Skip to comments.Bankruptcy: Reasons stay the same, but number of filings have nearly doubled in 10 years
Posted on 02/09/2003 8:55:56 AM PST by RCW2001Edited on 05/07/2004 7:33:59 PM PDT by Jim Robinson. [history]
About one of every 240 Montanans turned to bankruptcy last year as a life preserver of sorts -- the only thing keeping them from drowning in a sea of debt.
Bankruptcy filings in the Treasure State totaled 3,779 in 2002, just 73 shy of the record-breaking number in 2001.
(Excerpt) Read more at greatfallstribune.com ...
In the last few years, I've seen a few of my neighbors who have 7-Eleven-type jobs having big screen TVs and new furniture delivered to the house. Credit cards are a means to instant gratification but can really bite you later.
My advice to all those with credit card or even home equity debt is to get out from under it as quick as you can. It will be the best thing you ever do for yourself. Words cannot describe the feeling of being (other than the primary mortgage) debt-free.
Of course, you still need to manage your money and live not at your means but below your means. Living below your means is the only sure-fire way to get ahead in America. My wife and I put away the money we used to spend on car payments, credit card payments and home equity line payments. As a result, we have ready cash for all of life's "little" emergencies that most people go into debt to cover.
I know people who have enviable incomes but they are in debt up to their ears. If they ever missed a paycheck or two, they'd be facing a financial disaster. That's not living affluently, that living in slavery!
I should probably rephrase that. What I really meant is that credit has gotten easier to get for people who choose to be irresponsible with it (emphasis on people who are irresponsible). It's a lot easier for them to dig themselves a hole now.
The problem is the nature of our money. Our money is credit. Stop extending credit and there will be less (or no) money. Less money means fewer purchases of non essential goods. Fewer purchases of non essential goods means fewer jobs. Fewer jobs means higher permanent unemployment. Higher permanent unmeployment means higher welfare. Higher welfare means higher taxes to pay for it. Higher taxes means less money to purchase non essential goods. Fewer purchases means fewer jobs.
And that's not even thinking about things like interest and principle payments on the national debt.
You are right. Credit cards were once not so easily obtained. You had to have impeccable credit. As well, it was not customary to "carry debt" from month to month. Most people paid the bill off each month. In fact, many credit card companies (such as American Express) mandated it. People didn't see credit cards as a device to obtain good and services they didn't have the money for. They saw credit cards as a convenient way to pay for things so that they didn't have to carry lots of cash around with them all the time.
As recently as the 1970s, having a credit card was a badge of honor. Flashing a credit card announced to the world that you had arrived as a responsible and credit-worthy citizen. After all, credit cards weren't issued to just anybody.
Somewhere along the way, the credit card companies realized that they could make much, much more money by encouraging their customers to "carry over" balances so that interest could be charged. Even American Express now allows their customers to carry over balances. They lure you in with a "low, low rate" so that they can jack it up the first time you are late with a payment (or when they think you aren't noticing).
All of that is well and good. But it's time that the credit card companies were made to assume some responsibility for issuing "easy credit" to the financially clueless and irresponsible. Most of the people declaring bankruptcy should never have had a credit card in the first place. BTW, I'm not making excuses for those who don't pay their debts. I'm just saying that I don't want to see these credit card companies bailed out for making high-risk loans.
I had a summer job in the collection department at a bank 20+ years ago. I was surprised at the number of influential people that had trouble paying their bills.
I have a family member who declared bankruptcy about 10 years ago. Always had the best clothes, fancy car and extravagant lifestyle. Within a few years, he was back to his old lifestyle again, running up as much debt as he can. Now his kids are coming close to college age and due to his lack of financial assets, he will probably qualify for financial aid to put his kids through college.
Meanwhile, I'm trying to figure out how to get my kids through college without wiping out my life's savings. Due to the fact that I lived responsibly and was able to put money aside, I will not qualify for any student aid for my kids whatsoever.
Makes you wonder whether you and I are the real suckers, don't it?
This reminds me of something else. I knew two brothers up in WV, one is dead now. They both suffered from a low IQ. They were sent a check every month from the state, being disabled and all. They used their checks to buy four wheelers, rifles, and whatever their little pea-pickin' hearts desired. They lived with Momma and had no bills. I have often wondered, while slogging it out day in and day out, whether their life of gadding about was superior to my life of grinding my nose away. I still wonder.
Someday, that might happen!
Depends on the interest rate. Assuming the commonly used 18% rate, that person would need to come up with $1,625 for a minimum payment with a balance of $65,000. And if that person insisted on making only the minimum payment, it would take 48 years to pay it off, and he would end up paying about $100,000 in interest (in addition to the $65,000 principal). That's assuming, of course, that he never used a credit card again!
There is a calculator here that will figure out all the gory details for you!
Lots of very famous and admired people have went bankrupt. We enjoy lots of products which came to into being only because many inventors went bankrupt, and were able to start over again.
Davy Crockett, Rembrandt, Mark Twain, H. J. Heinz(ketchup would not even have been invented if Heinz did not go bankrupt), Milton Hershey(chocolate), Henry Ford(we would not have Ford cars if Ford did not go bankrupt), P. T. Barnum(we would not have circuses if he had not gone bankrupt), Debbie Reynolds, Burt Reynolds, Jerry Lee Lewis, Wayne Newton, Mickey Rooney, Donald Trump, the Bass brothers, etc.
Since we no longer have "The Year of Jubliee", bankrupcy is the closest we have to the bibilical principal of canceling debt every so often.
I also have no sypmathy for banks, and their practices.
Exactly. The credit card companies, who take no trouble to examine credit worthiness, should get no new breaks from the legislature in bankruptcy law. Many parents of college students would rather they not have credit cards, but because they are over 18 there is nothing the parents can do to prevent getting the cards--at least the companies can't go after the parents!
Ultimately, "atlas will shrug". Personally, I believe before atlas shruggs, the US current account deficit will make a mess of this economy. Then, the US policy makers will have to figure a way out and there will be hell to pay for all.
I can agree that if someone was given an interest-free loan, say by a friend, and then uses bankruptcy law to avoid repayment, it is morally the same as stealing. But it seems to me that if a bank is lending out money at 15%-20%, as is common with credit cards, debtors are paying through the nose, right from the start, to reimburse the bank for insolvency risk. The high interest they have already paid during the period they did make monthly payments was equivalent to insurance against their own bankruptcy. So if they do go bankrupt, and there is no bankruptcy fraud, it is unfortunate but not, morally, stealing.
This stupid punk kid who lives next door is 19, he isn't in college, he didn't finish high school and he doesn't have a job. Stupid hippie parents just don't have a clue
Rumor in the neiborhood is he is a stand-in in porno movies
This stupid kid just declared bankruptcy with something like $40,000 in creditcard debt.
Any bank stupid enough to give an unemployed 19 yearold high school dropout a creditcard DESERVES to get ripped off
Bad credit is a cost of doing business, they took the chance giving this stupid punk a creditcard, that was their business decision to make, it turned out to be a bad one
The government shouldn't be in business of defending corporations from their own stupidity
If you never heard of The Year of Jubilee, the Day of Atonement, or understand why God commanded it, they there must be plenty of "Biblical priniciples that you dont know of".
People who have never read the Bible, and certainly people who have never read Leviticus, should never make such wild statements as you just did.
The Year of Jubilee, is known by all jews and protestants, and anyone who has read the Bible. All debts canceled, all mortages ended, all foreclosed property returned, all people sold into slavery freed, etc.
It is "scary" that YOU have never read Leviticus(esp Leviticus 25 and 27), that you have never heard of The Year of Jubilee, and that you equated a command of God(periodically forgiving debt) to "stealing".
It is scary that you pretend to speak as either a jew or christian yet you know nothing of this holy principle, or of the principle of "forgiving", not only explicit in The Year of Jubilee, but in the entire Bible itself. There is nothing more Biblical that the principle of forgiving - even if you never specifically read Leviticus or heard of The Year of Jubilee. A true jew or christain sees no contradiction in forgiving, or in forgiving debt periodically.
Bankrupcy law already prohibits all fradulent debts from being canceled - so spending money on credit that you never intended to repay is not a "dischargable debt".
And there is no difference between being irresponsible in business, or irresponsible in family finances. Irresponsiblity is irresponsibility.
If anything, if you want to compare the moral aspects, a "business bankrupcy" is the one that is immoral, since it hurtrs so many more people: suppliers, and employees who no longer have jobs nor 401-k retirement funds, and maybe no pensions either.
One has to ask himself if he thinks Gary Winnock of Global Crossing, etc, etc, etc, is morally superior because he ruined so many lives with layed off employees and wiped out all their retirement funds------ to the employee who lived on credit cards for a while after being layed off by that same Global Crossing to feed his children?