Flame me all you want, but there are reasons behind reforming bankruptcy

[LynneSin]

First and foremost - the bill that is currently on the floor is very flawed so this is not a post in defense of that bill.

But Bankruptcy laws do need to reform. Hell too many people put themselves (including myself) into major credit card debt and for what? Junk, clothes, useless stuff they probably could have done without. Bankruptcy has become a crutch to enable these people out of their debts (and believe me, I've been close to doing it myself).

This bill will probably be passed but hopefully when the next democrat gets into the White House we can reform this reform bill to give leeway to those who have found themselves in debt due to outside issues such as medical bills, unemployment & other catastrophic events.

But it's about time that those who spend foolishly are required to pay their bills. I'm not one to judge because believe me, I too was a foolish spending. But I've managed to get my once $6k debt down to $2500.

Discuss and flame away

[Darkhawk32]

1. Creditors shouldn't give credit away like candy then...

A little self-control is required on their part too.

[LynneSin]

3. And that could be reformed too

Personally I think new credit card owners should never be given more than $1000 credit until they can prove they are responsible with their credit card. My first Credit Card was $2900 and boy that can go quickly

[ashmanonar]

22. my first was only 700.

with wells fargo.

it went up to a thousand after a few months, when i didn't have a late payment (i online pay, so i don't have to worry about paper bills and crap.)

[CrispyQ]

16. Yes, and also the way they raise your credit limit.

We had a card with a $5k limit. We charged my husbands classes & books on it, a couple of major car repairs & made way more than the minimum payment every month. When he was reimbursed for his classes by his company we'd send that entire amount to the card. Over the 5 years we did this, our creidt was increased to the point we now have about a $25k limit! Yikes! The most that was ever on that card at one time was about $3k & now we qualify for $25k? I can see how that would be enticing for lots of people.

Many people are irresponsible with credit cards, but the companies are too.

[cally]

32. You can request a lower limit

and you should do it. The high limits work against you on your credit score. When you go to borrow for a house, they look at the credit limits, not how much you borrow.

Credit cards are just bad. I don't like them. I rarely use them.

[springhill]

42. Their goal is to get you in debt.........

They love all that interest they collect. Believe me, they hate it when you pay it off timely. As long as you keep paying the minimun they will continue to up your limit because the more you spend, the more interest they receive. They are trying to trap us and doing a damn good job at it. Does that mean we have no responsibility? Of course not. But by the same token, they need to quit exploiting people who can't afford to have their credit raised.

[BlueEyedSon]

2. While I agree that many people get into CC trouble by overspening

A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce.
--Krugman 08Mar05
http://www.nytimes.com/2005/03/08/opinion/08krugman.html

[LynneSin]

5. And that is what needs to be reformed when we have the power to do so

:D

We don't have the power now

[madfloridian]

11. So you are defending our New Dems for being eager about it?

We don't have the power right now, maybe never. Do they have to vote for it?

[fertilizeonarbusto]

17. The problem is

this bill is no help at all if we are talking legitimate concerns. Sure, the bankruptcy laws need to be fixed, but this bill just makes things worse.

[Silverhair]

26. A good argument for universal health care.

The country would save money if everybody had access to health care. A healthy populace is more productive and makes more money for everybody, both the poor and for the wealthy.

[RobertSeattle]

4. Here's my exceedingly slight defense of it

I think almost any bill that has to do with economic or technological "things" should be renewed every 20 to 30 years. With the changing world, the laws need to change. Recall that we are still stuck under that idiotic Mining bill from the 1800's. So in general, I think laws of this nature should new renewed or revised on a regular basis.

[koopie57]

6. I understand where you are coming from

right now I would rather see some comfort given to those families who must be out of their minds with worry. If some sleezy folks with no shame get a break ... so be it. i suspect they are dumb enough to eventually get theirs anyway.

[NewHampshireDem]

7. Okay, but ...

Why then do credit card companies (and other lenders) charge different rates based on 'credit worthiness'? Because people with less 'credit worthiness' are more likely to default. Ergo, the companies are already ready protected from backruptcy claims. Their protection is built into the system.

When I read stories about lenders losing money and failing because of loan defaults, then I'll consider supporting such 'reform.'

(BTW, this is not meant to be a flame. :))

[sui generis]

8. unfortunately the bill does not distinguish

between catastrophic expense and frivolous living outside of one's means.

I agree - the solution is to not use credit, period. If it requires credit, that means you can't afford it or haven't saved appropriately to buy it outright.

If you are able to make minimum payments regularly then you certainly can make minimum payments in advance to your savings account.

HOWEVER, this bill is disgusting primarily because it protects only one class of entity: the corporation, at the expense of the consumer.

While it's true that being unemployed should not become a financial burden you pass through to the credit card companies, if you didn't have credit to begin with it also wouldn't be an issue and you would either sell your house or file for bankruptcy much sooner.

There are people who should not have credit or should have very low credit limits. Credit card companies have a huge interest in having you run up as much credit as you possibly can and still make the minimum payment. In that way they're like a smart drug dealer: keep your people strung out but not so strung out that they lose their jobs and can't pay for more.

[Canuckistanian]

15. Yes, you don't throw the baby out with the bath water

And all these politicians voted AGAINST meager protections for those who are blameless or innocent.

[fertilizeonarbusto]

19. Beautifully put

Almost as beautiful as you, sui generis ;-)

[ChiciB1]

20. Posted At Another Site...

There IS such a thing as "Stolen Credit"!

[madfloridian]

9. Are you aware of the medical bills section, and caregivers?

And the lack of an exemption for the elderly? And the fact that no real disclosure is required by the credit card companies?

I know we are going to lose our drug benefit, a good one, from our former employers at the end of this year. It was part of the Medicare bill. We will have to take a chance on the stupid cards, or just take what we can afford.

In our county all county retirees are losing that drug coverage...we can handle it better than most.

Thanks for caring and thinking it out.

[tanyev]

10. A good universal health care plan would go a long way

toward reducing bankruptcies.

[madfloridian]

12. And why not reform corporate bankruptcy...why just private?

.

[gulfcoastliberal]

40. Gee, no reply to that one, eh?

Maybe because this bill is all about screwing over Americans for the gain of credit-card companies. That anyone would defend this disgusting legislation here, is amazing.

[madmark]

48. There is no such thing as corporate bankruptcy

Individuals can file Chapter 11's just like an entity can. Entities can file Chapter 7's just like individual's can.

[Desertrose]

13. I had to file about 7 years ago....it was the hardest thing I ever did

I had some hefty credit card debt that started when I was in the process of divorce...had 2 kids and I ended up using those damn cards to help pay the bills. We were not buying "junk".

Had some HIGH limit cards when I had my business back east- the companies kept upping the limits & I kept getting pre-approved cards with even higher limits.

I know I went through hell before I decided to go that route...it was the county sheriff knocking on my door ready to come & take my few possesions that helped me decide I had to go that route. I owned nothing but my car at that point.....I got a free lawyer consult & did the filing myself.

I really don't feel that too many people who actually NEED the help to start fresh willingly put themselves through it. There is great stigma attached to declaring oneself bankrupt where I grew up, let me tell you.

They took my car ( which I worked very hard to devalue from their BB value and with help was able to buy back)...they even took the last $15 I had in my pocket. Talk about humiliating.

No it wasn't an easy thing but I am slowly coming back and if I had to make payments I never would have made it. For some folks, chapter 7 is the only choice.

But then again at my hearing, I also saw the ones who played the system...who spoil it for those who really need the help.

The whole thing sucks....the interest the credit card companies charge is completely outrageous and they make it so easy cause they want people to be slaves to the system.

[ChiciB1]

14. I Posted At The Other Site....

that there are times when the Credit Card debt can be "stolen" and you can find yourself in a world of hurt. This was my case and it was pretty devastating!

[punpirate]

18. What many people do not realize...

... is that the current bill is not intended to improve collections from deadbeats--it's intended to improve collections from everyone reaching bankruptcy court.

In truth, bankruptcy laws need no reform--especially in the context you describe. Are you aware that provisions already exist in law to deny bankruptcy relief to credit abusers, and that there are standards to determine that, that the existing law can also force credit abusers into Ch. 13, rather than Ch. 7?

What you claim that is needed already exists. What the current bill does change in that regard is the degree of leeway individual bankruptcy judges may apply extenuating circumstances in specific cases. In a way, the bill in Congress now does what mandatory minimum sentencing does in criminal cases--it takes away individual judicial discretion.

Cheers.

[peacetalksforall]

21. LynneSin - there are distinctions and you are calling for support while

only looking at one aspect...

the reasons are already mentioned on many threads...

the umbrella distinction is between poor planning and an unexpected minor catastrophic to major catastrophic event.

the other umbrella distinction is in our country's history - between normal economic growth and health coverage and job opportunities to an era where the rug is pulled out from under many.

We went from the progress and some normal expectations of growth and stableness to the right wing profiteering and gouging cowboy affiliated, gun loving, bible toting, imperialistic srategy for killing and destroying.

There are distinctions - irresponsibility vs all the other reasons - job, business, doctor, pharmacist, help.

You are ONLY looking at those who spend unwisely and that is really unfair and insular. You are only looking at one distinction and tactily agreeing to another form of destruction in this country.

And you are ignoring the fact that only a few Dem leaders give a darn
about vote theft so how do you expect dems to get back in power.

You are talking about a give away to already wealthy corporations who realize billions and billions in profits and who wrote the legislation - by only looking at your own life as an example.

[LynneSin]

23. You did read my first sentence....right?

I'll repost it:

First and foremost - the bill that is currently on the floor is very flawed so this is not a post in defense of that bill.

I'm not supporting the bill - I'm supporting real reform. And believe me I know those who got bankerupcy based on high credit card debt. The laws might be out there but they aren't enforced.

[TreasonousBastard]

24. Read the other comments here, and agree..

that not only are most bankrupties not from fivolous overspending, but the card companies are at least partly to blame themselves for giving away all that credit.

Take special note, though, that this "reform" is aimed ONLY at the people who can least afford to be hammered. The ones to whom bankruptcy is a genuine relief. Are the card companies, HFC, and other subprime lenders going to be restricted in return for this gift?

Corporate bankruptcy as a business strategy is untouched, hiding money in trusts, second homes...

All of the other abuses of bankruptcy have been ignored. Nobody bothered to mention "protected" pension funds going up in smoke when the bankruptcy court allows them to be an asset in reorganization, bankruptcy to avoid civil judgments, stockholder equity disappearing when the company is reorganized under a new holding company...

[SoCalifer]

25. I Respectfully Disagree

I hear what you are saying and don't necessarily disagree on the surface of it. However consider this: So long as corporations are allowed to get away with outsourcing jobs to exploit poor countries who do not have the standard of living that we do, who do not have the environmental protections that we do, and are allowed to get away with it without incurring any penalties -- not to mention, all-the-while, being subsidized by us regular folks through corporate welfare.

And so long as corporate USA continues to be allowed to concentrate the wealth with their criminal lazie-faire style supply-side economics, plunging more and more decent hard-working Americans into economic calamity.

Then I say corporate USA is responsible and let them reap what they have sowed. We should be able to spend on our credit cards what our labor truly has earned, and if lazie-faire corporate USA who have, lets face it, seized control of our government and news media don't like it; then I say tuff!!

We need to start drawing lines in the sand and start holding our ground, because we're losing what belongs to us.

You know, our founding fathers went to war not just against a tyrannical King, they also went to war against the corporate powers who had control over a man's wealth (his labor); as they do more-so today. That is why for the first hundred years Americans feared granting corporate charters, and made it illegal for businesses to spend money on politics, or to buy and trade stocks with other businesses. This is also why our founding fathers viewed a man's labor as his property and not some commodity -- only a slave's labor is viewed as a commodity.

And this is why you see the U.S. Code: USC 15 § 17 Antitrust Laws Not Applicable To Labor Organizations. Where in the first sentence you read: "The labor of a human being is not a commodity or article of commerce". http://www.law.cornell.edu/uscode/html/uscode15/usc_sec_15_00000017----000-.html

In my opinion since all wealth is derived by labor, as recognized by President Lincoln. And so long as corporate USA (our de-facto government) robs from us the wealth which is rightfully ours by paying us slave wages for our labor. Then like I said, let them reap what they have sowed; because as far as I am concerned, decent hard working Americans are not over spending on their credit cards - they are just taking a little of what was theirs in the first place.







"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration."
-- Abraham Lincoln


"The fight is never about grapes or lettuce. It is always about people."
-- Cesar Chavez

[madfloridian]

27. Here is a questionable part of bankruptcy reform...

abortion protestors protected, medical catastrophes not protected.

http://www.boston.com/news/nation/washington/articles/2005/03/09/senate_gop_gains_victory_on_abortion_vote/

Senate GOP gains victory on abortion vote
By David Espo, AP Special Correspondent | March 9, 2005

WASHINGTON -- Abortion rights forces lost their first test of the new Congress on Tuesday, a skirmish over the rights of protesters in bankruptcy court, in a vote that reflected last fall's election results and portended fiercer battles ahead.

Lawmakers on both sides of the issue cautioned against reading too much into Tuesday's 53-46 vote on which the Senate said it would not deny protesters the chance to use bankruptcy proceedings to avoid payment of court fines or penalties. Supporters said their proposal applied only to violent protests; opponents said individuals participating in peaceful protests could also be affected.

Democrats had tried to attach the amendment to a major bankruptcy measure."

[GreenPartyVoter]

28. We don't go bankrupt over junk.. we went bankrupt because we used our

credit cards to pay our bills because the job hubby had at the time cut his hours way back. So he held on to the job hoping that the hours would come back up next week, or next week after that, or the one after that. And then eventually there were no more hours to be had.

Sometimes it's not about buying junk. Sometimes it's about trying to get by.

This bill doesn't allow for that. Medical bills are major, yes, but sometimes it's about paying for your electricity, rent, groceries and such.

[Colorado Blue]

29. I'm sort of an expert on the subject of credit cards (alas) so

I would like to add this observation:

Credit card companies that charge low interest to hook creditors, then raise the rate through the roof, should face legal penalties.

Ditto, for outrageous late fees, on which one then starts paying outrageous interest, which other creditors then begin charging, until one is in a vicious cycle and can't possibly get out of debt.

I'm talking about interest in the 25% range - that is usury, IMO, and ought to be ILLEGAL. I understand that certain predatory lenders are now offering credit for way MORE than that - to poor people of course. Frankly I think it's outrageous and somebody ought to sponsor a bill establishing legal parameters to protect borrowers.

Like others in this thread I got into debt for medical reasons, and trying to establish a business after I got sick and couldn't do the day job any more. In any case even with the best of intentions to repay the loans, with 25% interest there's no WAY - one is driven permanently into debt.

It ain't right.

[LaPera]

30. Yet corporations file all the time as sound business decisions. The rich

have special provisions so they can file with no changes to their lifestyle, this bill will NOT affect them.

But the poor and middle class should bear ALL the changes.

Who in the fuck are you kidding?

[chicagojoe]

31. Put a cap on interest rates on credit cards.

[LittleClarkie]

33. While I can see the need for bankrupcy reform

that, I don't think, was the intent of this bill. Having a bill written by credit card lobbyists means in a sense the foxes have the keys to the hen house.

This bill is not the way to reform the system. They're limiting lawyer involvement. They're not accepting safety net amendments. Those who support it have one concern: credit card companies.

It's like what I told a friend about SS reform: Yes, it is probably needed. No, I don't want this administration or anyone connected to them to do the reforming. They. will. fuck. it. up. Guaranteed.

[European Socialist]

34. I just wish I could have all the postage from credit card offers ....

sent over the years. The credit card industry is out of control. They keep coming up with tricky schemes to dupe people into more debt and then they want protection from those very people. WTF!

[Red State Rebel]

35. Nobody holds a gun to your head and makes you use a credit card!

I learned the hard way - got my crap paid off and cut up the cards. If you can't pay cash for it, don't get it.

The only debt I have is my mortgage and it will be paid off in under 10 years.

It's not easy to discipline yourself to not using credit, but it can be done.

[Bluebear]

36. Medical issues, divorce, job loss are the 3 common bankruptcy causes

Frivolous buying is one thing, and it is that image that people have when blaming people for "getting themselves into credit trouble". It's not usually that sweater at Macy's you just HAD to have.... it's your spouse leaving you, it's having to buy medicine because you don't have/can't get health insurance, it's your louse spouse leaving you with bills for things you never approved of buying but are obligated to pay for anyhow.

[Bridget Burke]

37. Texas is a "Community Property" state...

So you get half a spouse's income when you split. Or, if he (or she) is a scumbag, dope addicted bum--you get half the debt.

A couple of friends of mine went through this years ago--one of the relationships was, in fact "common law" marriage. They managed to pay up without bankruptcy, but it was rough.

[Red State Rebel]

45. I was specifically speaking about Credit Card Debt

Medical situations are entirely different. Divorce situations are a mixed bag.

[Lars39]

49. People charge their operations and meds, too.

[Radical Activist]

38. That is extremely insulting to anyone

who is in debt because of a medical emergency they had without health insurance, anyone who made some mistakes as a young college student, anyone who was tricked into signing a predatory loan or mortgage because our educational system doesn't prepare people for that, or anyone who just went through a rough financial period in their life and is trying to get out. People shouldn't be credit slaves for the rest of their lives because they made a few bad mistakes.

A lot more people are filing for bankruptcy because the economy has gotten worse, real wages have been going down since 1980, you can't support a family on one income anymore, and credit card companies are out of control. We should deal with those problems instead of making life even harder for the working poor.

[MikeG]

39. They already pursue abusive filers under Section 707(b).

Trust me, they've been doing it since the 80's.

If you make more than $4,000.00 per month you can't file Chapter 7.

[BlueInRed]

41. There are already plenty of checks and balances in the bankruptcy laws

and the main loopholes for wealthy people to shield assets remain untouched.

This is NOT a bill about bankruptcy reform except to eliminate it as a possibility for many middle income Americans, while leaving it wide open to abuse by wealthy people who can hire lawyers to use the code to keep luxurious assets and corporations who can avoid large judgments against them.

This kind of post perpetuates the myth this bill was about curbing abuses because that is NOT what this bill was aimed at. It is aimed at preventing millions of Americans who got in a bind through no fault of their own (ie, job loss, medical emergency, etc) from getting a truly clean start by forcing them into an expensive court supervised Chapter 13 repayment plan.

Most bankruptcy judges oppose this bill. And bankruptcy judges already have discretion to refuse to grant relief to people who abuse the system. No changes were needed except to make the credit card companies happy.

[sandnsea]

43. Just like partial birth abortion

This is how the right wins. Take a scenario that rarely happens, make people think it's the norm, push through bullshit that hurts people in trouble.

I'm surprised at you LynneSin.

When corporations cannot file bankruptcy, screw people out of millions, change their name and get fat new government contracts; THEN AND ONLY THEN will I worry about anything the general public does.

[Bryn]

44. I Disagree

with this BK reform bill. I filed for BK Chapter 7 two years ago and am still grateful for it, it saved my home and my car. To make a looong story short, I fell into hard times. Today I am doing very well after the chapter 7 discharge was granted and I got the fresh start. I believe that the U.S. Trustee is one that checks everything, he's one to approve or refuses to grant, his own decision is based on what he sees, proof of stuff, etc.. Leave it to U.S. Trustees and Judges. It's not for Credit Companies/Predatory Lenders to benefit at poor/middle Americans' expenses. They don't lose money anyway! It's not all about charging junks on your credit cards. BK cases aren't always about CREDIT CARDS. Anyway, I want people who needs it to have same opportunity that was given to me. I can picture U.S. streets being filled with the homeless, beggars, overcrowded debtors' prisons..if Bush/GOP get their way with this BK reform, cutting funds, destroy SS....Sad! Perhaps this reform would help to prevent the rich from profitting from BK, but it won't! It's not targeted at the rich, but right at the unfortunate, poor, elderly, sick people with no way out. Don't let this bill pass.

[conflictgirl]

46. We filed but not for the reasons you'd think

Yes, we put too much money on credit cards, for some unnecessary things. In this case, I'm referring to "unnecessary" things like appliances, car repairs and new tires for the cars. We needed those things, but we could've done better about saving money for those things in advance and I readily acknowledge that. But we always paid our bills on time even though our debt was higher than it should've been, and tried to pay above the minimum payments when we could too.

Then my spouse lost his job, was unemployed for 6 months, and the job he finally got paid half of the amount he made before. At that point, we'd already contacted our creditors and explained the situation and begged them to work with us, but to no avail. At the end of 6 months we had accumulated almost an additional $1000 just in late fees. There was no way to get out of that, especially when the job he took paid less than half of what he made before. So yes, it was our fault that we got into debt in the first place. But all the "personal responsibility" tough love in the world wouldn't have changed our ability to repay it once he got another job.

For whatever its worth, we filed two years ago and have not accumulated any new debt. We learned our lesson.

[madmark]

47. I do not understand why you think bankruptcy law should changed

because you ran up a credit card to 6k. So what. You did not file a bankruptcy. And that makes sense to me because most I people I deal with do not file BK unless their unsecured debts exceed 10k and they do make enough disposable income to payoff the principle (after first paying fees, penalties, default interest et al) within a reasonable period of time.

So I say to you what specifically about the current Bk Code do you think is not working and needs reformed?

[PA Democrat]

50. If you want to stop people from abusing credit cards

I would suggest that there are ways to do this that don't involve such draconian measures that punish the many people who are not guilty of frivolous spending, but rather are facing bankruptcy due to medical bills, job loss, or divorce.

How about teaching kids in school about the perils of credit card debt and the deceptive and greedy practices of credit card companies?

How about requiring HONEST disclosure about interest rates, penalty fees, and how long it would take to pay off your balance if you only make minimum payments? Better yet, provide this information in simple language that wouldn't require a team of contract lawyers to interpret it.

How about restricting the predatory lending practices of many lenders?

My understanding is that the current bankruptcy laws do offer lenders recourse against people who abuse credit.

Don't people see the pattern? Because of a minority of frivolous lawsuits, we must take away the rights of people who file legitimate lawsuits. Because of the minority of people who file for bankruptcy due to their own reckless spending, we must punish the majority of people facing bankruptcy due to circumstances beyond their control.

This bill doesn't address the problem of credit card abuse. It just ensures higher profits for a morally bankrupt industry.

Edited for clarification

[Mandate My Ass]

51. Yes, because of 3% - 5% of documented, demonstable abuse

95% - 97% of legitimate filers should automatically be considered deadbeats and the burden of proof shifted to them rather than to the predatory system that placed them in this position in the first place.

There is not enough lipstick in this entire world to paint this pig of a bill as "reform." Calling it "consumer protection" merely demonstrates how hypocritical this administration, as well as those beholden to this corrupt special interest. truly are.

[lonestarnot]

52. WRONG and right sort of right... What about unemployed for months

uninsured with a med emergency, what about flood, no insurance, earthquake, fires etc??????