The Finch Formerly Known As Gold

7 March 2005

Writing a new chapter

The Glittering Eye takes a dim view of the new bankruptcy-reform measure:

As I see it this bill is an attempt to secure for the credit card issuers, some of the biggest of all contributors to political campaigns, what was formerly unsecured credit and reduce their risks.

I don't have any problem with credit card companies making money. And I do think that people should be responsible for their debts. But there's a simple solution to reducing the exposure of the credit card issuing companies: stop giving unsecured credit. I do have a problem with the credit industry improving their bottom lines by having the government do the heavy lifting for them. They knew what the rules were when they issued cards to people who couldn't pay.

With literally billions of card offers every year, you have to figure that not everyone who replies is going to have a credit score in the 800s. And personal bankruptcies haven't been steadily increasing, either; from 2003 to 2004, they actually dropped slightly. I don't think bankruptcy should be viewed as just another personal financial tool, but I don't think it should be redefined purely for the benefit of the creditors, either.

(Disclosure: I went through a Chapter 7 in the early 1980s, though the amount I had written off was less than the amount I wound up paying back.)

Posted at 6:31 AM to Common Cents


Charles, You are right as rain on this ... and having had the unfortunate experience of a Chap7 as well in the 80's I can say it saved me from total ruin (some would argue Chap7 IS total ruin of course) and allowed me to get my act together and recover from poor financial planning and a catastrophic combination of first loss of job during the massive bust of that time period and massive medical bills that result from no insurance that results from no job ... and having worked in both the first and second tier lending industries associated with a career in banking and finance I can assure you that your suspicions are correct ... the creditors are going to get a real boost out of this and folks will not have the safety parachute they once had. It will create the "company store" effect for many an ill fated debtor. Bankruptcy and its resulting 7 years of punishment are enough in itself than to keep folks on the hook for the pleasure of some bank somewhere.

Posted by: Ron at 8:47 AM on 7 March 2005

The bankruptcy "reform" law is probably the worst law being considering this year in the federal congress, and is the best argument I've seen in a long-time for peaceful socialist revolution in this country. Why our so-called elected "reprsentatives" are representing the credit card companies instead of the people is beyond me.

Posted by: J. M. Branum at 11:45 PM on 9 March 2005