T Nation

BankRuptcy Reform & Single Mothers


#1

I am not Boston Barrister, so I will simply post the link instead of 15 internet pages of article. No offense, BB. I just found it interesting that the reform may affect more than "those people".

http://moneycentral.msn.com/content/Banking/bankruptcyguide/P114573.asp


#2

Wow, good find, Professor. That article pretty much perfectly describes the friends I was talking about in the other thread about this. I'm interested to see what the responses from the other side will be about your article here.


#3

Well, I certainly have nothing to say about it, because I agreed with the stupidity of the bankruptcy reform as it was the last time.
This just amplifies that.


#4

"Whether she should have filed for bankruptcy is debatable. But under reform legislation just approved by Congress, debtors like her may no longer have the option of filing in the first place. By making it tougher and, possibly, more expensive to declare insolvency, the law aims to encourage personal responsibility and restore more power to creditors in an era when personal bankruptcies have become more popular."

Encouraging personal responsibility makes you evil and heartless.

"Other expenses involve vacations and what Williams calls 'compensation spending' to make up for the divorce."

"Williams, a financial counselor for nearly 25 years, does not think the new bankruptcy law will affect women too disproportionately because a means test takes income into account. "Those who will feel the biggest impact will be filers who have the income to repay the debt but just don't want to," she says."


#5

I did not see the other thread, perhaps someone can direct me to the link.

My take on the bankruptcy reform is: It's about time, and I will tell you why. My wife and I have found ourselves in pretty bad financial shape twice since we were married; Once of our own making, once not so much. When we were first married and had the first taste of freedom, we (actually mostly me) ran up huge debts acquiring stuff we thought we had to have. It got to the point where bankruptcy looked like the best way out. We were so far over our heads, I thought we would never get out. Nancy was self-employed and we learned the hard way about the "self-employment tax" as well. We owed the IRS $4500, the credit card companies about $20,000 and could barely cover the mortgage. In my case, I could not get past the thought that I got us into the mess, and it was my responsibility to get us out. We went into debt counseling, and it took 2 years to pay off the IRS and 5 to get the revolving debt taken care of. It sucked, but it was worth it. The second time we were in financial trouble was about 10 years later. Nancy ran a successful business, was pregnant with our fourth child, and debt was pretty maneageable. We had a little credit card debt, but had for the most part learned our lesson, had some savings, blah, blah. The long and short is, due to the death of my 3rd son, we decided that Nancy would close her business, and that affected our bottom line by about $3300 a month, which was a lot more than I made at the time. I suppose we could have cut our losses, filed bankruptcy and tried to hold on to some of what we had in that way. Instead I sold all my toys so I could keep paying the mortgage, wiped out my savings, went out less, in fact we don't have cable TV to this day. By the grace of God we also have no debt besides a mortgage. No CC debt, no car payment, no nothing.

Now I know I will get blasted by those who think that it is unfair to compare our situation to single mom who can't make ends meet, and to some extent I agree. I think these situations are unfortunate and require compassion and help on our part. I do not however, have any tolerance for those who think they can spend as much as they want and when they get into trouble, get it "taken care of". I have seen this happen over and over. I know that is an oversimplification, but in way too many cases this is exactly what happens and is thus the general target of this legislation.

My question would be; Whose responsibility is it to take care of the mom and kids in this story? Is it the credit card companies? Is it the governments? Is it her families or her kids fathers?


#6

Ah, your moral highness forgot this quote:

Ignorance of the situations some people face leading to this could be argued to be as such, however. I am not for someone buying a bunch of crap and then saying, "I'm not paying" and filing for bankruptcy with no serious reason why. I will not overlook serious reasons though.


#7

I would be for this if they would crack down on the creditor abuse. Has anyone heard of creditors calling, a child answers, and the creditor tells the child that the police are coming to take away his or her toys and parents? This is not a one time event, but a common occurrence.

I would advise anyone here to avoid debt like the plague. (Or soy.) Car loans are the worst. If you buy a new car with a 5 year loan, and total it after 1 or 2 years, you could end up owing over $4,000 to pay off the loan your insurance doesn't cover. Your car has dropped in value by half, but your loan has only reduced by less then a third, depending on the interest rate of course.

Got 4 grand lying around? If not you had better have good enough credit to get an unsecured loan, or be able to get an equity loan on your house.


#8

You should. It's called savings.


#9

The author does a good job at plucking the heart and the strings for the travails of a working single mom....Oh woh is her...

That line of thought has some merit, but I have to take issue with the author on two occaisions.

"Whether she should have filed for bankruptcy is debatable. But under reform legislation just approved by Congress, debtors like her may no longer have the option of filing in the first place."

That statement is patently untrue. Worse, as the author continues the paragraph - the text and explanation is non germaine.

Later the author includes quotes catering to those headed for divorce court.

""Look over all the tax returns before you sign them. If you're not comfortable signing them, file a separate return. Even though it will cost a little more, you won't be responsible for his omissions or his lies.""

Yeah... that's really gonna help your marriage out...Don't trust your spouse!

Just one more reminder from the Left that most marriages end in divorce.


#10

Damn, that was elitist. I know quite a few people who wouldn't be able to save that much due to just coming in even on paying bills and taking care of kids. While I am sure the goal is to have a decent savings account, I would be surprised if the majority of the people in this country could actually do so at the present.


#11

I find it more than a bit odd that we are discussing data that is at least 5 years old.

So what is your remedy, ProfX? If you are poor and female, then you are issued a "get out of debt for free card"?

Bankruptcies are rampant. It's time that there was something done to foce some personal responsibility.

I know, I know - "what about the poor, poor women who are having a tough time?" Maybe they shouldn't have been issued cards in the first place.

My opinion is that bankruptcy reform is a good thing, but there should be something to keep credit card companies from sending folks pre-approved credit cards in the mail.

Maybe some of this could have been avoided if the public wasn't so ignorant, and the credit cards themselves were just a tad harder to come by.


#12

No it's not elitist. I challenge you to listen to one hour - just one hour - of the "Dave Ramsey Show". If you think you need the gov't to help you get out of debt - you are wrong. The guy is very down to earth, and explains in very common terms how to cure the cancer of debt.

Black women seem to be a favorite of his, because of the stereo-types that the touchy-feely left champion. He puts them on a plan to get out of debt.


#13

Dave Ramsey changed my life, even if I don't walk with the Prince of Peace.


#14

Well I haven't posted in awhile, but as this is something currently affecting my situation I thought I'd chime in. I have no delusions of changing anyone's mind, but I thought I could add my own situation to the pot and try and show the dilemmas facing those who file chapter 7 but would like to repay their debts.

As for my own situation I'll lay it out as quicly as possible. I have acquired a heap of debt as I have tried to help finance my own business which is not doing as well as I'd planned. I have always had great credit and made my payments on time. However, recently I was late on one payment and ALL my cards raised my interest to near 30%. Concurrently, my minimum payments were raised as well, far above where I can afford them.

Now I agree with everyone else that one ought to repay what they owe, so I called my card companies and told them the situation and asked if we could work out some sort of agreement where I could repay the debt at a level I could afford. All of my creditors, despite flawless credit to that point, refused to give me any leeway for at least 6 mos to a year! Even then, they couldn't say what they would be able to do for me.

I went to a credit counselor to see what they could do for me. They said they could get my payments reduced, but still not to a manageable level as the creditors were not giving them leeway either. Furthermore, it would take over 5 years to pay off AND during that time I would agree to taking out NO new credit. To top it off, any settlment or payment plan would stick on my credit for years on top of my 5+ years with no access to credit! No car, no mortgage, no loans, no nothing!

So here I sit where all my best efforts to do the right thing have been met with great opposition. I have no ability to keep making these payments for long and my financial situation has some rough waters still to come. From my own perspective, if these companies were interested in recouping their money, perhaps they could be a little more cooperative with someone like me with good credit(~700 FICO) who genuinely wants to repay my debt. But, their attitude and recalcitrance has angered me to the point that a bankruptcy doesn't even offend my moral senses anymore!

Obviously some will believe I ought to repay what I owe regardless and others will sympathize since they've been screwed too. Oh, and trust me, ch 7 is not a cakewalk by any stretch! The state I'm filing in has exemptions that were written over 25 years ago and have never been adjusted since! Here the exemption for a car is $1200 and a house is $5000. No, I didn't forget a zero there! PErsonally I rent and drive a shitty car so I have nothing to fear there, but I would certainly not be driving away in a Lexus as someone wrote in another thread!


#15

Maybe? They shove credit cards in your face the moment you step on a college campus. They hand out free gifts for signing up from tee shirts to concert tickets. The majority of people in debt have been in debt since the age of 18 because of this. And to you it is "Maybe"? I think the issue is MUCH larger than trying to get people to own up to responsibility. If that is your goal, what about the moral responsibility of the credit card companies to not take advantage of those just walking into the real world? You obviously give that much less leverage on your scale of morality.

I do believe I have received at least 5 different "free" credit cards over the last two months. Ripping the info to shreds has become a job in itself because they won't quit sending them.


#16

No - I think human ignorance trumps the EVIL CCard companies' business practices. You are going to blame credit card companies for someone's inability to throw away credit card offers? There is no excuse for owing more credit card debt than you can repay.

Are you also blaming McDoonDoon's for selling the mega-whopper-with-cheese and-65-pounds-of-fries-with-2-gallons-of-coke meal deal for the obesity problem?

To me there is no difference in the appetite, or the sales pitch.

And maybe some of the exponentiating numbers of bankruptcies could have been avoided had the recipients of these free offers done exactly what you did.

Personal responsibility. Priceless.


#17

First, my opinion, is that running up a huge credit card debt simply because you have a card is stupid. I will also add that there are probably quite a few stupid people in the world. In that action, I do not condone it. My stance is actually centered around those who run into unexpected life situations that immediately add debt that they can not control. I don't think there is a way out for those people any longer and I think there needs to be.

I knew several students who were buying stereo systems for their car along with a set of rims all charged to Visa. I thought it was dumb then and generally only use my debit card now if I need to make a purchase. However, I also understand how I was raised and that by preying on those just out of high school who may not have had the same guidance, it becomes a large moral issue that you have decided to ignore. On that level, I think the student needs to repay the debt, not file bankruptcy...however, I feel that credit card companies need to stop peddling to this degree.

For the record, there was one more credit card in my mail box just now when I got home.


#18

I must have missed something, here...because in a post above didn't you say the CC companies should have to bear some of the responsibility too?
But here you seem to be saying they don't.

I agree the consumer--the public has the responsibilty first, but I would like to see some way to make it harder for CC companies to screw people, and I'd also like to see ways that they have to help people --with a good faith effort from the people of course.


#19

If the bill just stopped irresponsible borrowers then great, but it also hurts families recovering from things like medical bills, etc. With medical reasons being 50 percent of bankruptcies, not to mention things like unemployment, it's pretty obvious this a sell out to credit card companies and lenders, who exploited the misperceptions of bankruptcy, and lobbied hard for the bill($620,000 for Delay's PACS, and $26 million for Republicans last election)

No suprise, it gives the filthy rich a pass too, keeping at all costs the loopholes that allow millionares to keep their mansions if they plan well(with trusts and special exemptions). And worse to me some damn democrats actually signed this crap too.


#20

funniest part of it--to me--is that most of the republicans who signed it believe in it or fell for it, whichever (rolling eyes) but the democrats that voted for it did it only for political reasons--selling out, as it were, the people for the money.
Like Biden.