<p>What are your thoughts/experiences/feelings on this issue, esp with regard to the doubling of the credit card minimum payment next month? Any personal experiences or know some people who have done this?</p>
<p>My father is in the process of declaring bankruptcy. For a while, we lived in a nice house, went on nice holidays and had a worry free life. This was until my fathers work place moved to Juarez, Mexico ( :rolleyes:thank you NAFTA!:rolleyes: ). He moved there for 2 years where he was manager of the tool plant. Unaware to him, he was training his way underpaid replacements. They laid him off and he had a mental breakdown. He didn’t work for about a year after. Now, my father is a school bus driver. He went from $30/hr + overtime to $10/hr. Lost our house, lost our life… good times…:rolleyes: That was about 3 years ago and now my father is deep in debt… my parents live in seperate houses (both with their mothers), life is just a bowl of cherries right now! lol :rolleyes:</p>
<p>Dude I am totally sorry, my little BS problems seem like a walk in the park now compared to your parent’s situation. Good luck and my prayers will be with you.</p>
<p>Forgot to add… My aunt doubled her payments on credit card and so far it seems to be helping with her debt…</p>
<p>Bankruptcy is a tool this country has legally provided to give folks a chance to restart their lives after financial reverses or bad decisions.</p>
<p>Unfortunately, large segments of the financial services community, most importantly credit card companies, want to have their cake and eat it too. They want to have the cake of raking in high interest revenue and other fees from late payments, over balance etc. etc. They found the growth part of the industry is with folks having marginal credit. Then they found that some of those folks, who were led to overextend by the lenders, declared bankruptcy and left the lenders holding the bag, so to speak. (never mind that they justified high interest rates and fees with arguments of greater risk. Never mind the high profits from the accounts.)</p>
<p>So, to solve this problem, they got a compliant congress to pass very lender friendly bankruptcy “reform”. The prepayment for this reform took place in the last two election cycles and the final payment will be due next fall (campaign donations. Never say we don’t have the graft and corruption of other nations. We just legalized it!)</p>
<p>MY humble opinion: If someone had reverses, needs the help and is willing to live with the consequences, do it. And do it with honor.</p>
<p>newmassdad,</p>
<p>You nailed it. Bankruptcy reform is a travesty, corporate welfare at its worst. My father, a lifelong Republican, has been a bankruptcy attorney for nearly forty years. He opposed reform from the beginning, and to this day he’s heartbroken over all the people who will be hurt by the new law. When I asked him to estimate the percentage of people who abuse the system, who file because of flagrant irresponsibility, he said it’s far less than 1%. </p>
<p>The injustice of the new law is thrown into stark relief by recent events. Many victims of Katrina who are forced into bankruptcy will not find the relief they need. </p>
<p>Finally, as I’m sure you know, the majority of personal bankruptcies result from astronomical medical bills, a problem congress seems unwilling to confront with the same determination with which they sought bankruptcy reform.</p>
<p>You are generally right, newmassdad, as to the credit card industry. For years it has encouraged and pushed folks to take on more and more debt (Congratulations! You have been pre approved!!!) Debt people could not afford or service. And when in a perfect illustration of karma, those folks started to sluff it off with bankruptcy filiings, the industry raised a false hue and cry and then finally bought Congress to insure stricter laws to prevent the discharge of their debt.</p>
<p>This goes double, by the way, for the mortgage industry. Both new home purchases and refinances.</p>
<p>However, I will add this small caveat based on years of being a bankruptcy attorney on both the debtor and creditor sides: very few people really got a new start under the old bankruptcy laws either. Very few people facing foreclosure really got to keep and stay in their homes by filing a Chapter 13. It’s a few months of delay for most and nothing more. And the vast majority of my fellow members of the bar who represent debtors, must know this. Their clients would be better off taking the fees paid to their attorneys and paying down some of their debt or allowing the foreclosure and moving on to start a new life, or… just going out and having a last (paid for) good time.</p>
<p>The credit industry and much of the bankruptcy bar are two sides of a coin. One creates the misery and the other lives off it with false hope.</p>
<p>spoon and mhc,</p>
<p>It’s interesting to hear from folks much nearer the action than me. I wonder how many folks on these boards have even known of someone close declaring bankruptcy - personal knowledge etc.? I know I have not. Just another example of the divides that exist in our society?</p>
<p>I have friends who were a normal yuppie type couple, but living on the edge in a booming housing market as so many still are today, refi, leverage, buy a bigger house. Betting you’ll make lots on the appreciation.</p>
<p>The husband quit his job to start his own business- he had great ideas, but did not understand that one doesn’t usually get paid for the first couple of years, plus he quit his paying job months before the new job began. In the menatime, he had 4 kids and a wife and they needed $5k monthly to survive on the house/car payments they already had.</p>
<p>She began using every one of those pre-approved offers to cash advance for monthly bills, to the tune of $50-100k in debt in short order.</p>
<p>It was stupid for him to do what he did. It was not too smart to do what she did…the whole thing came crashing in on them, they were renters for years after that, the theoretical equity was gone when they had to sell in the subsequent bad market, it is true that it was their choices that led to the final problem- combined with bad luck and bad timeing- they might have been able to pull it out if the market had stayed hot. </p>
<p>They also would have hit the wall much sooner if not for those stupid pre-approved offers. In some cases, the longer you can hold out the better chance of making it all work, in their case, in 20-20 hingsight, the sooner they gave up and moved on the better. After a year or two, he had to get a job instead of having his own business.</p>
<p>They were starting over, with 4 kids, needing help from family, etc. It took years to get back on their feet. Oh, and they are divorced. </p>
<p>They are as normal and middle class looking as can be, normal nice family, normal parents, great kids, etc. They had bad luck, they made bad choices, it messed up their lives for years. </p>
<p>There is a part of me that wants to blame those pre-apporved ads for exacerbating the condition, but I also blame the couple for bad choices. True, too, the timing of the bad market and recession caused problems with the business idea working out as well as it could have. </p>
<p>I think many BKs are a combo of bad choices, bad luck and bad timing…if any one of those could be fixed the situation might not get so desperate.</p>
<p>It does seem silly that the industry does everything possible to induce people to take credit, at higher rates for the bad risk, then cries when not every one pays!</p>
<p>It is also true that a “normal” family with good credit can fall on hard times and borrow themselves into oblivian in a very short time, before any one can catch on.</p>
<p>Another couple I knew had to BK a business. They kept their house, barely, but the really sad thing about the BK is that creditors of the business were owed money and there was money, many thousands put into the BK, yet only secured creditors got anything.</p>
<p>It seemed to me, from the stories they told, that the BK trustee fees basically equal whatever amount of money is available and not secured. If I recall the cash available in the BK was either high five or low six digits, yet none of the creditors received a dime- convenient for the trustee wouldn’t you say? I got the impression these trustee guys can set their own fees or perhaps determine how hard they will work (billable hours) by the amount potentially there.</p>
<p>I am no expert, maybe our attornies can comment on how this works, but many people in the town )creditors of the business) were hurt by not being paid anything when there really was money there!</p>
<p>somemom~</p>
<p>I also had some friends who lived just as the couple you described did. Interestingly, the husband was an aircraft contractor who KNEW how unpredictable the market was and yet, they spent EVERY penny they earned on major toys. One year, he worked at a local company under his own contract (no middle man to take out taxes–he was responsible for paying his own). Instead, he spent all the tax money putting in a pool and then hired some expensive accountants to, let’s just say, “finesse” the taxes a bit. Well, long story short, they got caught and owe the IRS TONS of money now, plus interest and penalties. So what did they do? They declared bankruptcy!!! While that doesn’t get them out of the IRS debt, it cleared them of the other things (pool table, hot tub, cars, credit cards, etc.). It is really shameful, IMHO, because they behaved in a TOTALLY irresponsible (and illegal, for that matter) manner and now, their creditors get hurt. Nevertheless, the wife is still livin’ on ebay making all kinds of purchases of junk…Blech! ~berurah</p>
<p>Berurah~
So nice to see you back! Neither couple I mentioned lived high on the hog, but I know of two other couples who blew into a smaller town from the city…both spent like crazy, tried to impress all and it did not work out in either case.</p>
<p>In one family, they finally salvaged the financial mess when a parent dies and the inheritance came, but they are blowing that like crazy and are pariahs in town. The others spent and showed off and had an ac****ant who was giving less than ideal advice, they lost it all to the tax man, house, cars, BK, the whole thing. I do not know that they had very many credit card things, they mainly had the tax lien, but it attached to their home and they are now renters.</p>
<p>Of course, all the old time small town people have some sort of sick enjoyment when outsiders come in, show off and then go down in flames! I see their point, but it’s still sad.</p>
<p>somemom~</p>
<p>I have actually only known two families which have declared bankruptcy, and in each case, there was flagrant abuse of the system and egregiously irresponsible behavior. In the one example I talked about, the couple was very showy and frequently denigrated those with fewer material goods. The funny thing was that they actually lived paycheck to paycheck too…it’s just that the paychecks were BIGGER <em>lol</em>. In the other case, there were some medical bill issues (as opposed to IRS issues), but in reality, with an income in the upper five figures or lower six figures, the couple COULD have purchased adequate insurance for the family (another case of an aircraft contractor ridin’ high). Before they did declare bankruptcy, they put assests such as property in their parents’ names and totally manipulated the system. Right after the bankruptcy, they were traveling and spending money like CRAZY. </p>
<p>While I feel like I am an empathetic person in general, I do save that empathy for those who really deserve it. I have absolutely no sad feelings for those who abuse the system and get caught while my family lives modestly and plays by the rules. ~b.</p>
<p>I think we have to be careful about the judgments we make about other people’s choices from the outside. While we have never declared bankruptcy, there was a time, after my husband was “downsized” out of an upper management job, that we could have. (Instead, pride demanded that we spend years working our way out–years during which we had no health insurance and could easily have been thrown even deeper into a hole.) But now everything’s fine again, and we have many tens of thousands of dollars of credit available on cards that are constantly thrown at us–and on those few we hold and pay off every month, the line keeps increasing without our wanting it to. It’s almost as if they’re saying, “Okay, you can pay off that line; let’s see you handle THIS one!” Of course, we’re not buying it, but what if we had a disaster?</p>
<p>My point is that you really don’t know the details of the lives you judge, so try not to be too harsh. And the companies that just made life so much harder on the debt-ridden are the same companies that throw all this unsecured credit at all of us, including our unemployed college kids.</p>
<p>ctymomteacher~</p>
<p>I am actually privy to ALL of the details of the case that I noted (including details on how they cheated on their taxes). The woman was my best friend. I do not feel the same way about those who come to encounter legitimate difficult financial times. We have been there too. Those people constitute an entirely different case, and I have a great deal of empathy for those people. Bankruptcy abuse DOES exist, as does legitimate use of bankruptcy protection. ~b.</p>
<p>Not knowing either the specific case or what you know about it, my comments were not directed exclusively at your post, B. I still think we can all be terribly judgmental, especially, in this culture, where those who don’t have money are concerned.</p>
<p>I think, based on my experiences with acquaintences and clients who have a history of BK, that there is some abuse; however, I think some of the abuse is generated from a system that is so screwed up. I watched 2 close friends go through it around the same time and buy did I hear how they could ahve screwed the system and never been cuaght and yet were almost punished for honesty (except that they can live with themselves!) Also, the part where all the money never went to the creditors would explain some of the problem, if no one who is owed money is really going to see it, where is the motivation for a person not to cheat…if they think that way. In their minds, they are not stealing from creditors, but from a trustee who is just trying to keep their money.</p>
<p>I agree ctymom, even the couple who took all the case advances, stupidly, were not living high on the hog, they were desperate to survive, car repossed, etc. The were not flagrant, just desperate.</p>
<p>The ones I really feel sprry for are people with outrageous medical bills, that could happen to any of us, unless you have govt type medical benefits. Prices now are so unreasonable. Last summer my husbands anual physical, the lab work was $750…it doesn’t really cost that? It can’t. Then the insurance companies negotiate a lower price, proving it doesn’t cost that, so why should some one without insurance have to pay that exhorbinant amount? And if something big is done, that family could go BK based on the outrageous amounts billed, yet might have been able to pay off the amount the same hospital charges the govt or insurance companies.</p>
<p>The purpose of the bankruptcy laws is to give people a second chance. </p>
<p>This may be due to unforseen medical problems, or perhaps, forseeable medical problems which those particular individuals did not forsee: like smoking or drinking or over eating for many years that causes “unexpected” health problems for them in later life.</p>
<p>It may be due to unforseen financial problems; loss of a job or overspending when they had a high income which they did not forsee could end. Or not understanding the difficulty they could get into living the lifestyle implicitly promised to them on TV and through the delivery in the mail of pre approved credit cards. A lifestyle they thought they could manage until an employer or industry went belly up.</p>
<p>Similarly and perhaps relevant here: college students are offered credit when they start school which they do not have the experience or sophistication to use wisely.</p>
<p>It borders on hubris for us to be overly critical of others who we feel developed their credit problems from lifestyles we see as extravagant or unwise. We may feel fortunate that we did not act as they did, but harsh criticism is unfair no matter how much we think we know about them. </p>
<p>If there is a legitimate focus for criticism, how much more appropriate the purveyors of credit who know and study and target and encourage their users in unwise activity? </p>
<p>Many do not believe that we should put warnings on cigarettes, liquor, lottery tickets etc. But at least we are charitable to those who fall victim to errors of their use, and easy availablity. And we encourage them to kick the habit and get their lives in order.</p>
<p>The same should go for those who have used credit unwisely.</p>
<p>
</p>
<p>Yes, exactly. Interestingly, in one of the cases I cited above, this family had ALREADY declared bankruptcy once, and then waited the requisite amount of time and declared again (buying Corvettes and such in between). No lesson learned there, IMHO.</p>
<p>ctymomteacher~
I thank you for clarifying that your statement was not a personal attack. I didn’t mean to be defensive either. There are definitely two sides to the bankruptcy coin, and there are lots of ways that a responsible family can end up in dire financial straits. I would NEVER presume to bring judgment on those people. To the contrary, we have been there on the edge before what with having a large family and less than no assistance, even in the case of emergency, from extended family. ~b.</p>
<p>mhc48~</p>
<p>
</p>
<p>This was very clearly NOT the case in either of the two circumstances I noted above. While it may be unfortunate that the ONLY two cases I personally know of regarding BK demonstrate the abuse of it, it is surely not a display of hubris to condemn that sort of behavior. The fact is that I am exposed to the same sorts of messages on T.V. and in the media that they are. I CHOOSE to act responsibly. Does that mean that I will never find myself in financial distress? Of course not! We just went through a job scare ourselves last spring, which I candidly shared here on CC. It is not being arrogant or displaying hubris to generally expect people to demonstrate personal responsibility no matter what the influences. ~b.</p>