Posted on 11/09/2019 9:05:56 AM PST by rintintin
thank you. But can’t the lenders then grab the person’s assets to make good the loan?
yes, people should not be living on credit so much.
What would those people do if they didn’t have credit cards?
a. live within their means
or
b. go to loan sharks
I’m going to guess they’d choose b
Debtors prisons didn’t stop people going bankrupt, but then it stopped people taking risks.
I think it is bad to stop people taking risks - the USA is innovative primarily because there is no stigmatism to going bankrupt. So people try new things and fail.
In Germany or France it is practically a sin to go bankrupt. So innovation is far lower.
that’s a trade-off, isn’t it?
Credit card delinquencies are near historical lows. Delinquencies are up in student and auto loans.
The 2005 Bankruptcy Bill made it harder to file Chapter 7 (liquidation of dept). I remember the stories of people running up 10's of thousands of dollars in CC debt. They would get the debt wiped out and do it all over again.
Because they are credit cards, they are unsecured - there is no home or vehicle specifically attached to the loan. Declaring bankruptcy prevents the lender from taking any assets of the borrower. I know people who keep their assets in family members’ names to protect them from being attached.
I think our personal debt issue is much more related to the fact that as our standard of living fell for the past few decades (as a result of “globalization”/competing with the developing world for jobs), people simply pretended it was 1985 and borrowed to finance their lifestyles. As they lose real jobs from the “before-times” and replace them with the McJobs available, it is impossible to repay the loans. Student loan debt illustrates this perfectly, as most students can only get McJobs (they are too young to hold any of the remaining good jobs).
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.