Personal Bankruptcy Filings Jump 7.8 Pct.

My Way ^ | 11/14/03 | Marcy Gordon

[Tumbleweed_Connection]

WASHINGTON (AP) - The record-setting pace of new personal bankruptcies continued in the 12 months ending Sept. 30, with their number rising 7.8 percent, according to data released Friday.

Personal bankruptcies jumped to 1,625,813 from 1,508,578 during the same period a year earlier, Administrative Office of the U.S. Courts data show.

The upward trend had been expected to continue despite signs of recovery in the economy and as effects still linger from the consumer spending binge of the 1990s. The rate of bankruptcies generally lags other economic indicators.

The bankruptcy filings "are being overwhelmingly driven by individuals with household debt," said Samuel Gerdano, executive director of the American Bankruptcy Institute, a group of bankruptcy judges, lawyers and experts. "They do reflect the buildup of heavy consumer debt."

The total number of bankruptcy filings, including both personal and business, has grown by 98 percent, to 1,661,996 in the 12-month period ending Sept. 30, from 837,797 during the same period ending Sept. 30, 1994.

However, the rate of growth in new bankruptcies slowed somewhat in the July-September period compared with the same period a year ago. "It's not surprising to see some sort of ongoing cleanup of credit problems even when the economy is on the mend," said economist Ken Mayland, president of ClearView Economics in Cleveland.

Legislation making it harder for consumers to erase their debts in bankruptcy court won speedy, overwhelming House approval in March and was endorsed by the White House. But the Senate hasn't acted and is unlikely to do so before recessing for Thanksgiving.

Proponents of the legislation say it is needed to stop abuse of the bankruptcy system by people who can afford to repay their debts. Banks, credit card companies and retailers, who have pushed for such legislation since 1997, contend that abuse creates a hidden tax of about $400 a year on every American family through higher interest rates and other charges passed on to consumers.

Consumer and civil rights groups and unions oppose the legislation, saying it is unfair to low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face mounting medical bills. Opponents blame the credit card industry for much of the rise in personal bankruptcies, saying the issuers make credit too easily available and flood consumers with solicitations to open new accounts.

[sourcery]

[arete]

Someone forgot to tell them about all the new jobs and the recovery?

Richard W.

[Black Birch]

Someone forgot to tell them about all the new jobs and the recovery

The Illinois economy has been shrinking for the last two years or so. It is still shrinking...

[KevinDavis]

The Illinois economy has been shrinking for the last two years or so. It is still shrinking...

Thanks to the high taxes the Lying Ryan passed (Blago will pass more taxes or user fees). I know that one trucking company in Illinois may leave due to high taxes.

[Black Birch]

Thanks to the high taxes the Lying Ryan passed (Blago will pass more taxes or user fees). I know that one trucking company in Illinois may leave due to high taxes.

Income taxes haven't gone up yet, but just about every other type of tax or "fee" has..

[KevinDavis]

Exactly.. I may not live in Illinois much longer..

[Starwind]

Would you both say/estimate the your state & local tax increases have exceeded or offset the Federal tax cut?

[Smoke6]

I'm sorry to disagree with the basic premis that debt resolution by bankruptcy is a function of a poor economy.

Watch television: "Get out of debt, stop creditors, stop garnishments/reposessions... call the law firm of..."

That's the primary reason: "get a free ride, tell your creditors to eff off, keep what you got and never pay for it"

I see this every day in my business... a collection agency.

My $0.02

Smoke6

[verity]

consumer spending binge

[Black Birch]

Would you both say/estimate the your state & local tax increases have exceeded or offset the Federal tax cut?

Not yet..

[GatekeeperBookman]

The newer communications & info speed changes throughout our society. I contend that folks learn they can flip the debt into the trash can. I also think the new credit ( over the last few decades ) is easier & more accepted. We are victims of a more rapid pace-in normal life & in the area of debt creation ( & disposal ). Not entirely the sign of a WEAK ECONOMY. Complex issue.

[A. Pole]

I see this every day in my business... a collection agency.

My $0.02

Private bailiff's opinion is worth only $0.02?

[A. Pole]

Banks, credit card companies and retailers, who have pushed for such legislation since 1997, contend that abuse creates a hidden tax of about $400 a year on every American family through higher interest rates and other charges passed on to consumers.

Banks, credit card companies and retailers?! Why would they care?

[Glenn]

contend that abuse creates a hidden tax of about $400 a year on every American family through higher interest rates and other charges passed on to consumers.

Do they think we are idiots? What a silly spin.

[A. Pole]

Do they think we are idiots?

Yes, of course!

[Iscool]

Collection agencies rank about 2 steps lower than car and vacuum cleaner salesmen, don't they???

[iconoclast]

"get a free ride, tell your creditors to eff off, keep what you got and never pay for it"

You're absolutely right.

The cause of the incredible number of bankruptcies is a toxic combination of instant gratification and lack of responsibility.

Divorce is also an effect of these traits and a factor in many of these bankruptcies.

[oldironsides]

I deal with buyer qualifications and pre quals for home purchases. I am no longer stunned by the enormous debt carried by the young folks. They have numerous credit cards, huge car payments and an appetite for more. They cannot buy a home because they in debt overload with high interest rates. They became credit addicted in college. The banks hook into the young set and many cannot get free.
Some of these college grads have very good jobs with good income. They just have credit overload. They cannot stop spending.

[KevinDavis]

My wife and I was in debt. We payed it off. Personally I think people declare bankrupt just to avoid paying off the bills.

[FITZ]

But even the government measures the success of the economy by consumer spending. The idea of measuring the economy by how much people are living in the black or by savings accounts seems long gone. As long as people are spending --- everything is great -- even if they're using credit cards they'll never pay off.

[FITZ]

People openly discuss their bankrupcies now --- where a couple generations ago that was considered something almost shameful. They'll brag how they got to keep all their stuff and their debts were wiped out --- and within a short time the credit card offers start coming back in the mail --- with higher interest rates --- but they don't care, they can file bankrupcy again.

I guess with all these bankrupcies, we must be seeing a decrease in the consumer debt --- so maybe that's good. Maybe everyone should declare bankrupcy and there will be no more consumer debt at all.

[Labyrinthos]

The cause of the incredible number of bankruptcies is a toxic combination of instant gratification and lack of responsibility. Divorce is also an effect of these traits and a factor in many of these bankruptcies.

Bingo. Yes, there are genuine sob stories, but I suspect that the vast majority of personal bankruptcies are the result of poor financial planning, poor judgment, lack of foresight, greed, and the need for instant gradification.

[FITZ]

Also the easy credit handed out. I know of some people --- both retired -- one in his early 50's living on disability and the other in her 70's who retired early so gets a small SS check talking about getting new cars --- because they said at 0% interest, it was like they're giving the cars away. College students who have never worked a day in their lives get credit cards. You declare bankrupcy and they'll be sending you offers of credit cards within a few months.

[ex-snook]

"Personal Bankruptcy Filings Jump 7.8 Pct. "

Another leading indicator of recovery. [sarcasm off]

[FITZ]

My wife and I was in debt. We payed it off. Personally I think people declare bankrupt just to avoid paying off the bills.

I know --- I paid off all my debts and just have my home mortgage --- but it seems almost like being a sucker when you tighten your belt, drive a 10 year old vehicle and see those who declare bankrupcy driving new cars, watching their big screen televisions, wearing the best clothes. They can get themselves $60,000 into debt, declare bankrupcy, wipe out all debt, keep everything and start all over again getting more debt to buy more luxury items.

[riri]

but it seems almost like being a sucker

It sure does, but you know what? People like us sleep better at night. We don't fight with our spouses and divorce or money issues, etc.

[FITZ]

But look how left out we feel when the reports of the great economy come out talking about increased consumer spending and we know we weren't part of it. I think it's a good time for people to get out of debt and start saving money instead of spending it.

[Mamzelle]

The banking corporations seduce a lot of uncreditworthy folks into debt, then pass the costs of deadbeats onto the rest of us. The only way to beat them at that game (and only to a certain extent, since their incompetence hurts the consumer in other ways) is to refuse to borrow money...

Since these CC concerns have booths at college campuses trying to lure the dingaling students with NO INCOME--reminds me a lot of what the tobacco companies were accused of doing with cigarettes.

[meenie]

The other side of the coin is if you are entirely debt-free you cannot get a credit card. I do have a debit card from my local bank that enables me to travel without having to take a large amount of cash. The notion that debt and credit makes a better risk than a large balance in debt-free real estate and investments is itself a measure of bankruptcy in the system. We have a system that is threatening to bankrupt itself, so don't begrudge the consumer his day in the sun. Our system just loves the creation of debt to keep the ponzi scheme going.

[riri]

I stay home with my children so in the course of doing things with them, I meet many other women. I know only one woman who will openly say how "in debt" her family is, the rest of the women I encounter profess to be debt free.

Most have larger houses than I, dress in whatever brand names are popular and have two new cars in the drive way. I know I couldn't afford their lifestyles and be debt free--and we have a fairly large income--relatively speaking.

[stylin19a]

Hey.......quit casting aspersions on a major piece of my retirment planning.

[DuncanWaring]

... contend that abuse creates a hidden tax of about $400 a year on every American family through higher interest rates and other charges passed on to consumers.

The implication here is that if they (lenders) get this legislation enacted, credit card interest rates will decrease.

I say BUNK!

[Smoke6]

I'm sure one of my reps has YOUR number... haha

Actually, a former employer put us in business after laying us off telling us they could do a better job of handling finances for our small long distance company they acquired.

Since little fish are eaten by bigger fish, they were eventually swallowed up by worldcom... speaking of bankruptcies...

Smoke6

[waterstraat]

I predicted this several months ago. I also predict further increases in the bankruptcy rate. Actually, I predict increases in the bankruptcy rate for the next several years as more and more americans lose their jobs, and as more and more high tech and factories move to asia.

Bankruptcies used to be healthy, thats why we have bankruptcy law, but if you cant start over, then bankruptcy is not doing what it is supposed to do.

[waterstraat]

There is nothing wrong with going bankrupt, if you have a chance to get a job after it is over. Lots of well respected people, Wayne Neuton, Milton Hershey(chocolate), John Sutter(gold in California), Donald Trump, Henry Ford, Tom Edison, Davy Crockett, etc went bankrupt, and they are still heros - there is no stigma to going bankrupt. If you go bankrupt, you join a very respectable group of people.

If we didnt have bankruptcy law, we would not have chocolate to eat, we would not have gold, we would not have electric lights, etc.

[iconoclast]

If we didnt have bankruptcy law, we would not have chocolate to eat, we would not have gold, we would not have electric lights, etc.

Tongue in cheek?

I have always drawn a distinction between business and personal bankruptcies.

I have been a partner in one business and owner of two others. I've never declared either kind of bankruptcy, but my experiences lead me to believe that the paths to financial collapse are quite different.

[waterstraat]

The total number of bankruptcy filings, including both personal and business, has grown by 98 percent, to 1,661,996 in the 12-month period ending Sept. 30, from 837,797 during the same period ending Sept. 30, 1994.

It was not hard to find a good paying job in 1994.

[waterstraat]

If we didnt have bankruptcy law, we would not have chocolate to eat, we would not have gold, we would not have electric lights, etc. Tongue in cheek? I have always drawn a distinction between business and personal bankruptcies.

The bankruptcies I spoke of , were personal bankruptcies. Milton Hershey, John Sutter, etc were all personal bankruptcies. There is no tongue in cheek. The fact that Milton Hershey was able to go bankrupt and start over, enabled him to start the Hershey Chocolate business, it enabled Henry Ford to start a car company, it enabled John Sutter to start a mill in California and gave us billions in gold for the american economy when we needed gold the most, it enabled Tom Edison to invent the light bulb, motion pictures, etc.

I dont take anyone seriously if they say they are against personal bankruptcies, if they continue to go see Wayne Newton in Las Vegas, if they eat Hershey chocolates, if they drive Ford cars, if they use electric lights, if they watch movies, etc.

Anyone who does those things, is a two-faced double dealing hypocrite if they still say they want our personal bankrupcy laws stregthened.

[Jerr]

It is getting just so hard to past those costs along. You can only raise your interest rates only so much before you hit the usuary law ceilings. They will just have to charge their merchants more in fees, too!!!!!

You never know when the American consumer will wake up and stop charging so much. What with those nice low minimum payments, the consumer can be in debt all of their life!!!

[iconoclast]

The bankruptcies I spoke of , were personal bankruptcies.

Uh Yeh. you're right. I forgot for a moment about reading where Henry and Thomas Alva went nuts with their Visa cards.

[waterstraat]

I forgive Tom for his financial irresponsiblity. I dont hold it against him at all, or any one else that gets into financial troubles, and I dont mind saying that I do use electric lights, which is very consistent with my views of supporting those who go bankrupt.