Post by RPankn on Feb 26, 2006 16:57:13 GMT -5
Unfortunately, the 'duh' aspect of this article could have been written back in 1998 when Clinton signed a bill into law which made several classes of debts that previously could be eliminated through bankruptcy, non-dischargeable and despite similar warnings from bankruptcy lawyers, judges and academics as those given to Bush. So this trend didn't just start last year. But to Clinton's credit, he didn't cave into credit card companies, who had been trying to get these rules passed into law since the end of his first term.
By Michelle Singletary | February 26, 2006
In what will undoubtedly be the first of many ''I told you so" reports, the National Association of Consumer Bankruptcy Attorneys has found that, overwhelmingly, people who file for bankruptcy protection aren't deadbeats who went on shopping sprees with the intention of shirking their debts.
That's quite contrary to what was being charged by supporters of a federal bankruptcy law that went into effect last October.
For years, those proponents argued that billions of dollars were being lost because people were simply being allowed to walk away from their debts. [Yes, because life is so much easier when one has the mark of bankruptcy on their credit reports for 10 years and can only obtain credit at exorbitant interest rates, if they can at all, being denied jobs and getting priced out of auto insurance because the fat, wealthy piggies at the trough in Congress don't understand what life is like for normal people and never met a lobbyist they didn't like.]
''As retailers, we have seen first-hand the dramatic effect bankruptcy has had on both consumers' finances and on our ability to serve the public," wrote Steve Pfister, senior vice president for government relations of the National Retail Federation, in a letter to House members as the bankruptcy bill was being debated.
''These filings ultimately cost the tens of millions of households we serve hundreds of dollars each in unseen costs every year. Unfortunately, many of those losses are the result of misuse of the law by irresponsible, higher-income filers," he added. [Yep. When I was helping someone through bankruptcy, right before them at the 341 meeting with the trustee was a man who had been in the local news and was accused of scamming seniors out of millions of dollars in some kind of investment scheme. He filed for bankruptcy hoping to discharge the claims of his investors.]
On the day President Bush signed the bankruptcy bill, he said: ''In recent years, too many people have abused the bankruptcy laws. They've walked away from debts even when they had the ability to repay them."
The law now requires people to get credit counseling before they can file for bankruptcy protection.
The premise behind this provision is that by forcing people to get counseling, it will show that many bankruptcy filers in fact have enough money left over after taking care of their essential expenses to repay creditors.
I spent several years reporting on bankruptcy, and I saw no evidence (academic or anecdotal) to support claims that scores of people were gaming the system.
Now, in the first analysis of the tens of thousands of people who have undergone credit counseling since the law passed, the bankruptcy attorneys association found that nearly all (97 percent) of the debtors truly couldn't pay their debts.
The association examined data provided by six large and small credit counseling firms from a cross-section of the country.
All of the firms have been authorized by the US Justice Department's executive office for US trustees to provide the required prebankruptcy counseling.
In total, the firms that were surveyed counseled 61,355 consumers.
Four out of five filers felt forced to seek bankruptcy protection because of a job loss, catastrophic medical expenses, or the death of a spouse, according to the report, ''Bankruptcy Reform's Impact: Where Are All the Deadbeats?"
Fewer than 1 out of 20 consumers (3.3 percent) were candidates for paying off what they owe under a debt management plan (DMP), the report indicated.
With a plan, a debtor makes one monthly payment to a credit-counseling agency.
The agency then distributes the funds according to a payment schedule they've worked out with the person's creditors.
Creditors may agree to lower interest rates or waive certain fees if you are repaying through a DMP, although this is happening less as more people sign up for such plans.
Typically it takes about 36 to 60 months to repay debts through a DMP.
The highest estimate of consumers' being able to make repayments under a credit counseling DMP was 5 percent, with the low being in the 1 to 2 percent range, according to the report.
''The masses of expected deadbeats who were supposed to be identified under the new law and forced into debt management plans have not materialized," the association's report concludes.
Only about one in five (21 percent) of those seen by a credit-counseling firm were identified as racking up debt due to ''circumstances within their control."
In many of those cases, people said they didn't fully appreciate how credit card fees and finance charges could put them deeper and deeper into debt. [Sounds like credit card companies should be heavily regulated instead of the other way around.]
OK, if you must, call the latter folks deadbeats. It's hardly a revelation that if you buy something on credit and you don't pay the bill off the next month, you're going to be charged interest. [I don't buy this. She should discuss how credit card companies play shell games with billing dates and grace periods as an excuse to jack up interest rates and tack on ridiculous fees.]
With the low minimum payments required, it's easy to amass a lot of debt over time. We all know this. [Of course, Ms. Singletary as a Post propogandist has to blame the victim, but not exame the actions of the victimizer.
]
But I do sympathize with people who experience a major disruption to their income or become financially ruined by uncovered healthcare costs (a growing and disturbing trend in America). [It's only a trend to her? Michelle, wake up!]
It is for these people we have bankruptcy protection.
There is at least something good to come out of the new law. If you're looking for a reputable credit counseling agency -- even if you aren't filing for bankruptcy -- I'd suggest you choose one that is now certified by the trustee program. At least then you'll have less of a chance of dealing with a deadbeat agency. [Wrong again Michelle. Unless one is in bankruptcy, their creditors are not obligated to participate in any debt counseling program. And, in fact, most collection agencies choose not to, even though they could recover some of the debt had they done so.]
To find an agency on the list, go to www.usdoj.gov. In the search field type ''approved credit counseling agencies."
Michelle Singletary is a columnist for The Washington Post.
www.boston.com/business/personalfinance/articles/2006/02/26/surprise_bankruptcy_filers_really_are_broke/?page=2
By Michelle Singletary | February 26, 2006
In what will undoubtedly be the first of many ''I told you so" reports, the National Association of Consumer Bankruptcy Attorneys has found that, overwhelmingly, people who file for bankruptcy protection aren't deadbeats who went on shopping sprees with the intention of shirking their debts.
That's quite contrary to what was being charged by supporters of a federal bankruptcy law that went into effect last October.
For years, those proponents argued that billions of dollars were being lost because people were simply being allowed to walk away from their debts. [Yes, because life is so much easier when one has the mark of bankruptcy on their credit reports for 10 years and can only obtain credit at exorbitant interest rates, if they can at all, being denied jobs and getting priced out of auto insurance because the fat, wealthy piggies at the trough in Congress don't understand what life is like for normal people and never met a lobbyist they didn't like.]
''As retailers, we have seen first-hand the dramatic effect bankruptcy has had on both consumers' finances and on our ability to serve the public," wrote Steve Pfister, senior vice president for government relations of the National Retail Federation, in a letter to House members as the bankruptcy bill was being debated.
''These filings ultimately cost the tens of millions of households we serve hundreds of dollars each in unseen costs every year. Unfortunately, many of those losses are the result of misuse of the law by irresponsible, higher-income filers," he added. [Yep. When I was helping someone through bankruptcy, right before them at the 341 meeting with the trustee was a man who had been in the local news and was accused of scamming seniors out of millions of dollars in some kind of investment scheme. He filed for bankruptcy hoping to discharge the claims of his investors.]
On the day President Bush signed the bankruptcy bill, he said: ''In recent years, too many people have abused the bankruptcy laws. They've walked away from debts even when they had the ability to repay them."
The law now requires people to get credit counseling before they can file for bankruptcy protection.
The premise behind this provision is that by forcing people to get counseling, it will show that many bankruptcy filers in fact have enough money left over after taking care of their essential expenses to repay creditors.
I spent several years reporting on bankruptcy, and I saw no evidence (academic or anecdotal) to support claims that scores of people were gaming the system.
Now, in the first analysis of the tens of thousands of people who have undergone credit counseling since the law passed, the bankruptcy attorneys association found that nearly all (97 percent) of the debtors truly couldn't pay their debts.
The association examined data provided by six large and small credit counseling firms from a cross-section of the country.
All of the firms have been authorized by the US Justice Department's executive office for US trustees to provide the required prebankruptcy counseling.
In total, the firms that were surveyed counseled 61,355 consumers.
Four out of five filers felt forced to seek bankruptcy protection because of a job loss, catastrophic medical expenses, or the death of a spouse, according to the report, ''Bankruptcy Reform's Impact: Where Are All the Deadbeats?"
Fewer than 1 out of 20 consumers (3.3 percent) were candidates for paying off what they owe under a debt management plan (DMP), the report indicated.
With a plan, a debtor makes one monthly payment to a credit-counseling agency.
The agency then distributes the funds according to a payment schedule they've worked out with the person's creditors.
Creditors may agree to lower interest rates or waive certain fees if you are repaying through a DMP, although this is happening less as more people sign up for such plans.
Typically it takes about 36 to 60 months to repay debts through a DMP.
The highest estimate of consumers' being able to make repayments under a credit counseling DMP was 5 percent, with the low being in the 1 to 2 percent range, according to the report.
''The masses of expected deadbeats who were supposed to be identified under the new law and forced into debt management plans have not materialized," the association's report concludes.
Only about one in five (21 percent) of those seen by a credit-counseling firm were identified as racking up debt due to ''circumstances within their control."
In many of those cases, people said they didn't fully appreciate how credit card fees and finance charges could put them deeper and deeper into debt. [Sounds like credit card companies should be heavily regulated instead of the other way around.]
OK, if you must, call the latter folks deadbeats. It's hardly a revelation that if you buy something on credit and you don't pay the bill off the next month, you're going to be charged interest. [I don't buy this. She should discuss how credit card companies play shell games with billing dates and grace periods as an excuse to jack up interest rates and tack on ridiculous fees.]
With the low minimum payments required, it's easy to amass a lot of debt over time. We all know this. [Of course, Ms. Singletary as a Post propogandist has to blame the victim, but not exame the actions of the victimizer.
] But I do sympathize with people who experience a major disruption to their income or become financially ruined by uncovered healthcare costs (a growing and disturbing trend in America). [It's only a trend to her? Michelle, wake up!]
It is for these people we have bankruptcy protection.
There is at least something good to come out of the new law. If you're looking for a reputable credit counseling agency -- even if you aren't filing for bankruptcy -- I'd suggest you choose one that is now certified by the trustee program. At least then you'll have less of a chance of dealing with a deadbeat agency. [Wrong again Michelle. Unless one is in bankruptcy, their creditors are not obligated to participate in any debt counseling program. And, in fact, most collection agencies choose not to, even though they could recover some of the debt had they done so.]
To find an agency on the list, go to www.usdoj.gov. In the search field type ''approved credit counseling agencies."
Michelle Singletary is a columnist for The Washington Post.
www.boston.com/business/personalfinance/articles/2006/02/26/surprise_bankruptcy_filers_really_are_broke/?page=2
