Forgiving Debtors Less | csmonitor.com
Considering declaring personal bankruptcy any time soon? You might want to do it before the new laws come into effect. Not that we recommend going the bankruptcy route if you can avoid it — the stigma and long-term effects are not necessarily something you want. That being said, sometimes you need a fresh start and declaring personal bankruptcy may be your only option. The Christian Science Monitor had this to say about forgiving debt in a recent editorial:
Too many individuals use bankruptcy like a “get out of jail free” Monopoly card. Over the past decade, personal debt other than mortgages has doubled, as has the number of Americans filing for bankruptcy. At least $40 billion in debt is now forgiven annually.
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The bill wisely contains a means test that compares a consumer’s income and expenses, and requires bankruptcy filers who can repay at least some of their debt to do so. It also forces them to take credit counseling before filing. Many debtors also won’t be able to file more than once every two years, nor could they file after just buying a vehicle with a loan.
One piece of the legislation that needs close attention would take away much of the leeway now given judges in gauging an individual’s circumstances. The bill makes little distinction between those who wantonly abuse credit and those forced into bankruptcy due to extraordinary circumstances, such as job loss or costly healthcare. Almost every debtor after bankruptcy will likely need to repay portions of their loans. That’s proper in most cases, but it could also force many to live off of family, friends, or welfare. Congress needs to track how many are pushed into poverty and be ready to fix the law.
Not included in this bill is any government pressure on credit card lenders to stop taking on many customers who are obvious credit risks - especially many teens. Perhaps that’s because financial institutions have given big bucks to help many members of Congress get elected - $29 million in the 2004 election cycle. At the least, those under 18 should not be subject to barrage mailings offering credit cards.
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Forgiving Debtors Less | csmonitor.com
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