Credit Cards, Debt, and Bankruptcy

[johnblake]

The evil credit card companies deserve some bashing. IMHO they should be more transparancy. And no matter how hard I try I can't seem to get them to stop sending me junk mail.

I'm also for personal responsibility. Having said that, the homstead exemption is a crock of ****. A 'living' exemption that applies equally to everyone makes more sense. I have no problem will a bizzilionare having to downsize to a dumpy apartment to pay for their debts and failures. One size fits all.

 

[Mr._johngalt]

Don't agree at all. There is plenty of competition in
the credit card business. No one forces you to have one
or to use it. It's called free enterprise and personal
choice. As far as the homestead exemption and
bankruptcy. That's the law. If a bazillionaire takes
advantage by buying a castle in Florida or wherever...........that is just being smart. It is neither
illegal, immoral nor fattening.

JG

 

[cute fuzzy bunny]

Politicians and diapers.
Both need to be changed.
For the same reason.

Lets put the politicians in diapers.

On their heads of course, thats where the doo-doo comes from

 

[laurence]

So let me get this straight by way of example:

I could take the credit card offers I have recieved in the last couple of months, run up $100,000 in cc debt to trade up to a monster McMansion in my neighborhood, declare bankruptcy, and come out way ahead, right? JG, you know best of all that real estate is just another investment/asset class. If someone is able to wipe the debt slate clean and keep a house they couldn't afford in the first place, that's a loophole that should be closed. Maybe a shelter equal to the median home price of the county, and then a lean on the remainder when you sell (somebody's got a better idea, I'm sure).

Disclosure: if I was in a position to take advantage of this loophole, you better believe I would! Not casting holier than thou stones by any means. But right now Florida has a nice little avenue to suck assets/tax revenue from other states. While I would like to see the feds have less power, there are some issues that have to be handled at the federal level, or else you just have a race to the bottom between the states.

 

[Mr._johngalt]

Perhaps I'm not explaining this very well. There are literally
thousands of laws that I regard as nutty and more are being passed all the time. You MUST take every advantage (legally) because you are getting screwed
right and left in many other ways. If you don't take
advantage of those laws that benefit you, you are either
clueless or live in a different world than I do. In other
words (using your example) I not only support the
"rich" buying huge homes on credit and then filing
bankruptcy, I think they are smart to do so if insolvency is staring them in the face (for any reason). You have
to protect yourself because no one out there cares
as much as you do about protecting you. As for the argument that these "loopholes" run up the costs for the rest of us.
I don't buy that either. Using credit cards is a purely
voluntary act and the business is very competitive.
If you don't like the big bad credit card companies, then
don't use their product! EOR (end of rant)

JG

 

[eridanus]

I don't buy that either. Using credit cards is a purely
voluntary act and the business is very competitive.
JG

Granting credit is a purely voluntary act. If the banks want to reduce their default rate, they should screen their applicants better. They shouldn't run to Congress to fix their poor business decisions.

 

[gayl]

Don't agree at all.  There is plenty of competition in the credit card business.  No one forces you to have one or to use it.  It's called free enterprise and personal choice...JG

Is this John Galt that I am agreeing with? Up to the homesteading part that is ....

Granting credit is a purely voluntary act. If the banks want to reduce their default rate, they should screen their applicants better. They shouldn't run to Congress to fix their poor business decisions.

Agreed ... they should screen better. However, applicants willingly fill out those forms and send them back .... and many may fudge on them just to make themselves eligible? They are not doing so under duress .... it is an active conscious decision that they should take personal responsiblity for

I have 2 cards .... one that I took all my son's debt onto with a 4.9% interest rate until paid off and one that I use each month and pay off in full so I am hardly against them. They are a useful tool IMHO if used wisely

 

[sgeeeee]

d Re: Credit Cards, Debt, and Bankruptcy

I'm all for personal responsibility, but surely that responsibility runs to the individuals who are making the credit decisions for the credit card company.

Making a decision to grant credit to someone is a business decision that credit card companies make. The fact that credit card companies were sending several offers a week to my neighbors while the bank was in the process of taking their home for lack of mortgage payments tells me that the credit card companies are not spending too much time analyzing that decision.

If I make a bad business decision and decide to invest in a company that has lied to me in their SEC findings and ultimately costs me a lot of money, no one bails me out. No one makes the corrupt executives pay me back. I made a bad business decision based on lies and it doesn't matter. I'm out.

The credit card companies already have much more protection than I do. They don't want to take any responsibility for actually reviewing credit reports before they grant another credit card because that would slow down the process and they wouldn't make as much money as they do by just giving out credit cards like candy. So they've decided that it makes more sense for them to give out credit cards to any person real or imaginary that they can find an address for. Now they've decided that if they can get some bleeding heart neo-cons to support their cause they can give away credit to everyone and not suffer any downside potential themselves. How does that help us?

 

[lets-retire]

They check your credit when you send the form back in.

One of the question when you file for banruptcy is have you purchased anything for $1000 (chpt 13) $500 (chpt 7) within the last 12 months. I don't know what the court does if you have and especially if it was attached to your exempted possessions. I think a yes answer to either of these questions makes you ineligible. The trustee works to have you not confirmed and your bankruptcy dismissed, so they look pretty hard to find anything to get it thrown out.

If it is discovered that your financial condition has drasitcally changed and you go out on a buying spree I think the trustee would bring that up and possibly try to have criminal charges brought against the plaintiff for fraud.

From what I have read/heard about the new law the only changes concern those making more than the median income for the area. So it effects those who would be concidered wealthy and not change anything for those considered poor. Funny how the liberals in Congress are against this, because it hurts the poor, but it doesn't change anything for the poor, only the rich. What they want it to hurt more for the poor also? I'm sure the evil consertives in Congress are willing to f@#$ the poor also.

 

[Hyperborea]

From what I have read/heard about the new law the only changes concern those making more than the median income for the area.  So it effects those who would be concidered wealthy and not change anything for those considered poor.  Funny how the liberals in Congress are against this, because it hurts the poor, but it doesn't change anything for the poor, only the rich.

Interesting point about this was brought up on a radio program I heard last week with the author of the Nolo Press bankruptcy books and some others. The claim was that the new law will really only directly affect the top 5 or 10% by income of the debtors. Those top income debtors though are the ones who have more access to the remaining legal dodges to avoid payment (excessive homestead exemptions, trusts, etc.). What it was claimed that the apparent real purpose of the law is to make the bankruptcy process so difficult and protracted that it will put it beyond the reach of the bottom income tier of debtors.

If it is true that it only will affect the top 5 to 10% why go to the bother of bringing in another 500 or so page bill? Why not limit the homestead exemption, exempt retirement accounts to some "reasonable" level but make them fair game for debt payment beyond that and simplify the process? Because Ken Lay and other Bush friends may have to pay their debts?

 

[Mr._johngalt]

If you Lay down with Bushes you get up with freebees

JG

 

[kz]

"Most bankruptcies are caused by medical emergencies, prolonged job loss or divorce"

I'm not going to say this is wrong because I don't know the stats on bankruptcy. I will say, however, that I don't personally know anyone who filed for bankruptcy for any reason other than they lived beyond their means.

Currently we have two friends (with families) having a financial hard time due to illnesses and prolonged time off from work. Now if it comes to a bankruptcy in either case I'm sure people will blame the high medical bills and loss of income as the culprits. But in both cases they (families) were WAY over their heads in credit card/revolving credit bills due to their lifestyles. And in both cases they can't stop buying. New furniture, new trailer to haul all the snowmobiles (that were all bought on credit), tons & tons of Christmas gifts for the kids, etc. I guess they are obsessive/compulsive spenders and they just can't change their ways. As one of the guys said to me just two days ago "It's all about the toys you know".

 

[parnass]

"Most bankruptcies are caused by medical emergencies, prolonged job loss or divorce"

I'm not going to say this is wrong because I don't know the stats on bankruptcy. I will say, however, that I don't personally know anyone who filed for bankruptcy for any reason other than they lived beyond their means. ...

Do you mean that most people who file for bankruptcy were probably living on the brink beforehand and that a medical emergency, job loss, or divorce was the event which pushed them over edge?

 

[kz]

Yes.

Although they weren't "on the brink" they were over it before the medical emergency kicked in. Now I'm hearing how they just can't handle another bill since they were already living paycheck-to-paycheck along with the use of their credit cards.

 

[gayl]

Kz, good point

 

[laurence]

You know, I had a friend that just walked away (defaulted) on some debt, didn't declare bankruptcy, just stopped paying. It fell off her credit report after a certian number of years (forget how long). Won't we just see people do that more if BK becomes too difficult to file for? Keep paying on the house and the car so you don't get forclosed/repo'ed, and give the finger to the CC companies and any other unsecured debt! (Not advocating this plan-don't have CC debt anyway).

 

[lets-retire]

When I was talking wiht my lawyer she said most people she worked with were over the brink at least 6 months before they actually file. They just thought they could pay their bills so they didn't file.

Since the majority of most peoples assets are tied up with their house the homestead is protected. Obiously this does not apply to most people here or to the wealthy. I guess I could understand a limit on some of the homestead exemption for houses over a certain limit, if the person is filing chapter 7. If htey are filing chapter 13 then they are repaying a portion of the debt amount and the credit companies are not out as much money.

 

[Martha]

What it was claimed that the apparent real purpose of the law is to make the bankruptcy process so difficult and protracted that it will put it beyond the reach of the bottom income tier of debtors.

This is exactly the objection of those in bankrutpcy practice and among trustees. Everything is being done to make it difficult to file bankruptcy. This is regardless of any perceived abuse of the system. You must go through a number of preliminary steps before you can file bankruptcy. You must supply tons of supporting paperwork which many are not good about maintaining and burdens on placed on bankruptcy lawyers which will cause some to leave the practice. Much silliness. I am very tired of laws that propose to have a particular purpose but seem only to make life difficult for everyone. This includes not only bankruptcy reform, but HIPPA for so called health care privacy, and various laws passed regarding financial privacy. Just a bunch of needlessly time consuming paperwork. Makes me want to quit practicing law. I, the good liberal, am sick of too many pointless laws.

Martha

 

[charlie]

SG, that's the first time I have ever seen "bleeding
heart" used to describe a neo-con. And Martha,
do I detect a chink in your liberal armor?

Cheers,

Charlie

 

[sgeeeee]

SG, that's the first time I have ever seen "bleeding
heart" used to describe a neo-con.  . . .

Yes, but it so applicable these days. Neo-cons are constantly singing the blues for the unfortunate wealthy and the large corporations who are only trying to do God's work but keep having to pay taxes. If we could only give them a few more tax breaks, and grant them a little more power and priviledge, everything would be better.

 

[lets-retire]

I don't mean to hijack, but Martha's comment about HIPPA is true. In my work I have been called to locate people who have not called their friend's/family in days and noe the hospitals won't/can't say if a person has been admitted.

 

[Mr._johngalt]

You know, it is quite possible to effectively "go bankrupt"
and never see a lawyer or courtroom. As was previously
pointed out, you MIGHT be able to walk away from your
unsecured debt (credit cards), or at least negotiate
a sweet "out", while keeping your car, house, etc.
I have known people who made a good living buying
up insolvent companies before they went into
bankruptcy and then they did an "out of court" Chapter 11,
also called an "assignment for the benefit of creditors".
This sort of thing requires a pretty high degree of
financial creativity, but Martha can confirm it is done all
the time.

JG

 

[deserat]

Ahhh, HIPAA - the bane of my existence right now. I'm running around trying to find out if arcane pieces of medical equipment in any way display or use patient health information and where that would be used and if that information is used in a secured area, la, la, la. Then this information will be sent to the US Gubmint to do......? Probably sell it somewhere and/or beat the vendors over the head to make it more secure which will result in higher priced devices which will result in those costs being passed onto the consumer which will result in higher insurance premiums.....all in the name of safety....supposedly. Way too much regulation in my estimation.


Sorry - just a bit sarcastic

Bridget

 

[Cut-Throat]

which will result in higher insurance premiums.....all in the name of safety....supposedly. Way too much regulation in my estimation.

You can thank the GOP - GOP President, GOP Congress, and GOP Supreme Court!

 

[Mr._johngalt]

Hello C-T. Re. too much "regulation", you don't really believe this do you?

JG