The Devil in the Details

During the so called “Great Recession” (c. 2006-2009) our firm filed over 500 bankruptcy cases in Florida’s Middle District. During this time, I became aware of the fact that many of our clients who had applied for and received lines of credit with Best Buy were unaware that the contracts they signed gave the store a security interest in all of the items purchased with that line of credit (see example below or click here).

BestBuyPMSI

For example, say you bought a $1,500 flat screen TV with your Best Buy credit card and were in the process of paying off the balance when you were forced to file bankruptcy. While you may be able to discharge the credit card debt, Best Buy retains a secured interest in the TV. At this point, most people wouldn’t have a problem offering to finish paying for the electronics they purchased on credit, however, often times problems would arise where clients had disposed of or transferred the products to another party, e.g., sold their digital camera to a friend before they were finished paying off the charge. You can see how in the latter case someone might be reluctant in agreeing to pay for goods they no longer had in their possession.

What this illustrates is the importance of understanding the terms of any contract you sign in the course of conducting your personal affairs. Read the terms carefully and if you don’t understand them, consult an attorney. Contracts should not be misleading or overly difficult for the average person to understand. Unfortunately, in many cases, they can be which requires signers to be vigilant and ask questions. If a person offers you a contract but is unwilling to explain its terms in plain English, DO NOT SIGN IT.

 

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