The Bankruptcy Bill: Effects?

[Adam's Apple]

Scaring People Away from Debt
By Froma Harrop, The Providence Journal
April 8, 2005

The era of happy borrowing is over. Americans might as well know it. The death bell now tolls for low interest rates. And he who doesn't hear that chime can't miss the siren of bankruptcy reform. The federal bankruptcy bill, sure to become law, will turn many exuberant borrowers into lunch for debt collectors.

Fear does have its uses. If the sight of a tighter noose warns people away from piling up debt, all to the good. Americans will understand that credit cards are a potential enemy — and that even the friendly home mortgage can come back to haunt them.

The bankruptcy bill in a nutshell: If you get in over your head in debt, and still have a decent income, you can't wipe the slate clean with a Chapter 7 bankruptcy. Instead, you will be shunted into what's called Chapter 13. There, lawyers will find a way for you to pay back what you owe. That means you will write your creditors checks month after month and, if necessary, year after year.

For full article
http://www.jewishworldreview.com/0405/harrop040805.php3

 

[Mr. P]

They will end up in Chapter 13 — making monthly payments unto eternity for things they forgot they ever bought.

Well, unless they changed the Chapter 13 payout and I don't think they did, it's not eternity, it's 5 years max.

On the other hand..this new bill if signed by Bush will be a disaster.

 

[Adam's Apple]

How would holding people responsible for their rightful debts be a disaster?

 

[Mr. P]

How would holding people responsible for their rightful debts be a disaster?

I didn't say it would be. This bill will be..perhaps Ms. K will give us her story again..she was lucky, but is very typical of those that need relief.

Then there is the question of whether a credit card Company should be responsable for bad business practices..what a concept, huh?
First thing that comes to mind is, credit cards issued to college freshmen without income. Seems odd doesn't it? They just have to send in the form...good business practice? I don't think so. Should the credit card company take the hit for bad business decision or practice? Bet your ass they should.

 

[Adam's Apple]

Good point there. My youngest daughter was 14 years old when she started getting information from the credit card companies, and a few of her friends (guys and gals) were constantly on the run from collection agencies when they were young. The worst offender was the daughter of one of our well-known professors on campus. She was a credit card shopaholic and knew she had no way of paying for the purchases she made. Maybe this bankruptcy bill will force parents to be more concerned and involved in what their kids are doing if their kids' feet start getting held to the fire for debts they ring up.

It's just not right for people to keep making purchases that they have no way to pay for. The seller just passes his loss onto his other customers, and we all end up paying for these debts in the end.

 

[Mr. P]

...
It's just not right for people to keep making purchases that they have no way to pay for. The seller just passes his loss onto his other customers, and we all end up paying for these debts in the end.

I agree with that...but something the public doesn't know is, many, many, people are not abusers..Like Ms. Ks' example..These and the young kids are those who this will hurt..not the true abusers. The abusers will find another way to work the system.

 

[5stringJeff]

Frankly, I think it's good that peopl eare made to pay their debts. This bill will (or should) force a major shift in American's spending habits.

 

[William Joyce]

I agree. The problem with easy bankruptcy is that those costs are borne by everyone, even in a free market. If the credit card company knows that X percent of their debt will be discharged, that means higher rates for those who DO pay their debt. Same for other situations. I don't doubt that the credit people have lots of power and can finagle themselves, but look, we're all grownups here. You know what you're getting into. It's not a big secret: you borrow, you gotta pay it back. With interest. I know that A LOT of bankruptcies are nearly fraudulent. People lie about their assets.

And, Americans need to save more. I should talk.

 

[Mr. P]

I agree. The problem with easy bankruptcy is that those costs are borne by everyone, even in a free market. If the credit card company knows that X percent of their debt will be discharged, that means higher rates for those who DO pay their debt. Same for other situations. I don't doubt that the credit people have lots of power and can finagle themselves, but look, we're all grownups here. You know what you're getting into. It's not a big secret: you borrow, you gotta pay it back. With interest. I know that A LOT of bankruptcies are nearly fraudulent. People lie about their assets.

And, Americans need to save more. I should talk.

I can't take issue with any of that William. My main grip is the
Credit card companies have enlisted the Government to solve what is really
bad business practice (See my example, on college kids, above).

 

[Yurt]

I can't take issue with any of that William. My main grip is the
Credit card companies have enlisted the Government to solve what is really
bad business practice (See my example, on college kids, above).

Actually, the government created the bankruptcy haven in the first place. Before this, you were thrown in prison (again government) or the bank just took it all. I do not agree with this bill, but I have not read over it much so can not offer an indepth opinion, however, the creditors had to go to the government because the government created the first bankruptcy legislation to begin with.

 

[Mr. P]

Actually, the government created the bankruptcy haven in the first place. Before this, you were thrown in prison (again government) or the bank just took it all. I do not agree with this bill, but I have not read over it much so can not offer an indepth opinion, however, the creditors had to go to the government because the government created the first bankruptcy legislation to begin with.

True, but that doesn't excuse bad business practice.

 

[insein]

True, but that doesn't excuse bad business practice.

But people dont gripe when things are good. The only way bad business practices are changed are when people complain. If enough people begin to get into trouble with debt, they will complain about the credit card companies and then the companies will change. Having the government force the crad companies to do anything wont work. The people will stop using their cards or demanding better service as a customer of said company. The people have the power to change the system. This bill simply motivates more of them to do it.

 

[Yurt]

Just an interesting note:

Citicorp, a major lender, had 108 Billion dollars in revenue last year.

 

[Adam's Apple]

That is interesting indeed, Yurt.

This is getting away from the original topic, but I hope Citicorp, along with all our other "high roller" financiers, are investing some of that money in their own government. Sure would lessen our need to borrow so much from China and other foreign sources.

 

[Mr. P]

This is getting away from the original topic, but I hope Citicorp, along with all our other "high roller" financiers, are investing some of that money in their own government.

Well, they are sort of, if you consider lobbyist part of the Government.

 

[Adam's Apple]

Yes, I know, but that wasn't the kind of investing I meant.

 

[CA95380]

Bailout for Citicorp?

Just an interesting note:

Citicorp, a major lender, had 108 Billion dollars in revenue last year.

That is interesting indeed, Yurt.

This is getting away from the original topic, but I hope Citicorp, along with all our other "high roller" financiers, are investing some of that money in their own government. Sure would lessen our need to borrow so much from China and other foreign sources.

Today - November, 2008
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