New Bankruptcy Law takes effect Oct 1st.

[asleepathewheel]

Originally posted by Odin



Humans arn't rational, everone does things that are stupid out of a sub-conscious desire to improve thier status. Our society is at fault because as children we are bombarded by mesages saying that buys expensive stuff, like $120 Nikes, makes you cool. That influences our spending habits as adults. You are falling for the Libertarian assertion the onlty the individual matters and that people have complete and rational control over thier decisions, an idea that is false, or else Ming and other people employed in influencing people's decisions would be out of a job.

Thanks for the lecture, kiddo.

Once you grow up a bit, maybe you'll take responsibilty for yourself instead of blaming everything on society and peer pressure.

[Colonâ„¢]

Originally posted by chegitz guevara
Bankruptcy is one of the things that makes America better than Europe. After independence, our founding fathers wanted to ensure that no one could be put in prison for debt, that people whose circumstances got out of control could wipe their debts and start again.

I don't think we've been putting toomany people into prison for debt of the late.

[korn469]

here's a snippet of an article on the motley fool that helps sheds some light on how things can get out of control

How Careful Do You Have to Be?

Consider two simple examples, starting with a positive one. Let's say that you begin setting aside $75 every month, in savings earning 5% interest. If you can pull this off for five years, you'll end up with a comforting $5,100 in emergency savings.

Now, let's turn this picture on its head, and assume that you come up short by the same $75 per month, on average, over the same five years. Further, assume that you routinely patch over this difference with a credit card. Note that we're talking about less than $20 per week here -- hardly a symptom of reckless "retail therapy." Nonetheless, at the end of five years you'll be looking at more than $7,200 in debt, assuming an 18% credit card interest rate.

That's an extra $2,100 in debt, beyond the $5,100 earned by saving $75 per month. This is the difference between saving and paying down debt. Saving is hard enough, but paying down debt is $2,100 harder!

And this difference just gets bigger as time goes on. While your bank savings work hard twenty-four hours a day to make you more money, any outstanding credit card debt is likely to be working three times harder, charging a much higher interest rate than your savings pay.

Moreover, as a saver you have the force of compound interest on your side, the idea that your balance starts to snowball as you earn interest not only on your deposits but also on the interest payments you leave in the account. As a debtor, this same powerful compounding force works against you, and the higher the interest rate, the faster the snowball builds.

http://www.fool.com/seminars/sp/index.htm?sid=0001&lid=100&pid=0000

[Urban Ranger]

Originally posted by Theben
Considering that the APR rates for credit cards are already insanely high, having to pay more per month only makes sense if the card issuers lower their rates.

How much is the annual interest rate on credit cards over at your end?

[Urban Ranger]

Originally posted by Oerdin
70% of the US economy is based upon consumer spending (also in the linked article). It is dangerous to toy with something that big just because Chase Manhattan paid Sen. Biden X number of dollars for special legislation to make them more profitable.

I agree with the new proposal in spirit. Bankruptcy should be biting, i.e. it needs to have some severe adverse effects on people so it wouldn't be abused. Here if you declare bankruptcy you can't even take a cab, and the effects last for 4 full years.

However certain provisions are definitely insane. Why would anybody needs to pay for an item after it gets repossessed?

[Patroklos]

However certain provisions are definitely insane. Why would anybody needs to pay for an item after it gets repossessed?

That is stupid. However, I think they should be able to get the property acessed and if the asset is worth less than the amount you owe, you should pay the difference. And visa versa.

[KrazyHorse]

Originally posted by DanS
A high savings rate is not in itself a good thing. In part, we have the lowest savings rate because we have the most stable economy.

Your savings rate is, fundamentally quite negative (mod real estate increases), and this is what is causing the large current account deficit.

A too-high savings rate is not necessarily a good thing, but a too-low one is devastating in the long run

[KrazyHorse]

Originally posted by Patroklos


That is stupid. However, I think they should be able to get the property acessed and if the asset is worth less than the amount you owe, you should pay the difference. And visa versa.

Bull**** (on the paying the difference part)

If you've declared bankruptcy your creditors are ****ed. That's the point. They get everything you own, you start clean.

Otherwise bankruptcy doesn't mean anything at all.

[KrazyHorse]

Declaring bankruptcy should mean that you start out literally from scratch. You don;t get to keep the car, the TV, the house or anything else.

They don't have any claim on your future earnings.

[MosesPresley]

"I'm tired of seeing these redneck *******s spend spend spend then declare bankruptcy because they weren't financially responsible"

"they should use some of that credit to buy health insurance instead of those new rims or a bass boat eh?"

"Quite right, but why should you be given free rides when you buy too many $120 nikes ?"

There is a strong odorous undercurrent of predjudice surfacing. Is this the real reason some are supporting this law?

[asleepathewheel]

Originally posted by MosesPresley
There is a strong odorous undercurrent of predjudice surfacing. Is this the real reason some are supporting this law?

Who am I predjudiced against? Those who can't manage their finances? That cuts a pretty broad swath of society I think. And I'm ok with being called prejudiced in that way. After all, if you would believe Che's link, then you would see that upper middle class would be most affected by the changes.

[:) Smiley]

Bankruptcy law is the US excuse for a social safety net like those in other developed and some developing nations.

There's got to be one or the other. Doing away with both is like jumping out of a cliff without a parachute or a cushion below.

[DanS]

Here if you declare bankruptcy you can't even take a cab

How does that work in practice? Do they screen for this?

[DanS]

Originally posted by KrazyHorse


Your savings rate is, fundamentally quite negative (mod real estate increases), and this is what is causing the large current account deficit.

A too-high savings rate is not necessarily a good thing, but a too-low one is devastating in the long run

You could just as easily say that foreign investors are shoving money in our faces, thus causing the current account deficit. The investment environment must be truly poor every place else.

I would assume that a negative savings rate is bad, but as stated I believe this to be temporary. I am as unqualified as you are to opine on a "good" savings rate.

[Dinner]

Originally posted by Ming
Yes Oerdin... if indeed the evil banks and fianancial company were to do as you suggest, the little guy would be hit even worse because they would NEVER be able to get credit. Only people with money would get credit. So be careful of what you wish for

Funny, I don't recall it being difficult to get credit under the old rules. Yet basically the old laws did require banks to give some care who they gave credit to since bankruptcy was a real possibility.