Posted on 04/08/2005 6:15:18 AM PDT by FlyLow
The era of happy borrowing is over. Americans might as well know it.
The death bell now tolls for low interest rates. And he, who doesn't hear that chime, can't miss the siren of bankruptcy reform. The federal bankruptcy bill, sure to become law, will turn many exuberant borrowers into lunch for debt collectors.
Fear does have its uses. If the sight of a tighter noose warns people away from piling up debt, all to the good. Americans will understand that credit cards are a potential enemy — and that even the friendly home mortgage can come back to haunt them.
The bankruptcy bill in a nutshell: If you get in over your head in debt, and still have a decent income, you can't wipe the slate clean with a Chapter 7 bankruptcy. Instead, you will be shunted into what's called Chapter 13. There, lawyers will find a way for you to pay back what you owe. That means you will write your creditors checks month after month and, if necessary, year after year.
To be honest, the bankruptcy bill leaves me with mixed emotions. The Puritan in me likes the part about personal responsibility. People who borrow have a moral duty to pay back their debt. And there are bad people who work the system. They do a Chapter 7 on Monday, then drive off in a new BMW Tuesday.
The liberal in me, however, thinks that the weak deserve protection. Many people fall into bankruptcy owing to medical bills or other bad luck. And the legislation does nothing to stop credit-card pushers from luring the innocent into obligations they barely understand.
(Excerpt) Read more at jewishworldreview.com ...
You cannot predict tommorrow... no one can... but I can predict that if you use credit... you will have bills to pay tommorrow that you wouldn't have had you paid cash for your purchase.
And you are continuing to misunderstand me. I am not saying that it's ok to spend more with credit cards than you would if they were debit cards. I'm saying that the "debt" which results from not paying the credit card bill until the end of the month is not a problem. (By the way, in 10 years of using credit cards, I've paid exactly $0 in interest and penalties).
The number one cause of Bankruptcy is medical bills.... 70% of people can expect a negative event in their lives to impact their incomes over any 10 year period...those are FACTS... not made up one offs.
And it's also irrelevant, because if you incur expenses you can't afford, you're screwed whether you use credit or debit cards. Say Bob has $5000 in his checking account and spends $3000 over the course of a month. Then he has a medical emergency which results in a $4000 bill. If Bob used credit cards on his purchases, he can *choose* to either pay the credit card bill or pay the hospital, depending on which debt will be least harmful. If he used a debit card, he has no choice; the money is gone from his bank account and he has to hope that his debt to the hospital will be tolerable. The only moral here is that you should always have enough accessible cash to cover emergencies; credit versus debit cards is irrelevant.
No one brings up the fact that defaults on credit cards have always been simply included in the cost of doing business for credit card companies. They have always made lots of profits thus far, so why do they need to ruin the lives of an occasional deadbeat here or there? It doesn't make sense, unless they are expecting a massive default, in which case, they would really lose a lot of money, or that their greed had just got the better of them. Maybe both. Perhaps the day of reckoning is closer than we think.
A Ruckus of Dogs wrote: That's bizarre. What does one have to do with the other?
Here's a story from KDKA-TV regarding this practice.
The slimy corporatist insurance industry rep said, here, "Credit scores have no relationship with how much money a person makes, Harrold noted. Rather, the scores reflect how responsibly an individual manages whatever amount of money he or she earns."
Interesting. It's a paint-numbers-world. Didn't always used to be.
My point ought to be reinforced: If you're in the business of mass-marketing high risk loans, you ought to bear the responsibility of your own business risk. To make it easier to seize the assets of your customers is tilting the playing field.
Yes
I actually did read something you have written.
I think your rhetoric is misleading.
"You don't have to have one day of credit history to get a Mortgage"
Nope the debt is secured against future expectations rather then real property but that does not negate the fact that the borrower signed a contract. There are penalties for breaking any contract.
Same here. I once saw a link to a web site where you can enter your name and address to get yourself off of the credit card mailing lists. I can't seem to find the link right now - I thought I had bookmarked it.
You can call the companies that are sending them and tell them to stop, but it's a pain.
Sure, but this is one factor that they look at. Sex and age are two other things that they look at that really have nothing to do with insurance except that people who fall into certain categories tend to be higher risk.
BTW some states have passed laws or are passing laws making this illegal.
What does any of this have to do with the rate someone pays for auto insurance?
(Bold mine)
Those things can certainly be shown to be tied to risk, and thus rates.
I'd like to see where they make the correlation between credit score and risk.
Until someone shows me differently, you might as well rate risk on hair color.
But apparently none for unilaterally re-"negotiating" the terms of a contract to ones much more favorable to one party...
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