Bankruptcy Bill

by **oowolf** » Fri 11 Mar 2005, 19:16:10

Being debt-free feels better every day!

by **some_guy282** » Fri 11 Mar 2005, 19:29:07

$this->bbcode_second_pass_quote('oowolf', 'B')eing debt-free feels better every day!

by **TrueKaiser** » Fri 11 Mar 2005, 19:45:35

$this->bbcode_second_pass_quote('some_guy282', '')$this->bbcode_second_pass_quote('oowolf', 'B')eing debt-free feels better every day!

by **uNkNowN ElEmEnt** » Fri 11 Mar 2005, 20:23:57

$this->bbcode_second_pass_quote('', 's')ome_guy282 wrote:
oowolf wrote:
Being debt-free feels better every day!

Amen.

so does not geting into it in the first place.

by **JohnDenver** » Fri 11 Mar 2005, 21:14:54

$this->bbcode_second_pass_quote('kochevnik', 'I')n this scenario, you will NEVER get out of debt, EVER.

by **uNkNowN ElEmEnt** » Fri 11 Mar 2005, 22:17:36

Friggin lovely, so either you are in debt and they turn you into a serf or they take all your gold/ money/ property and turn you into a serf.

Civil war is on the horizon.

by **gego** » Sat 12 Mar 2005, 01:26:42

Tells you who pulls the strings that the puppet politicians dance to.

by **smiley** » Sat 12 Mar 2005, 08:11:14

I think you have to be realistic here. I've been amazed by Chapter 7 for a long time. I don't think there are many countries which have similar regulations. Chapter 7 offers a way out of debt almost without any personal consequences.

People that file for bankruptcy here are in no way released from their debt. First all your assets are sold. Then the judge draws up a repayment plan together with the creditors. That means that a certain amount of your welfare/salary is withdrawn and used for repayments. They leave you with just enough money to get by.

And, yes, if your debt is large enough it means that you could end up paying for the rest of your life. But that is something you know before you take out a loan. You know that you have to pay it back one way another.

From what I see Chapter 13 is more in line with legislation around the world and it is also more fair towards the creditors.

The only problem I forsee is that a wave of people will that will file for bankruptcy before the new legislation comes into effect. About 1 million Americans file for chapter 7 each year. I think for the next months it will be many more and I don't know whether that will have financial consequences.

by **Malthus** » Sat 12 Mar 2005, 15:42:54

Hell what did you expect? Creditor institutions are not charitable organisations they want to collect their money after all. If John and Jane america is stupid enough to get them selves in debt although helped by sir "the bubble maker" Greenspan. I always laughed at seeing people extracting money from their home equity in order to "enjoy the good life"
without realising that they are adding to their debt, it also staggering to look at credit card debt that is being accumulated at 15% interest.This of course may go on as long as property prices go up but hell dont they always go up just like tech stocks in 1999. The crash of the housing market is sight people that should not have been approved for mortgage in the first place now think of buying a second house for speculation.
They should not be let get away with this. I think that the law is too liberal they should restore older institutions such as the debtor's prison

by **threadbear** » Sat 12 Mar 2005, 16:19:44

Bankruptcy bill is going to kill a lot of people, or cause grosse financial injury they may never recover from.

I recommend the song Bungalow Bill, by the Beatles, be changed to "Bankruptcy Bill" --Hey Bankruptcy Bill, Who did you kill, Bankruptcy bill. Kind of catchy, huh?

by **smiley** » Sat 12 Mar 2005, 17:17:41

With the risk of sounding rude. So what?

There is a reason, credit card rates are so high. The reason is that so many people default. Banks and credit institutions are smart enough to insure themselves against defaulting by keeping rates high enough to cover it. In the end you get to pay the bill.

I would say that 99% of personal bankruptcies can be blamed on plain stupidity so I feel little remorse for these people. I'm certainly not inclined to pay their debts.

So now the rules are changed in such a way that they (and not you) have to pay the price for their irresponsibility. I would call that justice.

by **Mercani** » Sat 12 Mar 2005, 17:58:31

Why is the interest rate of credit cards so much higher than FED lending rate? Because they say they need to add the "risk" factor. The person can file for bankruptcy in the current law and creditor cannot do nothing. If the creditors are charging the risk premium, they have to accept that they may not get all their money back !

When I buy a house for $100K and borrow $80K as mortgage, the bank should calculate the risk of house losing its value down to $50K and losing their guarantee to recover all of the loan.

The risk should be somehow shared between the debtor and creditor.
I think this bankruptcy bill is not fair to millions of people.
Don't banks know that the housing prices are bubble? Yet they keep selling mortgages at historically low interest rates, and they are trying to pass this new bankruptcy bill. (I am pretty sure the banks have set some incentives for politicians to pass the bill) This is like changing the rules of the game when the game is not finished.

by **cube** » Sat 12 Mar 2005, 22:07:49

I propose that we re-introduce the concept of "debtor's prisons" where people in debt can "work off" their debts kinda like what they had in England back in the 19th century. Just think once oil production peaks these treadmills will be coming back into style!

Anyways is it just me or is it rather "peculiar" that when a multi-billion dollar company files for bankruptcy they get a slap on the wrist and a "bailout" loan courtesy of Uncle Sam....but when Joe Sixpack does it then the multi-billion dollar companies cry foul. I'm all for demanding accountabilty but shouldn't it go both ways.

by **threadbear** » Sat 12 Mar 2005, 23:41:18

Smiley, Credit card companies are engaging in predatory lending practices that they will eventually have to stop, through acts of congress. There is absolutely no difference between what they do and what the knee-capping Mafia do, except the Mafia are more honest.

They have been wildly over compensated through ridiculously high interest rates and the encouragment of minimum payments and will continue to be rewarded for engaging in ethically criminal , but technically legal behaviour, with the new bankruptcy act.

If you think the high interest rates merely cover defaults, you're very mistaken.

by **smiley** » Sun 13 Mar 2005, 09:36:41

I don't agree with that.

Firstly the credit card business is not so profitable as it might seem. Credit card institutions don't loan money. They bundle the debt and sell them as derivatives. Technically they just transfer debt. The profits are divided between the credit card company and the institutions who buy the derivatives.

Since a lot of these derivatives are sold in Europe profits there have been severely hurt by the falling dollar. Interest rates have to be high to compensate for that and keep these derivatives interesting for Europeans.

Secondly you shouldn't underestimate the effect of defaulting. Last year 1.4 million Americans filed for bankruptcy. On 90 million households that is 1.6% who didn't pay their debts. That is a significant number and it is growing. Moreover the people who default usually have a larger than average debt.

So on a credit card loan the interest rate has to be prettty high just to cover the losses due to defaulting and to be able to sell the corresponding derivative. That is even without making a profit for the credit card company.

Warren Buffet called this market a "Financial weapon of mass destruction". I think he is right to do so. We have already seen in Asia what happens when banks issue too many bad loans. Interest rates go up, leading to more defaulting, leading to higher interest rates etc. A government can do little at that stage since the real interest rates are set by the market, not by the government.

Therefore I think it is a very wise decision of the US government to try to curb the amount of defaulting. However I do agree that they shouldn't have encouraged people to take out loans in the first place.

by **skiwi** » Fri 15 Apr 2005, 06:06:22

Bush will sign bankruptcy bill

Bankruptcy legislation making it tougher for heavily indebted Americans to wipe out their obligations won final congressional approval on Thursday and President Bush said he looked forward to signing it into law...

.. "This is the most special-interest-invested bill that I have ever dealt with in my career in Congress," said Rep. John Conyers, a Michigan Democrat first elected in 1964. "It massively tilts the playing field in favour of banks and credit card companies and against working people and their families."..

by **PhilBiker** » Fri 15 Apr 2005, 08:57:40

$this->bbcode_second_pass_quote('', 'T')hat's pretty scary, but there's still ways to dodge it, like going homeless, dealing drugs or leaving the country. It just sounds scary cause everybody is attached to their routine, and wants to play by the rules. If they're going to go nuclear on you and turn you into a serf, you might as well just drop off the grid and be an outlaw. Think of it as an adventure.

by **RiverRat** » Fri 15 Apr 2005, 11:32:04

$this->bbcode_second_pass_quote('smiley', '
')I would say that 99% of personal bankruptcies can be blamed on plain stupidity so I feel little remorse for these people. I'm certainly not inclined to pay their debts.

by **BiGG** » Fri 15 Apr 2005, 11:50:20

$this->bbcode_second_pass_quote('RiverRat', '')$this->bbcode_second_pass_quote('smiley', '
')I would say that 99% of personal bankruptcies can be blamed on plain stupidity so I feel little remorse for these people. I'm certainly not inclined to pay their debts.

by **arretium** » Fri 15 Apr 2005, 14:39:13

I think many of you bankruptcy bill proponents willfully refuse to acknowledge the facts in the industry. If that allows you to feel good about the raping of the American consumer, enjoy it. I for one know a bad deal when I see it.

The idea that Americans declare bankruptcy because of stupidity is wrong. The majority of Americans declare bankruptcy due to a life altering event: divorce and/or medical emergency. Keep on selling that lie that people the majority of people declare bankruptcy after a visit to Best Buy.

I like many others, disagree that this bill is a good bill, for several reasons:

* Usury laws have been pre-empted since the 1980s. I'd be far more comfortable with this bill, if Usury laws were left to the states like they were for almost two hundred years. In case you are wondering, Usury laws cap interest rates.

* Arbitration agreements - They are entirely one sided. Companies set up AAs with organizations that rule in their favor. Since they are a repeat player, set discovery rules and guidelines, these companies in effect right the rules and determine the outcome of the juducial system. I'd also be more okay with this bill of AAs were banned or called for an opt-in mechanism at the discretion of the consumer since CC companies yield unconscionable bargaining power.

* Lawyers are now personally liable for the factual errors of their clients. I'm somewhat optimistic this provision will be overturned in the appealate courts since this provision requires lawyers to be responsible for factual data that they can not always verify.

* Millionare's trust. You guys haven't talked about it, but rich people can still shield their money in trust accounts. In effect, this is really about going after broke people.

Before I talk about the last one, I'd like to mention something my Secured Transactions professor told me.. He sayed that a good lawyer will always write the contract such that the debtor is always in default. And with that said:
* Universal default - This is another example of the tilt of power in the hands of the corporations. Universal default allows the credit card company to increase the interest rate to the default rate of whatever their choosing is at the moment based on the **mere suggestion** that you have had a late payment with any entity as reported by one of the three credit bureaus....specifically, this information could be in error, but the contract still allows for the credit card company to increase the interest rate to the default rate. Effectively, this means that millions of American consumers are at the mere mercy of the credit card industry. These companies can decide at will that they wish to increase the interest rate to whatever rate they desire. If you disagree, you have to go to binding arbirtration which is controlled by said credit card companies.

I do agree with one thing. I'll never carry credit card debt **unless** my child or sopuse is dieing and it's the only way I can heal them.

Bankruptcy Bill

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