Bankruptcy Counseling Law Doesn't Deter Filings

[Rose Siding]

Three months after a new bankruptcy law took effect, the overwhelming majority of debtors seen by credit counseling agencies are filing for bankruptcy instead of using repayment plans envisioned by the law's supporters.

The law requires debtors to see credit counselors before they file for bankruptcy protection. It is a prerequisite that banks and credit card issuers hoped would steer consumers away from bankruptcy court and into plans that would allow them to repay debts over a few years.

But so far, that is not happening.
....
Graves said that so far, his counselors have seen people "with true hardships," such as lost jobs or disabilities that cut their income. "We have yet to see anybody who charged up their debts, used cash advances" and abused their credit, probably because those kinds of debtors filed before the new law took effect, he said.

In many cases, debtors are in such financial distress that they cannot even afford the counseling fee.......

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/16/AR2006011601291_2.html

[JDPriestly]

1. And as for those without true hardships,

many of them are manic-depressives who are hitting rock bottom after their up stages. The credit card companies seduce the manics real easily.

[Psephos]

17. You're onto something there

When it comes to mental connections between today's behaviors and tomorrow's consequences, some of us are ants, some are grasshoppers (to invoke the old fable).

That's neither good nor bad, it just is - presumably such a spread of mental styles has served a purpose in our biological past, else it would have been edited out by nature long ago.

Our culture requires thinking and conformance to an "ant" model when it comes to accounts, taxes, old-age savings, and even such things are parking tickets. Some people find these things easy to handle, and some find them as difficult as composing a symphony.

We don't consider those who can't compose a symphony morally defective. Why should we feel the same about the grasshoppers among us? We need a better way of accommodating all the varieties of human personality. One that specifically doesn't involve seduction by credit card companies of those most vulnerable to their "you can have it all" message. These companies know full well that x-percent of the people they shove these cards onto will end up in ruin because of it. The statistics are highly stable - further reinforcement of the nature-driven origin of this susceptibility.

Peace.

[Mandate My Ass]

2. They knew less than 3% of filers were irresponsible spenders

The "credit counselors" are employees of the same banks and credit card companies that wrote that POS legislation. This is a way for them to fleece and degrade the downtrodden even more than before.

[FloridaPat]

9. Also - 100% of the credit card companies have outrageous rates.

When are we going to see credit card reform?

[leesa]

3. So they fell for the mythology that people weren't losing jobs and

weren't in trouble due to medical bills. They fell for the GOP line that the reason people were in debt was because they were living high rather than because the economy sucked and the health care system was a wreck. An eye opener, eh?

[Nomen Tuum]

4. And what will Joe Biden say about that?

We're waiting, Joe...

[liberalhistorian]

5. Or Lieberman or Hillary

or any of the other Dems who voted for it? We're all waiting..........

[OKNancy]

6. Neither Clinton or Lieberman voted for the

bankruptcy bill

---

Edit- here is a list of the Democrats who voted for the bill ( plus Jeffords)

Baucus (D-MT)
Bayh (D-IN)
Biden (D-DE)
Bingaman (D-NM)
Byrd (D-WV)
Carper (D-DE)
Chafee (R-RI)
Conrad (D-ND)
Jeffords (I-VT)
Johnson (D-SD)
Kohl (D-WI)
Landrieu (D-LA)
Lincoln (D-AR)
Nelson (D-FL)
Nelson (D-NE)
Pryor (D-AR)
Reid (D-NV)
Salazar (D-CO)
Stabenow (D-MI)

[sarcasmo]

8. Clinton had a not voting and IMHO is a cowards way of voting YEA.

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=109&session=1&vote=00044

[OKNancy]

12. Perhaps she had more important things to do

on the day of the vote...March 10th 2005. Since it was going to pass anyway, her vote was not going to make a difference anyway.



http://www.cbsnews.com/stories/2005/03/10/national/main679236.shtml

[Rainscents]

18. Her husband (Bill) was in the hospital having a heart surgery.

Back off on her! I don't like her, however, she had good reason that day for not voting.

[OKNancy]

20. I hope you weren't directing that at me

since I posted a link to the story about Bill's heart surgery that day.

[sarcasmo]

19. That makes it OK? It's like me saying I had better things to do on

Election day.

[OKNancy]

21. Did you read the link I posted?

Sometimes family comes first. If her vote would have made a difference, then yes, she should have voted.

[LostinVA]

25. Yes, that does make it okay

Geez. I'm not a fan of HRC, but being with your husband while he has a potentially dangerous operation is definitely a good reason for missing a vote.

[Media_Lies_Daily]

28. No, it's NOT okay. As an elected official she has a responsibility to....

...represent her constituency in Congress, regardless of her personal situation.

She could have very easily have made the trip to DC, voted, and returned to her husband's side without missing very much at all.

[LostinVA]

29. Sorry, I can't agree with that

Elected officials give up certain privileges and rights of private life, but not this. We have to agree to disagree on this. And, I'll say this about ANY elected official.

And, "not missing much at all"? I've been waiting on pins and needles in the waiting room while a loved one is in a serious operation. You would be missing "much" if you weren't there, even if to others it seems like nothing is happening. Your whole life is happening.

[Javaman]

13. I could be wrong but didn't biden sponcer this bill...

after all the credit card companies are in his district and anyone with a brain knows that he's in their back pocket.

but, you know, I don't want to go around spreading rumors....

[Raster]

15. yep, senator "MBNA" biden was a sponsor. what a senator he is.

I mean, those scalito hearings certainly would have been a bore without those hat hijinx. Thank gawd his offspring made it into an Ivy League school.

biden is owned: lock, stock and barrel by MBNA. He is their boy.

[bleedingheart]

7. Because the Reasons for Bankruptcy WERE NOT ADDRESSED

but I guess we DUers already knew that.

Universal Health Care might make a difference.
Laws restricting borrowers from predatory practice might make a difference.
Living Wages and working to reduce unemployment...might make a difference...

BUT putting the SCREWS to people never works!!!!

[FloridaPat]

10. How about not sending jobs overseas. That would have made a

difference with me.

[pinniped]

11. Hey, fuck you graves.

--. "We have yet to see anybody who charged up their debts, used cash advances" and abused their credit, probably because those kinds of debtors filed before the new law took effect, he said.--

Ya, real people with real problems do exist, asshole.

Pretty stupid answer, graves, guess this small percentage that didn't file before the BS law will just have to pay now.:eyes:

[zann725]

14. I was wondering (due to loss of job, med bills)...one went 120+ past-due

on bills (due to total lack of income)...and couldn't even afford to file Bankruptcy? Under new laws, what happens?

I'm told that creditors techically HAVE TO write-off past due amounts at 120 past due, to balance books. Are any creditor actions (on UNsecured credit) past due amounts even have valid cause to continue collection on amounts already written-off, or are their many-time one-man office, small-time "collectors" just scare tactics?

Not that one plans to, but IF...as often argued BEFORE the new Bankruptcy legislaton...people largely do NOT mismanage money into debt, but get into debt by loss of job, or illness and large med bills?

[warrens]

16. The credit card industry fooled itself with its sob stories

I used to edit a publication in the field, and I had otherwise sensible people from Visa and MasterCard and Citibank telling me all these horror stories about guys with $30 million mansions in Florida going BK and keeping their mansion and Jag. The real stats: About 95 percent of BK filings are the result of divorce, illness and/or job loss.

A far smaller percentage are from foolish spending and credit card debt. Those people are going to have to sign a repayment plan under the new law, but they probably would have under the old law too. Bankruptcy judges are very lenient when the bankruptcy is the result of something that isn't your fault, but much less sympathetic is you stocked your house with plasma TVs, then couldn't pay the bill.

I hope the credit card industry just chokes on this. Mean-spirited doesn't even begin to describe them.

[mvd]

22. Right on

I still hold a big grudge towards all who voted for this law. Who will it affect most? Those without the ability to pay or those who are squeezed. It's just a boon for the credit card companies.

[SoCalDem]

24. Myths abound when fat-cats want legislation

Remember the tractors in front of congress when the repubes were pushing "the death tax"?

In FACT, family farms are NOT sold "to pay the taxes"... They are sold because the grown "kids" & grandkids don;t want to/can;t farm, and if that farm is Grandpa's ONLY asset and it's to be divided up 6 or 7 ways, is HAS to be sold..but not for taxes..

repubes are all spin & lies..

[54anickel]

30. And they continue to feed the myth with more lies outta their arses!

"We have yet to see anybody who charged up their debts, used cash advances" and abused their credit, probably because those kinds of debtors filed before the new law took effect, he said.

PROBABLY? Howz-bout some facts and data to back that claim up? :grr:

[AnneD]

27. ITA....

I argued against the law to my reps for the reasons you quoted. Most bankruptcies are due to divorce, medical, or job loss. I hope this bites them in the butt-they were so short sighted on this. The upping of the minimum payment will help get these people out debt sooner. I hope America kicks the CC habit. I have been CC free for 3 years now and will never go back.

[TexasLawyer]

23. Get ready for more of the same...

As per p. 2 of the article:

Credit-counseling executives expect the number of bankruptcy filings to pick up in the next few months, the traditional peak period for credit counseling, as families cope with increased energy prices, higher interest rates and a new federally mandated policy that boosts the minimum amount due on monthly credit card bills.

[depakid]

26. Repayment plans- LOL

When you're unemployed or looking down the barrel of a $40,000 medical bill or had to use credit cards at usurious rates of 25-30% a repayment plan's not much of an alternative.

Of course, anyone ho looked at the law knew this- but corruption in both parties is such that rationality takes a second seat to legalized bribery.