debt collectors also have legal obligations to consider any hardship request you make in relation to paying this debt off.

‘If you don’t contact your bank during this period and agree to put an arrangement in place, the bank could commence legal action to recover the unpaid balance.’

The Association also advises that not repaying a debt affects a person’s credit rating.

‘The longer your payment is past due, the greater the negative impact it will have,’ the Association says.

‘If your bank takes legal action against you, this can further impact your credit rating. A poor credit rating can affect your ability to receive finance in the future.’

DailyMail

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