Congress Passes Bankruptcy Reform Bill

[mindtonic]

The only way to owe money is to get things that you cant pay for. IE- credit/loans.

How about a morgage, and car payment? Would you consider these irresponsible investments or frivilous spending?

There's no doubt that Americans rely too much on credit. Of course we do......we take our cue from Uncle Sam (a fair statement regardless of what political philosophy you adhere to.) Our deficit grows larger every year and our government makes no real effort to curb it's spending.......but they expect consumers to use credit more wisely than themselves.

******Source of those statistics still to come.....I'm a little tied up helping my wife with our newborn******

 

[jmcleod]

Personally, car loans can and often are a very bad way of doing business.

How many kids have you seen driving "cool" cars - or brand new cars? I see it all day long. They drive cars that cost more than twice what they make in a year and usually pay huge interest rates because they are first time buyers. This trend goes well beyond kids too - I see adults trying to keep up with the Jones's all the time as well. In most cases a car loan is a necessary evil, but financing a depreciating asset is a poor move and should be avoided if possible.

I still hold to the idea that most consumer bankruptcies can be traced to poor borrowing decisions.

Jon

 

[slipknottin]

How about a morgage, and car payment? Would you consider these irresponsible investments or frivilous spending?

They are totally irresponsible if the loss of your job for a couple months means you have to declare bankruptcy.

 

[happychem]

It depends on whether the car and house were within your means to begin with. Obviously very few people have the money to buy a house, or even a car, outright, but aside from that folks should be living by the mantra of don't buy it unless you already have the money for it.

I'm not saying don't have a credit card, or even don't use it. Credit cards are very convenient ways of purchasing and building a credit history, used correctly. The rule of thumb should be if you don't already have the money (and I mean disposable income, not outright savings) don't buy it.

This is one of those reasons that commercials for those places where you can walk in and rent the big screen tv, the new sofa, new computer, etc. really bug me. You know the one I'm talking about, the mom's heading out to get a something and askes the family what they want... Anyway, I think that places like those just encourage irresponsible spending.

I think that there's no doubt that honest, hardworking people who live within their means are hurt financially by job loss or medical bills. All I can say about the last is thank goodness for medicare, as for stateside, while I'm not going to push my personal views on medicare, there should be some protection for people unable to pay, at the very least, it's rediculous to go bankrupt because you need heart surgery, or to have to decide whether or not you have the financial means to pay for a life saving treatment.

I am very interested in this reference mindtonic, I admit to being skeptical, but then, I would be if you had stated the reverse as well.

One thing in the initial post that I disagreed with:

Rep. David Dreier (news, bio, voting record), R-Calif., said the legislation would save American families an average $400 a year in higher interest rates now charged to consumers to recoup losses from those who abuse bankruptcy proceedings.

I strongly doubt that interest rates will decrease, at least not unless the government decides to audit these companies and force the decrease based on money saved. More likely the companies will simply save money and post higher earnings as a result.

The same thing happened here when the provincial government put a cap on how much insurance companies needed to pay out for soft-tissue damage. Insurance companies were crying that high settlements for these types of injuries were costing them an arm and a leg and were thus the major cause of high premiums. However, after the cap, insurance premiums have not dropped, they haven't gone up, but they haven't dropped as they were supposed to. I also suspect that we regulate our companies a lot tighter than the US government regulates American companies.

 

[jmcleod]

Happychem,
I agree that you won't see the savings passed down directly - or immediately. The companies will post higher profits and in turn the stock or dividend will rise. So a portion of the savings will get passed through to equity owners. This will (in the long run) increase the credit rating of banks and they will be able to borrow at less of a cost. Now they have a choice - lower rates or higher earnings. Companies that don't get greedy may pass the savings on. It's a cycle and will take some time to work through.

Jon

 

[Matak]

IMO their are too many social programs that started out with great intentions but abuse has turned them into societal nightmares. BK is just one of them...J

Is that the sound of another can of worms being opened? ...

The problem with social security nets is this: that what was first intenended as a help in time of crisis in time has become a necessity, then a right to be taken for granted. Familiarity breeds contempt.

Ask your parents or grandparents. If they are old enough, they will tell you that it was rare for anyone to accept social welfare before the mid 1960's. People were proud and would not accept a handout if they were able to support themselves. Nowadays public attitude has done a 180° turn and people say: "I've paid into it, I deserve it" or "the government has lots of money, why shouldn't I have my share?"

It's too bad, really. Programs that are helpfull to people in times of need become so abused that it becomes a mockery and has to be limited or highly controlled with bureaucracy.

Sometimes human nature sucks. We are a fallen tribe in need of salvation.

But having said that I really hope that there will be something there for people in need.

 

[jmcleod]

Well sadi Mr. Newman!

Yes - society has become conditioned to accepting things that haven't been earned. It drives me nuts. However, most people have been in need at some point. The problem is - as you said - when the need is perceived to be a right of society... Like you're collecting a debt owed to you.

And yes - it is a whole other can of worms!

J

 

[happychem]

The problem, as was earlier posted, is that not only do people believe that this debt is owed to them, but they believe that they deserve all the perks that successful people have as well.

Welfare should only be providing food, clothing and shelter, and the cheapest possible of all three. There are plenty of poverty advocates who complain about people on welfare starving and how woefully inadequate welfare is. While I sympathize with the plight of these people and understand that there are some who truly and honestly struggle, having grown up surrounded by them I have little sympathy for the visual majority of them. I don't believe that welfare entitles you to cigarettes and booze, it does not entitle you to the hottest and newest game consoles. When I was young and wanted a super nintendo my folks said that we couldn't afford it. Meanwhile the two welfare brothers that my mom was teaching had one, each, with that bazooka thingy that didn't take. Anyway, my point is that it's an issue of attitude, basically agreeing with Mr. Newman, love it, btw.

Another problem is that because welfare is not taxed, someone on welfare actually has a higher net earning than one working minimum wage. Now I for one would flip burgers before going on welfare, but everyone doesn't have the same pride in a dollar earned, nor the level of appreciation due for how hard it is to earn money. Quite frankly, once you've earned money, you have a much better appreciation for it and how to spend it, or not spend it.

 

[greeneyedlady]

closest personal experience with someone filling bk....a friend of my father's in dept up to his elbows filled to get out of his debts, this was the 2nd time he had done it.......he signed his cars over to my dad 6 months before (one was a 1969 mach one that he used as a show car)after liquidating or signing over anything he didn't want creditors to touch he waited about 1 year all told and then filled the only thing they could take from him was a trailor house he didn't want and an old clunker. 1 year after filling debt free he bought a new house, new car, big screen tv, and top of the line new computer with all the latest gadgets. The other stuff he had signed over he slowly over the last 4 years has reclaimed. No not everyone who files bk is so savy and can get away with this kind of nonsense but alot do or maybe I should say did

 

[Matak]

:OT: This is going off the intended path, but threads are progressional, not static.

A democratic government cannot make abritary decisions on a case by case review. Not only is it too time consuming, but it violates universality, or equal treatment for all. A democratic government is a good and fair style of government with its checks and balances and its "by the people, for the people" decrees, but it is not the most efficient type of government. The most effective and efficient form of rulership is not socialism, communism or even democracy, but a benevolent dictatorship.

But (and this is a big butt), a benevolent dictatorship is quite rare and only lasts for a generation or maybe two. A look at the bible shows that only about 10% of those in charge from the time of King Saul to the time of Malachi were kind to their people. The rest were ruthless, selfish and quite decadent.

So to bring this back on track, I believe that it is not the current rules and regulations that are the problem, but the tendencies of human nature.