Skip to comments.Bankruptcy Law backfires on credit card issuers
Posted on 12/28/2005 12:43:50 AM PST by SDGOP
An unprecedented spike in filings before reform took effect in fall 2005 is chewing into lenders' bottom lines, and the subsequent lull is showing signs of being short-lived. Bankruptcy attorneys say their caseloads are starting to pick up, and credit counseling agencies -- which provide now-mandatory sessions for consumers who want to file -- say they're seeing significantly more people than they initially predicted.
All this is raising questions about whether lenders will profit as much from the new bill as they hoped.Credit card interest out of control? Find a lower rate.
It wasn't supposed to be this way. The new law contains a means test that was supposed to steer higher-income filers toward repayment plans. Lenders expected a rush of consumers trying to beat the bankruptcy deadline, but nothing like the surge that actually occurred. More than 500,000 bankruptcy cases were filed in the two weeks before the law took effect, compared with a normal weekly volume of 30,000 to 35,000. So far this year more than 2 million cases have been filed, 49% more than the same period last year and eclipsing all previous records.
(Excerpt) Read more at moneycentral.msn.com ...
I learned my lessons about credit cards. I do not care how many frequent flier miles are offered. I do not care what kind of discount I will receive. I will never ever again use a credit card. Christmas is over and I owe less than I owed before Christmas, not more. I paid for everything. That required me to make choices. Imagine that!
Credit card companies don't force people to accept cards just like Hostess doesn't force people to stuff their faces with Twinkies. You have to use good judgement and moderation with everything. Shopping is my favorite past time. But my hubby cut me off. We paid off our cards and closed the accounts. So if I don't have the money, I don't get the shoes......... shoes....shooooes..........
I think "high heating costs" can be added to that list. We just had our propane tank filled and it wasn't pretty. December was very cold here in MI (until a couple of days ago) and I don't want to think of what January and February are going to be like.
BTW: I saw the story where California is banning woodburning fireplaces. I don't know all the details, but I hope the Northeast libs don't get any stupid ideas.
I have absolutely no sympathy for the CC companies. They use every dirty trick in the book to get people tied up in debt and paying their usurious rates. Among the things that peeve me:
1) Obscene interest rates as high as 30%.
2) Over limit fees (hey, if there's a limit, why aren't you stopped from going over it?)
3) Cancelling promotional rates if a payment is a day late. Say you've run up 15K in charges or balance transfers at a promotional rate. If you're just one day late, they can impose their published rate that can go as high as 30%! I have no reason to believe that they would not post timely payments as late.
4) Arbitrary rate hikes. If your credit score goes down, they reserve the right to raise your rate! Even if you've paid your payments on time and have made no late payments on any other loans! They can still raise your rate just because you may have run up a high balance on another card. This makes it more difficult for the credit-challenged lender to pay off their balance. It does nothing to protect the CC company, since they've already extended the credit.
5) Fine print that can confuse or trick the less savvy. I.E. offering a 3% promotional rate for six months but charging a 3% transfer fee. This makes the actual rate 9%. Do the math!
Of course, the goal of these companies is to get people of limited means to run up big balances at 15 - 30% that they can't pay (and thus forcing them to borrow some more).
However, if your're smart, you can outfox them for ahwile, using balance transfers and taking advantages of miles and reward points.
People should certainly be responsible with their finances. However, I find it absurd when CC companies cry to the government while hooking high-risk borrowers into charging up big blances at usurious rates. If we're going to tighten the bankruptcy laws, I would urge imposing some reform on this industry. (i.e. a grace period on cancelling promotional rates due to late payments, maxing the APR @ say 20%, prohibiting arbitrary rate hikes due to a change in credit).
They do it.
That was and is bankruptcy fraud, which the previous law covered. Thos items would have to be returned or would be considered nondischargable.
David Graham Phillips' "Susan Lenox, Her Rise and Fall" (1908 published 1917) and Theodore Drieser's "Sister Carrie" (1900) are about women of that time that were held in scorn, well that is in the case of Phillips because the main character was a girl born out of wedlock and no one would relalycut her a break because if it, but both books, the authors from time to time sort of retreat into a "Dobie Gillis" outside person style narrative on how the lower classes had to live and get by. "Lenox..." (parts of the book almost had me in tears and would be a good antidote for any "randroids" out there) was a true eye opener for me and although some of the conditions are mitigated in today's world, many of that still exists in one for or another and I fear a lot of these economic policies along with the undoing of many reform the Progressives of 100 years ago,we could return to some sort of a world like that. I think for honorable mention, I would list Jack London, Upton Sinclair and Stephen Crane where some of their works addrss those problems too.
esther waters by george moore was of the same genre.
Much of that literature from the victorian age is a reaction to herbert spencer, then in vogue. Rand basically took a lot of herbert spencer's stuff and re-cycled it.
I have a comparison based on personal experience. When I broke my foot, while living in Communist Poland, I went to the emergency and I waited few minutes to get help. When I broke the same foot (I know, it is lame) in America, having private insurance, I had to wait couple hours.
Another difference was that in Poland the nurse diagnosed the state of bones by touch, in USA they did X-ray. The rest was exactly the same. The main problem in Poland was not long waiting time but the lack of equipment caused by the relative poverty of the country.
My brother in law said much the same thing.
The Big Money players are a lot like cattle. Once they get spooked, it is hard to define what did it to them.
I have also been hearing that the retail sales over Christmas were very bad. Many were hoping for a surge in sales during the next week. Not a good sign.
There's definitely something in the air...
Un-freakin-believable. She musta been totally out of her freakin' mind.
I only got health insurance at the beginning of this month, I couldn't afford it since September, 2000. For many people, the bankruptcy laws ARE their health insurance.
I understand that. I would've had a dental appointment today, except that even at 40% off their regular price (this office has a sliding scale for people with less income, 40% off is as low as they go) we still can't afford for me to go to the dentist unless I'm in pain. Can't afford it even then, but some things you simply have to do.
I'll wager it eventually got his attention.
Talk about a streak of incredibly bad luck. Neither my girlfriend or her father saw their medical problems coming. He was physically fit one week - then bam! - he's suddenly in the hospital and undergoing surgery. She was dealing with back pain for a few weeks, thought it was a pulled muscle until the pain persisted, only to find out she's riddled with cancer. And both of them drained their resources before all of this helping the brother, his wife, and their young daughter hold onto their house. The brother wasn't a slacker, either. He took a contract half-way across the country, and spent 6 months away from his family, to pay the bills in the hopes of that work leading to more work. Unfortunately, when the contract ended, so did the leads. He's worked several low-pay jobs just to bring in some kind of money while he looks for other work, and his wife started her own landscaping business to put food on the table. As it is, they will probably have to sell their house - they were hoping to hang onto it for their daughter's sake, and renting is just as expensive as their mortgage payment right now.
I pray for them, as they have been great neighbors, wonderful friends, always ready to help someone out in their time of need.
Not all the folks that declare bankruptcy are slackers, or didn't prepare for a rainy day, as some other posters have suggested. These folks got hit by a hurricane, and my girlfriend hasn't seen the half of it yet.
This is the exact type of situation in which bankruptcy is legitimate.
However, it is the exception.
To me, the key to your post is your comment that you had lived very frugally and saved money for a rainy day. Despite that, life threw you some curve balls. You tried to roll with the punches and, after exhausting everything, you finally took bankruptcy.
You led your life MUCH differently than the people in the post whose "whole lives" were described as "emergencies."
I, for one, admire you for landing on your feet after what you have been through.
I just don't think that all that many bankruptcies, however, are based on such legitimate circumstances.
I have also been hearing that the retail sales over Christmas were very bad. Many were hoping for a surge in sales during the next week. Not a good sign.
You heard wrong. Sales were exceptionally strong. The stats are in and this holiday season was a great success for most businesses. Of course, there are a few here and there that didn't do well, but that could be because of bad management. All of the business shows on TV, such as Cavuto, Forbes on Fox, etc. have been saying how well the sales did this season. Don't know where you heard sales were bad. You must be watching too much CNN or MSNBC. Stop it.
Dude, get a grip. Feminists make women feel smart and empowered if they hold a gun to men's heads. You know about that.
But it's a ploy from the state and a conniving market to get money from men through women. The market plays them too.
This law could be a hidden blessing in that if more people are forced to balance their books, those same people will demand government to balances it's books.
This really makes me burn, because bankruptcy is supposed to be the last possible source of help when life unravels around you, through no fault of your own.
When I found out I was pregnant with my daughter, I knew (based on the trouble I had carrying my son) that I would have to give up my high-stress, long hours job and take something part-time. My husband and I examined our finances and, after conferring with his insurance company about our medical benefits, I took a job making roughly $40K LESS (still bringing in some money, but no where near what I had been making). We used up our savings to supplement my income. As it was, I still wound up hemmoraghing in my 31st week.
The NICU bills totaled $67K. Before I made the switch to the part-time job, the insurance company told me one thing - after the bills started rolling in, they changed their tune completely (God, I wish I had taped that conversation!). My credit card went from $2K to $10K in the span of just a few days with medical bills. We busted open 2 of our 4 nest eggs to pay off the rest.
My recovery was protracted, and my daughter's health was so fragile we didn't want her in a day care situation, so I remained working part-time. Every month, like clockwork, she was back in the hospital. This went on for a year. More medical bills, not enough income, savings depleted, buying diapers with the credit card. Those were dark days, indeed, and I questioned whether we would have to bust open our two big nest eggs just to survive. Those nest eggs were "we're going to lose the house" money, the untouchable rainy day fund.
It's been three tough years, we're still paying off the debt, but we're getting by. I'm at a great job now (still part-time, just had our last baby), and our nest eggs have grown (plus we have two more small ones started). We refinanced our house and cut the life of the loan, so our equity is building much faster. Our exceptional credit rating, and our pride, is still intact.
We never considered bankruptcy, but for a long time we were just one disaster away from it.
Puuuuhhhlleeezzzeee. My wife became disabled after a car accident. Previously we had been putting away 10% in retirement/investments and had no credit cards bills.
Replacing her income on my own AND paying the unbelievable medical bills (copays etc) has simply been impossible.
I took a second job, we moved to a smaller home, I drive an 8 year old car. The ends still don't meet. I'll NEVER file bankruptcy but I'll bet alot of people in our situation would.
You holier than thou folks should walk in my shoes for awhile.
I'm sorry you took my comments personally.
If you read our discussion again, you will see that we allowed for circumstances like yours...and were very sympathetic.
Our comments were aimed at the report that implied over half of bankruptcies are due to medical bills. I'd bet the vast majority of them were not like you (i.e. admirable and responsible). Most of them were probably saddled with high debt before the "rainy day" set in.
We never implied that ALL situations fit that description. I hope good fortune comes your way to help alleviate the burden. I have all the respect in the world for someone working so hard to pay their bills. Good luck to you.
You may be right. I'm beginning to hear more sympathy for the idea. Or maybe some kind of socialized system for the catastrophic expenses and private care for the rest.
Wow, what an inspirational story. I admire you so much.
It's one of the great ironies of most give-away programs that those who most legitimately need help often figure out a way to help themselves, as hard as that may be, while abusers actively game the system.
Here's this angel's picture:
I didn't realize that King Hussein lived to the age of 531,872. Thanks for the clarification on this single example that influenced an entire nation's life expectancy.
You have completely lost me. What feminist advocates holding guns to men's heads?
(BTW, I'm a girl, not a dude.)
It's no accident that the list A.Pole showed in his post started at #6, and only included four countries among the top 20 in life expectancy. That's because these rankings are disproportionately weighted toward smaller countries where the populations are so low that they are really statistical anomalies -- like #1 Andorra (pop. 70,000), #2 Macau (450,000), #3 San Marino (29,000), #10 Guernsey (65,000), #13 Cayman Islands (44,000), #15 Gibraltar (28,000), #17 Monaco (32,000), and #18 Liechtenstein (34,000).
I also speculate that a lot of these figures from underdeveloped countries are misleading or even completely fabricated -- for a number of reasons. Jordan, for example, shows a higher life expectancy than the U.S. even though its infant mortality rate is nearly three times higher than ours. And 70% of its population is comprised of Palestinians who don't even consider themselves Jordanians anyway -- so I wonder if their statistics are included in Jordan's overall figures.
The basic premise of any insurance policy is the transfer of risk from one person to another (or to a group of people). If I am concerned about wrecking my car, I buy an insurance policy on the car and pay my insurance company to agree to pay the costs of repair in the event I get in an accident. Insurance companies make money by accumulating a large pool of clients, and essentially making the very good bet that the number of times they actually have to pay for repairs is very small in comparison to the total number of policies they have on their books. In other words, the risk of a single driver getting into an accident (or the cost to the individual driver) may be substantial, but the risk of more than, say, 1% of the drivers in a large group getting into an accident in any given year is actually small.
The key, of course, is that most forms of insurance "work" for society as a whole because the nature of these insurance policies is such that the frequency of claims for any individual policy holder is very low. Many property owners will insure their homes, for example, despite knowing that there is a 99% chance that they will live there for 40 or more years without filing a single claim.
Health insurance is the exact opposite, for it is the one type of insurance where everyone involved in the process (policy holders and insurance companies alike) know from Day 1 that claims are going to be filed with such boring regularity that it makes almost no sense to even call it "insurance" anymore. If you filed three or four claims every year on your auto insurance, then your insurance company would either dump you as a customer or decide that it's cheaper to buy you a car and hire a driver to get you around. But somehow we have such an entitlement-based mentality about medical insurance that we are appalled by the notion that an insurance company just might not want to do business with you.
Some other fatal flaws with medical insurance are as follows:
1. Insurance claims don't adhere to typical economic principles of supply and demand because there are three parties to every transaction, not two. This is not a serious problem with something like life insurance because there is a finality about death that makes the claims process and the aftermath much more clear, but for health and property/casualty insurance it introduces a potential flaw that often rears its ugly head. If I crash my car and file a claim, we have three parties to the transaction who operate under conditions that do not apply to a "pure" economic transaction . . . 1) I have already paid for the insurance, so I really don't care how much it costs to fix the car -- I want the best parts, best service, etc.; 2) the insurance company doesn't have to drive the car around, so it doesn't really care about the quality of the repair and is perfectly willing to accept something that is sub-standard by my standards; and 3) the body shop is dealing with two "customers" who have two different goals in mind in the transaction. This three-way dilemma also applies to medical insurance, and is why the problems you perceive in medical insurance are almost identical to the problems many states have encountered in auto insurance (Massachusetts and New Jersey are good examples of this).
2. Medical insurance is the only type of insurance that is pretty much an open-ended financial commitment on the part of the insurance company. In agreeing to pay your medical bills, an insurance company has no control over how complex medical procedures get over time, and how advanced technology becomes. So they always find themselves spending more and more money on what is "normal care" -- because the definition of "normal care" is always changing (upward, of course) and getting more expensive over time. Imagine how expensive your auto insurance would be if you drove a $10,000 sub-compact car but had the ability to have it replaced by a $200,000 Rolls Royce in the event of a major collision. That's basically the way medical insurance works.
3. All insurance carries what is called a "moral hazard," which means that people with insurance policies will tend to behave in certain ways simply because they know that the insurance is there to protect them. A person with a brand-new car is likely to be a far more careful driver if he has no collision insurance, and a person with no medical insurance of any kind (even government-funded care) is more likely to keep himself in relatively good health (I'll leave hereditary/genetic conditions aside, since they aren't relevant to this point). It is no coincidence that the incidence of almost every physical and mental pathology has risen dramatically since people have been covered by medical insurance plans of one kind or another.
Well I'm sure others will want to feel a bit guiltier than you in "not understanding" what I say and may actualy get it. It's all on the heart. If your heart is guilty about so many other things, I don't blame you.
that said, another story:
man goes for security clearance interview. man is asked if he has undue debts or relationships which would make him a security risk. man says his wife overspends. Interviewer replies that wife overspending is not considered a security risk.
Thus, as you see, feminists also hold a gun to the security clearance process. It's not a lie apparently if you hide that you are a security risk! Quite the contrary, it is quite an encouragement. In light of gay marriage, and other "civil rights" issues, you can see what it means in terms of bribing potential.
You're making very little sense, and I don't feel guilty at all for not being able to ferret out your meaning from your cryptic posts.
So why is all this the fault of the credit card companies and the feminists? Why not pin the blame where it belongs, on irresponsible and easily led individuals?
The whole thing has to do with guilt/gun for socialism (feminism is an -ism, a selective social control guilt organ working for the government). It has to do with how taxes for "social justice" are raised at the local level, through greedy courthouses who want their own welfare by finding guilty verdicts. Business want their own organized theft-rights too, just as they do, and they encourage woman and children nagging. They all work in concert toward the source, the courageous moral men and women who work and pay taxes.
It is no secret that socialism holds a gun and great guilts to our heads if we do not pay taxes nor give to "charities", lest be called a deadbeat citizen or dad ("coz they spend more suing than supposedly supporting children or others through taxes", notwithstanding it is perfectly ok for the other side to use tax money to use judicial expenses and not direct handouts in order to carry out "support" in full blown unrestrained overrepresentative conflict of interest).
Feminism is just another term for another socialist collective organized devil-marked like group. They have their sway and their guns indeed to taxpayers' heads. That said, feminism is much more powerful at the local confederate agitation level.
I suppose the Federal will one day have to take control of such funds for its own sake of the situation. Meanwhile the courts will keep using guilts localy in order to extract taxes and confessions and concessions from people working and producing, and all that will happen through the feminist guilt agenda producing incredible amounts of very real pogroms (and human rights violation in the name of such, ironicaly).
To be fair, that goes both ways. When 18 year olds get DAILY credit card applications in the mail, enticing them to sign up for every card under the sun, (like drugs) making it as easy as possible to spend. They should expect to get hammered, knowing damn well half these young people are NOT wise to this trap, and at 18 or 21 years old, are not responsible enough to handle credit cards.
In many cases the credit card dealers got what they asked for.
I know you don't feel guilty at all not understanding. It's what I just said. But for those that do, let them find out, and for those that understand, don't disparage them. I am one of them and there are others.
Exactly. My 18 year old gets DAILY applications/enticements in the mail, nearly EVERYDAY of the year.
The credit card dealers got what they asked for.
Your talking to one of the above providers.
boutique or HMO?
Besides Tony Soprano doesn't juice the users any worse.
The danger is the abuse and costs this type of system would develop.
Of course if you claim to only speak Spainish, we have an excellent system now!
You should contact the State Insurance regulator about the screw job you received. It may be able to help get your money back. Publicize its failure too.
Compared to the costs we have now? Or Medicare fraud and abuse? Medicare is socialized medicine for the elderly.
I dont think it can get any worse than what weve got now - potential bankruptcy for folks with catastrophic illness. The Europeans spend less per person with their system than we do.
The real problem we have is the astronomical expense. If we can get that down, then discussion of a socialized system becomes moot.
Describes my current apparel perfectly. In fact, just finished re-ironing a patch (we are Thrifty with a capital T).
Yes, call it boutique medicine or what you like, but for those of us not carryin medical insurance and needing to see a doctor they are a blessing. All cash payments mean lower prices for the patient in many cases. At least that has been my experience and doctors who take the time to listen to you. In my case the ER doctor diagnosed me with TIA, ordered several CAT scans (one, if I had been coherent would've refused it was of my abdomen for a benign fibroid tumor)blood work, started IV's etc. Top if off, if it had been a stroke...never gave me the meds to stop a stroke. Later the catastrophic insurance I was carrying refused to pay. Chaching to a $5000 bill!
Follow it all up with my Cash accepting doctor who listens to the story of that night...it was not a TIA. It turned out to be a nocturnal seizure. Why was I unable to control the ER tests...I was postictal and the ER doc. missed it...big time. DX is I am part of the 20% of the epileptic population that suffers with nocturnal epilepsy. Ding! Ding! To the doctor for under $500 bucks for making the right diagnosis. Help me revamp my nutrition to support and calm the brain. That my friend decreased the amount of meds. needed to control the nocturnal seizures. And has resulted in me being able to keep my license, thereby remain working for income.
The point is somewhere there is a huge flaw in the system. Be it the hospital or insurance or bankruptcy, but something needs to give for those of us stuck in the middle right now. Who were all those specialist that night in the ER? Thank God for a few good doctors who say the *blank* with the insurance companies, charge reasonable rates, and know their patients. Yes, two teirs of medicine are developing. Boutique or HMO? So far, I'll take my boutique doctor who has the time to take care of me.
Naw. Just people trying to milk the system while they still have a chance.