Why don't you answer my question about the fairness of these folks waltzing into bankruptcy court and declaring the debt they owed me to be liquidated? Is that fair? Somebody make the case for me that it is fair for these folks to unilaterally discharge the debts they owed me? Cyclops or Kicky, you two are championing these shirkers.... please explain to me why it is the right thing to do to allow them to take food from my children's mouths?
Bankruptcy laws should exist to require these folks to repay their debts, discharge a percentage, protect exempt assets, etc. But not make it easy to just discharge all debts completely.
If they were to walk up to me on the street and take $500 from me, it would be a crime. That they can do the very same thing in bankruptcy court is nothing to encourage.
FreeDuck wrote:If all they need to do is claim bankruptcy and that's it, then what are the hearings for?
So creditors can appear and claim fraud on the part of the debtor, or that the debt owed to them is non-dischargeable if it falls within a very limited class of debts. None of which applied in my scenarios.
Contending that it's not "fair" that someone erased a debt to you through bankruptcy is merely an attempt to escape the consequences of your own decisions. You consciously and willingly undertook the risk when you extended credit, yet you now want to be relieved of the consequences of that risk once that transaction turns sour. That doesn't sound like a conservative talking, Tico. I'm sure you'd agree that we shouldn't erect a system that rewards people for evading their responsibilities, so why should we reward creditors who, on occasion, suffer the unfortunate, but completely foreseeable, consequences of their decisions?
kickycan wrote:Ticomaya wrote:kickycan wrote:Tico, seriously, what about the stuff in the three paragraphs that I quoted? That is what the article is really about, and I notice that you still haven't said anything remotely related to any of it.
It would be kind of like if a bill came along called the "Stop unwanted pregnancy bill", and you came along and said, "unwanted pregnancies are bad. Yeah, I'm all for this bill", ignoring the fact that in the bill they advocate sterilizing everyone under 21 years of age.
I appreciate you think the 3 paragraphs you quoted is what Krugman's editorial is "really about," but what it's really about is the bankruptcy law that's been advanced by the Senate. This is a law that curtails individuals from liquidating their debts completely through Chapter 7 filings. My concern about how easy it is for debtors to "wipe the slate clean" and the impact that has on the "creditors" is germane. Bankruptcy will still be available to folks ... it just won't be as easy.
Why don't you answer my question about the fairness of these folks waltzing into bankruptcy court and declaring the debt they owed me to be liquidated? Is that fair? Somebody make the case for me that it is fair for these folks to unilaterally discharge the debts they owed me? Cyclops or Kicky, you two are championing these shirkers.... please explain to me why it is the right thing to do to allow them to take food from my children's mouths?
Ridiculous diversionary tactics. Enjoy your "debate".
You must not have understood point that I thought I had made quite clear in my first post in this thread. My point has to do with the extreme ease with which someone can declare Chapter 7 bankruptcy. If this new law makes it more difficult for someone to do that, and forces them to repay debts the lawfully owe, it is overdue.
Ever had a debt someone owed you wiped out just because the person wanted to take a personal bankruptcy, au? I have. Do you think it was fair that someone taking bankruptcy was able to wipe out the debt they were obligated to pay me? It's way too easy to declare bankruptcy, and not fair to those who are owed the debts. I have little sympathy to those who whine and complain that it's not going to be as easy to wipe out their debts now. Go cry to someone who cares.
Are they supposed to just give money away
Perhaps if you have cancer the credit card companies should immediately void your credit cards to ensure no more debt is added to their outstanding bills.
but somehow the liberals always find someway to turn it around and make victims out of the negligent.
Ticomaya wrote:Why don't you answer my question about the fairness of these folks waltzing into bankruptcy court and declaring the debt they owed me to be liquidated? Is that fair? Somebody make the case for me that it is fair for these folks to unilaterally discharge the debts they owed me? Cyclops or Kicky, you two are championing these shirkers.... please explain to me why it is the right thing to do to allow them to take food from my children's mouths?
Of course it's fair.
You operate in an economic system which already has bankruptcy laws in place (as a lawyer, you must be aware of them). As such, any transaction in which you engage is predicated on accepting the laws that govern that transaction, including the bankruptcy laws.
If you allow someone to pay for services after those services are rendered, then you are, in effect, extending credit to that person. Consequently, you take the risk that the person will not pay -- either because of bankruptcy or because the person simply skips out on his bill. By extending credit, however, it is you who willingly undertake this risk. And if you took the risk, you should bear the consequences.
Contending that it's not "fair" that someone erased a debt to you through bankruptcy is merely an attempt to escape the consequences of your own decisions. You consciously and willingly undertook the risk when you extended credit, yet you now want to be relieved of the consequences of that risk once that transaction turns sour. That doesn't sound like a conservative talking, Tico. I'm sure you'd agree that we shouldn't erect a system that rewards people for evading their responsibilities, so why should we reward creditors who, on occasion, suffer the unfortunate, but completely foreseeable, consequences of their decisions?
My advice: if you want to avoid this situation in the future, DON'T EXTEND CREDIT. Demand payment up front and in advance. Of course, you might find it difficult to do business under these conditions, but, in the end, it's your choice.
But I assure you, I applaud changes to the system that will make it more difficult for persons to take personal bankruptcy and avoid payment of their debts.
I want to tell you something about credit cards and "personal responsibility."
Citizens of democratic countries do not have a limitless responsibility to pay off debts that they incur, whatever the reason. I know that this may come as a surprise to folks who have a strong belief in a culture of personal responsibility, but this is a fact.
I repeat: in a democracy, citizens do not have limitless responsibility to pay off debts that they incur. In a democracy, economics of all types -- whether they be household or national -- are subjected to limits created by the people that ensure that THE ECONOMY WORKS TO SERVE THE PEOPLE and PEOPLE DO NOT WORK TO SERVE THE ECONOMY.
In order for our lending system to work, citizens do have the responsibility to pay off their debts to the degree that they are able to do so without otherwise injuring themselves or the system. If there were no enforcement on the repayment of debt, no one would be willing to lend money. And without a lending system, supporting a commerce system would be difficult, etc., etc., etc.
However, when lenders offer you that credit card, they are assuming a risk. This risk is that you will not be able to pay off the loan. In order to insure against this risk, they charge you interest. This interest is meant to lessen any harm that they might incur, should you not be able to repay the full amount of the loan.
And so, everything works out. You get a loan. The credit card gets monthly payments against the loan -- plus a supplemental amount that covers them in the case that you cannot make full repayment. Because the current bankruptcy laws adequately protect the credit card companies, they are able to make a profit -- in fact, huge profits -- off of the arrangement.
The reason that I mentioned "democracy" above is that I want to enforce the idea that credit card companies operate at the pleasure and the discretion of the people. The reason that they are able to enter into the business that they are in is that the people have explicitly authorized them to do so. The people have decided that the business of offering short term loans via the "credit card payment system" is a valuable service. These businesses must be licensed and chartered by the state.
Under the new bankruptcy law, credit card companies will become a liability to the public good, rather than an asset. This, I think, is demonstrably true when you examine any of the scenarios that have been put out by reputable economists and by academics who specialize in analyzing consumer debt and its effects on the public.
By making it very difficult to secure a bankruptcy, credit card companies and other lenders are trying to obtain a guaranteed income stream from society by means of legislation. This has nothing to do with "free markets" or "personal responsibility." This is a simple matter of rigging the game in such a way that your personal productivity is tithed to entities who are rich and powerful enough to purchase this right from government.
I feel like I am just rambling on at this point ...
To my mind, "personal responsibility" is a very good concept. But there must be a limit here. This limit can be very clearly delineated by examining at what point the concept of "personal responsibility" becomes a liability to society as a whole.
With this bankruptcy bill, the credit card companies are going way over the line. They are establishing themselves as, essentially, wealth-sucking leeches that are not operating under intent of the laws by which they are licensed to do business in this country.
Banks and credit card companies exist to provide a service to us. Not the other way around.
I'm not sure how much more clearly I can say this.
You want personal responsibility?
by horsewithnoname
Wed Mar 9th, 2005 at 12:02:48 PST
Much of the press given to the bankruptcy bill currently in the Senate has been concerning the claim that bankruptcy is being used as a dodge, that dishonest people are using bankruptcy to duck their personal responsibility in paying off their debts.
The use of "personal responsibility" as a bankruptcy touchphrase is disingenuous. In this modern era, in which corporations make obscene amounts of revolving debt available to individuals, it is worth remembering that corporations came into being as a means of divorcing business owners from bearing personal responsibility for their actions taken in the course of business.
In a society based on personal responsibility, there are no corporations. There are only individuals who bear full responsibility for their actions, whether in business or otherwise.
In the business sphere, we left the personal responsibility society in the 1800's. Prior to that time, a business was a sole proprietorship or a partnership. In such a society, the consequences of any business decision can affect the personal wealth and freedoms of the owners. Sole proprietorships and general partnerships do not protect their owners from personal liability for business decisions.
In the 1800's, the legal concept of a corporation was created. Under this concept, a person could participate in the financial success of a business, but the person's potential for financial loss was limited to their initial commitment in buying shares in the corporation. The corporation could get fined, taxed, and sued into oblivion, but shareholders were not personally liable for the debts of the business, nor were they personally indictable for property or personal damages caused by defective products.
This legal protection is what made it possible for large groups of people to pool their resources and build large companies, without having to first build the mutual trust required in enter into mammoth 30-way or 100-way partnerships. But, the same legal protection is now exploited by corporate executives who, under the guise of "doing business", do things that would expose a sole proprietor to a real risk of losing personal assets or freedoms. A few examples include flouting minimum-wage laws, dumping toxic waste, and defrauding customers.
It is always within society's power to revise the law. MBNA, GMAC, Citibank, and the like exist only because we allow their corporate structure to be legal. Should the executives of these corporations continue to exploit the law to their gain at the expense of society, they should not be surprised if we the people demand revisions in the law.
Perhaps we could start by making the members of each corporation's board of directors individually and severally liable for all debts and obligations of the corporation, and deny said corporations, and members of the board, from seeking bankruptcy protection from any such debts and obligations. Remember, it's a matter of personal responsibility to repay one's debts.
Credit Card Firms Won as Users Lost (Cyclo note: not exactly a liberal guy)
"That's because people are paying so many fees that they've already paid more than was originally borrowed," he said.
In addition, some experts say, the changes proposed in the Senate bill would fundamentally alter long-standing American legal policy on debt. Under bankruptcy laws as they have existed for more than a century, creditors can seize almost all of a bankrupt debtor's assets, but they cannot lay claim to future earnings.
The proposed law, by preventing many debtors from seeking bankruptcy protection, would compel financially insolvent borrowers to continue trying to pay off the old debts almost indefinitely.
"Until now, the principle in this country has been that people's future human capital is their own," said David A. Moss, an economic historian at Harvard University. "If a person gets on a financial treadmill, they can declare bankruptcy and have what can't be paid discharged. But that would change with this bill."
Debate about the bill continued Thursday, with the Republican-controlled Senate refusing to limit consumer interest rates to 30%.
In the case of the second card, the papers show that McCarthy charged an extra $203 and made more than $2,000 in payments, but again fees and finance charges pushed the balance up.
McCarthy refused to comment on the case. A spokesman for Providian could not be reached last night.
But court papers show that McCarthy eventually paid all the bills in the case, including back taxes. The way she did it, using provisions of bankruptcy law, illustrates one of the problems with the proposed new law, critics say.
McCarthy had been making mortgage payments on two houses. She wanted to sell one of the houses to pay off her debts, but the house was entangled in legal difficulties. By declaring bankruptcy, she was able to stop the clock on her escalating credit card debts and give her lawyer time to clear up the legal problem, enabling her to sell the house and pay off the bills.
Under the proposed new law, McCarthy, who makes about $55,000 a year, would have had a much harder time qualifying for the bankruptcy protection that allowed her to pay creditors.
"The McCarthy case shows how hard-working people making good incomes can end up in situations that they can't dig themselves out of unless they file for bankruptcy," said Weed, her lawyer.
Credit card companies have come in for harsh criticism in recent years for their penalty fees and the "risk-based pricing" under which they charge customers different interest rates depending on their credit histories and their likelihood of paying.
Consumer advocates have accused firms of not adequately disclosing such controversial practices as universal default, when a company can jack up a cardholder's annual percentage rate, often to more than 30%, based on the cardholder's performance with another creditor, not the card company.
Regulators and law enforcement officials have accused companies of deceptive practices. In 2000, the U.S. Office of the Comptroller of the Currency and the San Francisco district attorney's office ordered Providian to pay $300 million in restitution after customers complained that the company didn't credit their payments on time and then imposed late fees.
A stream of court cases involving credit card companies has produced public outrage in various parts of the country.
In Cleveland, a municipal court judge tossed out a case that Discover Bank brought against one of its cardholders after examining the woman's credit card bill.
According to court papers, Ruth M. Owens, a 53-year-old disabled woman, paid the company $3,492 over six years on a $1,963 debt only to find that late fees and finance charges had more than doubled the size of her remaining balance to $5,564.
When the firm took her to court to collect, she wrote the judge a note saying, "I would like to inform you that I have no money to make payments. I am on Social Security (news - web sites) Disability . If my situation was different I would pay. I just don't have it. I'm sorry." "The idea that companies are losing their shirts on bankruptcies is a lot of bull," said Robert B. McKinley, chief executive of CardWeb.com, a Frederick, Md., consulting group that tracks the credit card industry. "With these rates and fees, the card industry is a gravy train right now."
Mills, the bankers association spokeswoman, said bankruptcies affected all American households in the form of higher costs and lower returns on investments.
As recently as the late 1980s, credit card companies offered a one-size-fits-all card with a fixed interest rate and an annual fee. Virtually all cards went to middle-class borrowers with good credit histories; issuing cards to poor or high-risk borrowers was almost unheard of.
But in the early 1990s, companies such as AT&T and General Motors began issuing cards with variable rates and no fees, increasing competition. And by the middle of the decade, card companies were finding their traditional middle-class markets saturated.
Their response: lend to riskier customers and make up for the danger of more defaults by charging higher rates and then new fees.
McKinley, the industry analyst, said the firms were helped by a 1996 Supreme Court case that gave card companies new protections against state regulation of fees.
"That really opened the flood gates. It set off a fee frenzy," he said.
Oh, and credit card companies ALSO will put a hold on your card if your finances and personal assets don't jibe with the credit you are requesting.
I started on page one and was immediatly struck by Tico's argument for personal responsibility. Thankfully, Joe made my point more eliquently than I could have. Tico, you were whining and complaining. You need to buck up and take responsibility for your actions.
