Bankruptcy: Reasons stay the same, but number of filings have nearly doubled in 10 years

Great Falls Tribune ^

[RCW2001]

About one of every 240 Montanans turned to bankruptcy last year as a life preserver of sorts -- the only thing keeping them from drowning in a sea of debt.

Bankruptcy filings in the Treasure State totaled 3,779 in 2002, just 73 shy of the record-breaking number in 2001.

[Excuse_My_Bellicosity]

I agree with the article that at least one cause of the problem is that credit is so easy to get. A guy who makes minimum wage can live his life on credit cards for quite a while.

In the last few years, I've seen a few of my neighbors who have 7-Eleven-type jobs having big screen TVs and new furniture delivered to the house. Credit cards are a means to instant gratification but can really bite you later.

[Search4Truth]

When your outgo exceeds your income, then your upkeep becomes your downfall.

[Larry Lucido]

Bump for later read.

[SamAdams76]

The reasons Montanans file for bankruptcy have changed little over the years -- the loss of a job, unmanageable credit card debt, gambling debts, lack of health insurance combined with catastrophic medical issues -- but overall, statewide filings have doubled since 1990.

My advice to all those with credit card or even home equity debt is to get out from under it as quick as you can. It will be the best thing you ever do for yourself. Words cannot describe the feeling of being (other than the primary mortgage) debt-free.

Of course, you still need to manage your money and live not at your means but below your means. Living below your means is the only sure-fire way to get ahead in America. My wife and I put away the money we used to spend on car payments, credit card payments and home equity line payments. As a result, we have ready cash for all of life's "little" emergencies that most people go into debt to cover.

I know people who have enviable incomes but they are in debt up to their ears. If they ever missed a paycheck or two, they'd be facing a financial disaster. That's not living affluently, that living in slavery!

[Mamzelle]

Banking institutions must do their job just as people must be responsible for their debts. When I see banks trying to hawk credit cards to jobless college students, these banks are not taking responsibility for investigating creditworthiness. Why should the courts bail them out? They are just as bad as the deadbeats! Let them eat their own bad decisions, rather than tangle up the courts. Stop extending credit--!

[Excuse_My_Bellicosity]

I agree with the article that at least one cause of the problem is that credit is so easy to get.

I should probably rephrase that. What I really meant is that credit has gotten easier to get for people who choose to be irresponsible with it (emphasis on people who are irresponsible). It's a lot easier for them to dig themselves a hole now.

[Excuse_My_Bellicosity]

When I was in college, I couldn't believe the number of credit card companies on campus pushing their credit cards on anybody and everybody. It was around all the time. They were always giving away free T-shirts, hats, frisbees, and stuff like that. I would always fill out their credit applications with bogus information so that I could get the free junk, but I stayed the hell away from the credit cards. That's the last thing I needed as a dirt-poor college student.

[templar]

Stop extending credit--!

The problem is the nature of our money. Our money is credit. Stop extending credit and there will be less (or no) money. Less money means fewer purchases of non essential goods. Fewer purchases of non essential goods means fewer jobs. Fewer jobs means higher permanent unemployment. Higher permanent unmeployment means higher welfare. Higher welfare means higher taxes to pay for it. Higher taxes means less money to purchase non essential goods. Fewer purchases means fewer jobs.

And that's not even thinking about things like interest and principle payments on the national debt.

[Astronaut]

I know someone who was receiving new credit card offers a month after his bankruptcy was discharged. The banks extend the credit to the unworthy to enslave them financially and charge exorbitant interest rates on the debt. They make a ton of money. Now they want to make it tougher for the debtor to escape this financial bondage by rewriting the bankruptcy code in favor of the banks. That is shameful, and I hope
Congress wont cave in to their pressure. If the banks want to write off less debt, dont extend credit to a guy making $10/hour. Apply some rational standards as to who qualifies for credit cards.

[templar]

The whole system is out of control. I don't see a solution that doesn't entail a lot of pain, grief, and suffering. That 10 buck an hour guy has kept some 20 or 30 dollar an hour guy employed by spending on his credit card. Cut him off from credit and the people his credit has been employing will be out of work. Keep him making payments he can't afford and the result is the same since he can't buy anything new with new credit. From my point of view (and I'm not anything close to an economist so it's not really valid) it looks like disaster somewhere down the road.

[SamAdams76]

When I see banks trying to hawk credit cards to jobless college students, these banks are not taking responsibility for investigating creditworthiness.

You are right. Credit cards were once not so easily obtained. You had to have impeccable credit. As well, it was not customary to "carry debt" from month to month. Most people paid the bill off each month. In fact, many credit card companies (such as American Express) mandated it. People didn't see credit cards as a device to obtain good and services they didn't have the money for. They saw credit cards as a convenient way to pay for things so that they didn't have to carry lots of cash around with them all the time.

As recently as the 1970s, having a credit card was a badge of honor. Flashing a credit card announced to the world that you had arrived as a responsible and credit-worthy citizen. After all, credit cards weren't issued to just anybody.

Somewhere along the way, the credit card companies realized that they could make much, much more money by encouraging their customers to "carry over" balances so that interest could be charged. Even American Express now allows their customers to carry over balances. They lure you in with a "low, low rate" so that they can jack it up the first time you are late with a payment (or when they think you aren't noticing).

All of that is well and good. But it's time that the credit card companies were made to assume some responsibility for issuing "easy credit" to the financially clueless and irresponsible. Most of the people declaring bankruptcy should never have had a credit card in the first place. BTW, I'm not making excuses for those who don't pay their debts. I'm just saying that I don't want to see these credit card companies bailed out for making high-risk loans.

[EVO X]

I know people who have enviable incomes but they are in debt up to their ears. If they ever missed a paycheck or two, they'd be facing a financial disaster. That's not living affluently, that living in slavery!

I had a summer job in the collection department at a bank 20+ years ago. I was surprised at the number of influential people that had trouble paying their bills.

[Movemout]

Until recently, I was essentially unemployed for almost two years. I had reserved enough money to make it through the dry spell. I have begun working again at a good salary. The monthly average of creditors offering credit never varied. I must get, at least, a half dozen offers a week (I never applied to one offer). I have known a fellow up in WV for 15 years. He declares bankrupcy every seven years like clockwork. He doesn't seem to lose anything. Immediately after filing he is inundated with proffers for credit. It doesn't bode well for our future that banks are pulling this crap.

[SamAdams76]

I have known a fellow up in WV for 15 years. He declares bankrupcy every seven years like clockwork. He doesn't seem to lose anything. Immediately after filing he is inundated with proffers for credit. It doesn't bode well for our future that banks are pulling this crap.

I have a family member who declared bankruptcy about 10 years ago. Always had the best clothes, fancy car and extravagant lifestyle. Within a few years, he was back to his old lifestyle again, running up as much debt as he can. Now his kids are coming close to college age and due to his lack of financial assets, he will probably qualify for financial aid to put his kids through college.

Meanwhile, I'm trying to figure out how to get my kids through college without wiping out my life's savings. Due to the fact that I lived responsibly and was able to put money aside, I will not qualify for any student aid for my kids whatsoever.

Makes you wonder whether you and I are the real suckers, don't it?

[Rebelbase]

Someone I know recently confided to me that that they are $65K in credit card debt. Can someone here calculate a ballpark minimum payment for that amount?

[Movemout]

"Makes you wonder whether you and I are the real suckers, don't it? "

This reminds me of something else. I knew two brothers up in WV, one is dead now. They both suffered from a low IQ. They were sent a check every month from the state, being disabled and all. They used their checks to buy four wheelers, rifles, and whatever their little pea-pickin' hearts desired. They lived with Momma and had no bills. I have often wondered, while slogging it out day in and day out, whether their life of gadding about was superior to my life of grinding my nose away. I still wonder.

[Movemout]

It should be close to $2,000/month. Ballpark.

[SamAdams76]

I'm with you. My family is from Alabama and my parents have a 20-acre spread down there. Sometimes I wonder why I just don't quit my job, sell my house, and move my family down there. With my savings and what I could get for my house here in Massachusetts, I could pay cash for a double-wide trailer, set it down on a piece of my parent's land and live off what is left over for the rest of my life.

Someday, that might happen!

[Brian Allen]

$1,950 per month?