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Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 06:10 AM   #1
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Credit Cards, Debt, and Bankruptcy

http://www.washingtonpost.com/wp-dyn...3Demail&sub=AR

Congress is debating a bill to make it harder to declare bankruptcy.

Partial quote of the article. QUOTE: Punitive charges -- penalty fees and sharply higher interest rates after a payment is late -- compound the problems of many financially strapped consumers, sometimes making it impossible for them to dig their way out of debt and pushing them into bankruptcy.

The Senate is to vote as soon as this week on a bill that would make it harder for individuals to wipe out debt through bankruptcy. The Senate last week voted down several amendments intended to curb excessive fees and other practices that critics of the industry say are abusive. House leaders say they will act soon after that, and President Bush has said he supports the bill.

Bankruptcy experts say that too often, by the time an individual has filed for bankruptcy or is hauled into court by creditors, he or she has repaid an amount equal to their original credit card debt plus double-digit interest, but still owes hundreds or thousands of dollars because of penalties.

"How is it that the person who wants to do right ends up so worse off?" Cleveland Municipal Judge Robert J. Triozzi said last fall when he ruled against Discover in the company's breach-of-contract suit against another struggling credit cardholder, Ruth M. Owens.

Owens tried for six years to pay off a $1,900 balance on her Discover card, sending the credit company a total of $3,492 in monthly payments from 1997 to 2003. Yet her balance grew to $5,564.28, even though, like Hosseini, she never used the card to buy anything more. Of that total, over-limit penalty fees alone were $1,158.

Triozzi denied Discover's claim, calling its attempt to collect more money from Owens "unconscionable."

The bankruptcy measure now being debated in Congress has been sought for nearly eight years by the credit card industry. Twice in that time, versions of it have passed both the House and Senate. Once, President Bill Clinton refused to sign it, saying it was unfair, and once the House reversed its vote after Democrats attached an amendment that would prevent individuals such as anti-abortion protesters from using bankruptcy as a shield against court-imposed fines.
UNQUOTE

What do y'all think about this? I think the credit card penalties are too stiff, OTOH I know people who just keep spending and spending with no intention to pay. They love to live "high on the hog" and LBYM is unknown to them.

I use a credit card for two reasons, conveinence and airline miles. I pay off the card monthly, incurring no fees. Seems sensible to me.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 06:23 AM   #2
 
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Re: Credit Cards, Debt, and Bankruptcy

I am firmly on the side of the credit card companies.
If you don't like 'em, don't use 'em. The same goes for
any other service where there is competition. And, if
you get in trouble, don't whine and blame the big bad
credit card company.

JG
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 06:38 AM   #3
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Re: Credit Cards, Debt, and Bankruptcy

I think the bill is a really bad idea. Most bankruptcies are caused by medical emergencies, prolonged job loss, or divorce. Do we really need to punish these people any more than they already have been?
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 08:15 AM   #4
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Re: Credit Cards, Debt, and Bankruptcy

Quote:
What do y'all think about this? *I think the credit card penalties are too stiff, OTOH I know people who just keep spending and spending with no intention to pay. *They love to live "high on the hog" and LBYM is unknown to them.
There's a good look at the credit card industry done by Frontline detailing the history of how they set up to skirt the usury laws. You can watch the show here - http://www.pbs.org/wgbh/pages/frontline/shows/credit/
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 10:03 AM   #5
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Re: Credit Cards, Debt, and Bankruptcy

Quote:
I am firmly on the side of the credit card companies.
If you don't like 'em, don't use 'em. *The same goes for
any other service where there is competition. *And, if
you get in trouble, don't whine and blame the big bad
credit card company.

JG
Try renting a car, ordering something online or making a reservation without a credit card.

Yes, bankruptcy should not be a "get out of debt" free card, but the credit industry shouldn't be given a free pass either. When you give a credit card to someone already swimming in debt, you shouldn't be allowed to collect if they go belly up. The credit card companies charge a "higher rate" for their "incresed risk" for the credit "undesireables" - but they are not taking a credit risk if they can force people to pay them back.

When a company can change it's rates, limits and fees at will, the consumer is in a no-win situation. You want to make people unable to get out of their debts? How about not allowing credit card companies to change the terms of a credit card after they have issued one. If someone's credit situation changes where a bank feels they are no longer worthy of the interest of limit the originally granted, cancel the card and give people 60 days to repay the balance. If people were aware that within 60 days they might have to come up with the entire balance, they might not let the balances get so out of control. And if they do, well then, they do get what they deserve.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 12:14 PM   #6
 
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Re: Credit Cards, Debt, and Bankruptcy

Hello Cal! I am not persuaded. Consumers have a
bazzilion choices for credit/financing/mortgages/ etc.
If you can't pay your debts, you should not be making
motel reservations or airline reservations or renting cars.
I have no sympathy for the "Oh poor me!" whiners.

The big bad credit card companies are an easy target
IMHO.

JG
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 05:04 PM   #7
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Re: Credit Cards, Debt, and Bankruptcy

Bankruptcy judges, lawyers and trustees in general do not support the so called bankruptcy reform legislation as proposed. I think many of us agree with the basic proposition that if people have the ability to pay all or a portion of their debts it is reasonable to require them to do so. However, the bill does many things that seem to be put in place simply to make it more difficult to file bankruptcy, no matter how bad a person's financial circumstances.

For example, debtor's lawyers are held responsible not only for the factual accuracy of the pleadings they prepare, but also for the accuracy of the tax returns, financial statements and other materials prepared by the debtor or others, which the debtor is required to submit with the bankruptcy petition. How is the lawyer supposed to know if those documents are accurate? This is downright bizzare.

Debtors have to submit a s**t load of documents with their petitions, including several years of tax returns. I know most of the readers here may be organized enough to have these documents, but many debtors simply don't have the documents required to be filed. And there really isn't a purpose for those documents.

On the "means" test--is there enough income to pay a portion of the debtor's bills-- actual expenses are not used, but a standard set of expenses without regard to reality, based on IRS standards for offers in compromise.

There is more and much makes no sense.

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Re: Credit Cards, Debt, and Bankruptcy
Old 03-06-2005, 05:21 PM   #8
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Re: Credit Cards, Debt, and Bankruptcy

Here is one for the TH book on statistics. There was a Harvard study about medical issues and bankruptcy. The study abstract says:

"In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs average $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick."

The conservatives say that it is a myth that bankruptcies are often caused by medical problems and site their own review through the US Trustee's office of bankruptcy petitions which showed 78% of bankruptcy petitions show medical debt of less that $5000.

My experience tells me that the US Trustee's review tells only part of the story. First of all, there are plenty of people that have so little that garnishment of wages resulting from a $5000 medical bill can send them into bankruptcy. Also, even if medical bills are paid by insurance, the medical problems can mean loss of time from work that might not be paid or even the loss of a job. Also, people live on such tight budgets that the slightest little slip can mean a bankruptcy.

Martha

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Re: Credit Cards, Debt, and Bankruptcy
Old 03-07-2005, 04:06 AM   #9
 
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Re: Credit Cards, Debt, and Bankruptcy

I firmly believe in socialized med. in this country, This is an area that people like rush are way off on, when some in this country say you have no right to med. care. I say BULL SHI!, You know one other thing, how come when someone is ill, and they cant afford to pay for medical attention, the fund drives for money always comes from the working people in the area. I never see a DR. on TV saying, "I will donate my expertise to help this person, because they need my help and can not afford to pay for it." No way the stupid asses are on a golf course swatting little white balls. as their bmw's are being waxed,
We need socialized med. in this country.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-07-2005, 05:12 AM   #10
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Re: Credit Cards, Debt, and Bankruptcy

I admit I have a credit card but have never had a problem with one. I don't pay anything past the due date and thus avoid finance charges. The problem with a lot of people is that they have no business with one in the first place. These are the ones that are impulse buyers and find it easy to go ahead and make that purchase. Its harder to let go of cash on the same items. Not sure if tougher bankruptcy laws will help this situation though. :-/
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-07-2005, 08:22 AM   #11
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Re: Credit Cards, Debt, and Bankruptcy

The Gov't is good at one thing protecting this country. Everything else the have screwed up. If you think socialized medicine is good look at the military medical system. They have numerous complaints of b/s illnesses just because the hospital is there. The military leaders slowed this down by giving family members a medical insurance plan that costs nothing for the members but has a small co-pay. Another place to look is the VA those doctors are very scary. I'd rather sew myself up on the kitchen table than visit one of those people again.

As far as bankruptcies go, chapter 7 is very liberal and chapter 13 at least requires repayment of some of the debts. The only thing that determines chapter 13 or 7 is the amount of assets. If a plaintiff has a source of income they should be made to repay a portion of their debts.

I have filed banruptcy. By the time we had realized there was a problem we tried to get help but creditors said to bad so sad, oh and by the way your intrest rate just went up. Went to credit counciling their resopnse was sorry you haven't made a payment more than 30 days late we can't help. When we did have a late payment over 30 days they said sorry your debts are too high we can't help, here's a list of bankruptcy lawyers. The credit company response just prior to filing, sorry we still can't help you, oh and here's another rate increase. Yes it was our fault.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-10-2005, 06:51 AM   #12
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Re: Credit Cards, Debt, and Bankruptcy

I came here today looking for a place to whine mostly about myself. This looks like a good thread in which to do it.

I've said a few times before that I dislike credit cards and avoid 0% offers because I have a history of paying late even when I had the money.

Well, I did it again. First time since being in the black (not including retirement savings). I missed a payment yesterday and got hit with a $35 late fee on a 0% deal that I have the cash to pay off completely right now. I was going to pay it online a couple of weeks ago but couldn't remember my username/password. I went out of town for a few days. I thought about it a couple of times after that at work but didn't have my account info there. This morning I finally paid it, but one day too late. (Well, three days too late since it takes a couple of days to process the payment.) This is especially ironic since I just got my credit reports a couple of days ago.

I know it's all my fault. $35 is still too high. I'm debating again whether to pay it now or pay it out over the remaining 16 months of 0%--well, 0% plus $35.

This card doesn't have auto-pay, but I could set up an auto-check through my banking. Or I could just pay it off today. I'll choose one or the other after I finish grousing about the late fee.

Anyway, back to the topic, I don't really know enough about the bankruptcy laws to have a strong opinion, but I haven't heard a good reason for them to be changed. I see what JG is saying, but I think usury laws are too loose--especially in Delaware where Discover is based--and credit cards charge fees that are too high.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-10-2005, 07:18 AM   #13
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Re: Credit Cards, Debt, and Bankruptcy

I have known three people to file for bankruptcy. One for medical reasons, one becaue they didn't know how to handle money, thought they could always make more money and got in over their heads, and one who deliberately lived above his means, and filed every seven years (scumbag). There is a problem, but this solution has flaws. There should be clear exceptions for medical and disability bankruptcy requests with spelled out criterea. The fact that lawmakers wouldn't include something like that shows they know there are more of these than they are admitting to. Looking at this new law more closely, I believe it only affects those whose income is above the median for their area/community, I think that will help prevent too many "little people" getting squished under the tires.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-10-2005, 07:57 AM   #14
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Re: Credit Cards, Debt, and Bankruptcy

Quote:
Well, I did it again. First time since being in the black (not including retirement savings). I missed a payment yesterday and got hit with a $35 late fee on a 0% deal that I have the cash to pay off completely right now.
I know it's kind of low-tech but the best solution I've found for making sure that the bills are paid on time is a big paper calendar hanging in the kitchen (mine attaches to the fridge with magnets). When the bill comes in and is opened the due date is written on the front of the envelope and then the envelope with the bill inside is put into one of those vertical paper sorters in date order. That same due date is written on the calendar and if it occurs very early on the month some indication is made on the previous month's calendar page.

I started doing this when I was 20-something working long hours, partying hard, and forgetting if I had a bill due. I would miss some of them on a semi-regular basis. Since then I've never missed one.

Quote:
I think usury laws are too loose--especially in Delaware where Discover is based--and credit cards charge fees that are too high.
If you watch the Frontline show that I posted above you'll see how the credit card companies worked to get the usury laws relaxed in Delaware and Nebraska and then were able to get rulings that it was the laws in the state of the credit card company (or at least the shell office they set up in a state) that ruled the transaction and not the laws of the state of the card holder.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-10-2005, 09:01 AM   #15
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Re: Credit Cards, Debt, and Bankruptcy

Quote:
Well, I did it again. First time since being in the black (not including retirement savings). I missed a payment yesterday and got hit with a $35 late fee on a 0% deal that I have the cash to pay off completely right now.
BMJ, why don't you open up a free checking account with free bill payments. When you receive your bill(s), you can schedule the payment in advance. You even get some interest since your checking account is debited on the day the money is paid.

No mailing, no postage, no worries (mate). Sounds like a commercial for Ron Popeil.

I currently use Bank of Internet, 2.25%, minimum $.01, free checks, postage free enveopes, and the free bill payment. I have attached both ING & Emigrant to BOI for easy transfer in & out.

http://www.bankofinternet.com/


MJ
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-10-2005, 10:23 AM   #16
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Re: Credit Cards, Debt, and Bankruptcy

Quote:
I know it's kind of low-tech but the best solution I've found for making sure that the bills are paid on time is a big paper calendar hanging in the kitchen (mine attaches to the fridge with magnets). When the bill comes in and is opened the due date is written on the front of the envelope and then the envelope with the bill inside is put into one of those vertical paper sorters in date order. That same due date is written on the calendar and if it occurs very early on the month some indication is made on the previous month's calendar page.
They neglected to send the first bill, but I think I had one in time for this last payment. I'm not usually persistent with keeping any form of organization, although a designated place to put unpaid bills might work for me. I know about when all my bills are due, but I just neglect to get around to paying them. Then again, this and rent are the only bills I have left that aren't set up to auto-pay. Rent I somehow remember....

Quote:
BMJ, why don't you open up a free checking account with free bill payments. When you receive your bill(s), you can schedule the payment in advance. You even get some interest since your checking account is debited on the day the money is paid.
See, the thing is I already have online bill pay, and I had the credit card set up so I could have them take money out of my account (on demand, not scheduled monthly). My problem is I never get around to doing it even though I have the money, everything is set up and it would take maybe two minutes using either method--if I had to boot up the PC first.


I know I must sound crazy, but for me I think it's easier to avoid situations where I have to remember to pay. I should either pay cash or set up the auto-payments at the same time I set up the periodic bill. I go through periods of taking care of everything promptly, but then I go through periods of a month or more not thinking about money, and that's when I get dinged. Just a quirk of my personality I guess. Or lazy or procrastinator if you prefer.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-10-2005, 06:11 PM   #17
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Re: Credit Cards, Debt, and Bankruptcy

Quote:

I know it's all my fault. $35 is still too high. I'm debating again whether to pay it now or pay it out over the remaining 16 months of 0%--well, 0% plus $35.

Don't want to make your day any worse, but you might want to check the fine print on your agreement. I've heard of companies that jack up the interest rate after a late payment.
I feel your pain though ... I paid no attention to the credit limit on one of my cards (which was rather low) and overshot it with a couple of big purchases. Got nailed with a $35 overlimit fee.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-12-2005, 04:47 AM   #18
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Re: Credit Cards, Debt, and Bankruptcy

Senate passed the bankruptcy "reform" bill this week. We will see what the house does. Attempts to amend were rejected. After nine years of talk, most certainly a bill is going to pass.
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-12-2005, 09:01 AM   #19
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Re: Credit Cards, Debt, and Bankruptcy

"Most certainly a bill is going to pass", perhaps the
scariest words ever to fall on the ears of an American citizen. If I had to choose between another Bin Laden
attack, an IRS superaudit, bypass surgery, amoebic dysentery, the black plague, or a "bill passing", well, I am just not sure........................

JG
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Re: Credit Cards, Debt, and Bankruptcy
Old 03-12-2005, 02:41 PM   #20
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Re: Credit Cards, Debt, and Bankruptcy

I read about the bankruptcy act "reform" as well. Does seem that it is going to pass. I heard that the "reform" did not touch the state allowed homestead exemption. This allows each state to set the homestead exemption limit. In some states its unlimited. So an individual can sell assets, move to Florida (which allows the unlimited exemption), put all of those assets into a new home (yes could be worth well into the millions) and then file, and keep the house.
I hope that I am wrong and this abuse has been closed or prevented. Just don't have a great deal of confidence in "reform".
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