The trouble started last October when Pavone, who was "squeezed for cash," asked Bank of America to lower his whopping 27.99% interest rate and increase his credit limit. The bank responded by denying his interest rate request, and reduced his limit from $32,100 to $30,400. That is just above his balance, which means Pavone would be charged penalties. Bank of America cited "economic trends" in both decisions.
That was the last straw. Last week Pavone wrote a letter to the bank:
"I consider your action an anticipatory repudiation of the contract and am treating you as in breach. I am therefore not paying the money that is currently due on January 3, 2010 out of protest."
Pavone anticipates Bank of America now trying to ruin his credit rating. The letter covered that possibility, too:
"For the record, I have a perfect payment history and I have a nearly perfect payment record on my credit. I have no doubt that you will mark my credit in light of this default, but if you do, I will sue you. I am eager to argue to a court that your interest rates are unfair within the meaning of various state and federal statutes, and anxious to point out that you 'had' to cut my credit limit from $32,000 down to $30,000 at the same time you were borrowing billions from the federal government and paid your executive bonuses in full."
The letter ends with Pavone requesting his interest rate be dropped to 10.99%, pointing out it would cost less to reduce his rate than to fight a lawsuit.
Bank of America does not comment about individual customers. Regarding credit limits, a spokeswoman wrote:
"In general, we monitor accounts for risk and may adjust customers' lines up or down as appropriate based on the risk profile and performance with us."
So what are Pavone's chances of victory? Ed Mierzwinski, program director for consumer advocacy group U.S. Public Interest Research Group, told the Huffington Post they are very good. He said it would be easier for the bank to cut a deal than to go to?court. And in an email, he offers this advice to other consumers:
"The banks respond to the squeaky wheel. ANY consumer who complains has a better chance than those who do not."
Watch Pavone on CBS: