What do you guys think of the coming bankruptcy reform/law?

Discussion in 'After Hours Lounge (Off Topic)' started by Drew Bethel, Jul 26, 2005.

  1. Drew Bethel

    Drew Bethel Screenwriter

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    I wonder if the creditors (banks, credit card cos., etc) will benefit more instead of passing these "savings" to the consumer. I say that because I believe most financial products are priced according to collectibility among other things.

    I do think that something should be done to prevent people from walking away from their reckless debt though. I just don't want to see people who were hit with high medical bills and unforseen tragedies punished.

    Perhaps some of you with personal stories or knowledge of this area can chime in...

    See story: http://www.usatoday.com/money/perfi/...upt-usat_x.htm
     
  2. Jack Briggs

    Jack Briggs Executive Producer

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    Drew, I do not see how this thread can happen without people spilling over into discussion of the politics behind the new laws. The thread will be watched closely, so be prepared. JB
     
  3. Ted Lee

    Ted Lee Lead Actor

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    well, i'm on the fence with this one.

    on one hand, i feel that filing chapter 13 (instead of chapter 7) is a good way to still force the consumer to "own up" to their debt. i think too many people have figured out that filing bankruptcy is a way out of their debt.

    that being said, i know someone who went through a bad divorce years ago. the husband left her with nothing but debt, so her only choice was to file bankrupty. while it caused her a lot of grief (i think bankrupty stays on record for around seven years), she is now debt free and back up and running, financially sound, bought a house, blah blah blah.

    tough call on this one ...
     
  4. Mort Corey

    Mort Corey Supporting Actor

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    It may turn out to be a swing of the pendulum from one extreme to another. Law at first too lenient to one now too strict. Guess we'll have to wait and see how it all pans out. I believe that what many people have done to cause this restrictive reaction was pretty immoral on the part of quite a few people....discharging their obligations without penalty.

    Mort
     
  5. george kaplan

    george kaplan Executive Producer

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    I too think that this will quickly become political.

    All I have to say, is that this law is clearly to help corporations and wealthy people, and it shafts middle class and working poor.

    Given the lobbying power that the wealthy and corporations have, and the current makeup of the Congress, that's not surprising.
     
  6. AjayM

    AjayM Screenwriter

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    I have to take issue with that, of course the law is there to protect the financial institutions, the question is why wasn't the law there to start with?

    People run into financial problems all the time, sometimes for "good" reasons and sometimes for "bad" reasons, but there should be absolutely no reason why a person should be able to walk away from poor spending habits "scott free".

    But as noted above, I think instead of taking a moderate path they just went from one extreme to the other, which will hurt some people (although less so than some people think it will) in the cases of medical and divorce type situations (although in those situations it could also be from poor spending/money habits as well).
     
  7. DevinJC

    DevinJC Stunt Coordinator

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    yet another example of corporations being given more rights than people.

    Class warfare in 30 years.

    Just kidding, I hope.
     
  8. Ted Lee

    Ted Lee Lead Actor

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    i think i'm confused about the whole "corporate getting away with it" sentiment. reading the article, it seemed like it only really spoke about consumers?
     
  9. Joe Szott

    Joe Szott Screenwriter

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    Why wait, enjoy it today!




    This law is total, complete bunk. I've never in my life met anyone racking up huge debts with a smile and a wry wink telling people, "I'll just go bankrupt, it's a win/win."

    30% of all bankruptcies occur due to paying for an unexpected illness, like a child having cancer. Another 30% because of divorces and the ensuing bills.

    Bankruptcy laws exist to keep people fom getting dragged into never ending cycles of debt and hopelessness. Now, that safety net has been yanked out so credit companies can have a fatter bottom line. It's sick.

    If these companies were really hurting because of dead beat consumers, I have a great idea for them: stop sending every person in the USA five pre-approved credit cards every single day! Actually run a credit check and choose your card owners if these "irresponsible" bankruptors are cramping your style. These firms have built an empire of easy credit, debt approved liftstyle for profits, now they don't even need to clean up after themselves. Gross.
     
  10. Drew Bethel

    Drew Bethel Screenwriter

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    The airlines have been playing musical chairs with bankruptcy filings for decades. However, you don't see anyone crying foul. It is also worth noting that aggressive or loose underwriting of financial products is now commonplace in the credit industry. So people are being baited into taking on more than they can realistically manage - they end up in financial ruin and the credit company is not penalized but rewarded by denying the bankruptcy filing.
     
  11. AjayM

    AjayM Screenwriter

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    And that isn't going to change, in fact you will still be able to do a regular Chap 7 discharge. But the person filing will have to fall under some guidelines that are set (means test) in order to "qualify" for it. So the impact to the low/middle income will be fairly minor (if at all).

    All you people complaining about this new law, how many have actually read what it entails? Better yet how many have read the actual law itself (to avoid whatever slant would be taken from a news article)?

    Andrew
     
  12. Joe Szott

    Joe Szott Screenwriter

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    I've never been to a hospital that didn't take a credit card as fast as a check...
     
  13. AjayM

    AjayM Screenwriter

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    Sure, add up the limits on all your cards, how much of a hospital visit would it pay for? I don't think you're going to be paying off a year of chemo treatments on your Mastercard.

    Secondly the Federal Reserve doesn't see the huge CC problems from their survey's (over half of the households in the US don't carry a balance, of those that carry a balance the average is around $2k, etc).

    The CC companies did lobby hard for this law, but did they do it for the low income worker with $5k in CC debt, or did they do it to curb the upper-middle income earner with $50k+ in debt?
     
  14. Chuck Anstey

    Chuck Anstey Screenwriter

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    I do think that some change to bankruptcy law is needed to stop those who just like to spend, spend, spend. However, I will have to side with those that feel the CC companies caused their own problem by giving giant credit limits to people who clearly cannot afford them. I see no serious distinction between them and a drug dealer getting someone hooked on drugs and then claiming no culpability when the user's life ends up destroyed. "Hey, I just provided a service. They could have said no or stopped any time."

    CC companies should have to clean up their own mess and not pass on those costs to other consumers. I would like to see CC interest rates capped at prime + a little. None of this 15-20% interest rate. Then they would be a little more careful about how much they lend and nearly everyone would benefit.
     
  15. Mort Corey

    Mort Corey Supporting Actor

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    I have...and I find it disgusting and immoral. Twice in the last 14 years this couple has declared bankruptcy but first they max out all of a myriad of cards, then buy new cars with minimal down (to limit any equity) then start the game again. They live in a nice 750K home and have income in the top 5%. Granted, I don't know of anyone else quite this egregious, but I do know that the game is played by others I have come into contact with in the past.

    Mort
     
  16. AjayM

    AjayM Screenwriter

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    Exactly, under the new laws the couple mentioned above will not be able to discharge their debt. They will have to file Chap 13 and start making payments, as well they should considering their financial abilities.

    Contrast that with a household that earns under the median income for their state (very roughly $40k/yr) they will still be able to discharge debt and be "free and clear" and be able to move on with life.

    Andrew
     
  17. Joe Szott

    Joe Szott Screenwriter

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    Unless they moved all their equity into their $750K house and then filed, since the new law exempts property from the equation. Or they could buy an even more expensive home if that didn't do it.

    If people are determined to cheat the system, they will. It's like unemployment wages. No matter what we do someone will figure out how to exploit it. But it was there when the wife and I needed it after our first baby was born and she was laid off 8 months into the pregnancy. Only time we applied for unemployment and it really helped us out.

    The point a lot of us are making is that there is no legislation about capping CC rates or making them not bury the rate hikes in the fine print. Many people are effectively hoodwinked by the contract agreements at a young age and have a devil of a time getting back out. Congressmen don't seem to be bothered to look into that, but by goodness it is a moral imperitive to go after those low-life, debt mounting bankruptcy scumbags running rough shod over the $$$Billion in profits the credit industry already makes every year.

    And this change in legislation will affect anyone who tries to file for bankruptcy moving forward, the difference between the rich and poor citizens as always will be that the rich ones have lawyers, CPAs, and others to help them minimize the damage. Average folk just bend over like usual.
     
  18. Mort Corey

    Mort Corey Supporting Actor

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    Sorry Joe, but I don't have much sympathy for people that enter into contracts (of any kind) that haven't got the sense to read what they are signing. As far as capping rates, every time government tries to fix some problem with legislation it just seems to make matters worse. Think Dick Nixon with his wage and price controls or Jimmy Carter with the windfall profits tax on oil....they just exacerbated and prolonged the problem. Capping CC rates would likely lead to less availability of credit.....hmmm, maybe that's not such a bad thing after all [​IMG]

    Mort (who doesn't trust legislators to do much of anything right)
     
  19. AjayM

    AjayM Screenwriter

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    Bew-hew. If you're not smart enough to read the contract you enter into then you deserve what is coming to you. How many laws do you want to enact to protect people from themselves and from being stupid? I have little sympathy for the guy who get's a credit card, doesn't read all of the terms and conditions, goes out and overspends and has to spend the next 5 years suffering and living on a very tightened budget because of their stupidity from the start.
     
  20. Eric_L

    Eric_L Screenwriter

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    Umm, last I checked credit cards arrived with no balance. Personal responsibility is not a corporate conspiracy.

    There is a certain amount of 'bad debt' which credit cards will shot for. The presumption is that if you don't have a certain amount of bad debt, then you are setting limits which deny credit to a considerably broader segment of consumers who could use your product responsibly. As I recall the average credit card targets 3% while lower rate cards shoot for a lower ratio and higher rate cards a higher ration.
    The real crime is not modernizing bankruptcy laws nor people who file bankruptcy. The real crime is schools who churn out students who have little to no understanding of APR, compound interest, monthly payments, contracts, finance charges, fees, stocks, bonds or even household economics.
     

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