Guruchaz | Tuesday, October 17, 2000 - 12:27 pm  This is an in-game discussion and I thought it might generate some active convo out here. Seems interesting. Here it is: Today, over one million people are filing for bankruptcy each year. This has surpassed the bankruptcy rate during the 1929 economic crash, yet we are currently in one of the most robust economies. There is something wrong with this picture. What do you believe to be the source of the problem and the solution? |
Ocean_Islands | Tuesday, October 17, 2000 - 12:30 pm  Bankruptcy laws have changed since 1929. Credit, on a consumer level, is more widely available. Bankruptcies did not cause the 1929 crash. |
Guruchaz | Tuesday, October 17, 2000 - 12:37 pm  Ok, but I don't think anything implies that bankruptcies caused the 1929 crash. I think obtaining a credit card is much easier than applying for a loan at the bank with a fixed interest rate. People start living on credit cards like no tomorrow and then they dig themselves a financial grave when they can no longer pay their bills, let alone save any money for themselves. Most people blow these situations off and don't want to deal with the sad situation they created. Then, they wonder why they have to get a job as a Wal-Mart greeter or a burger flipper when they get to age 65. That's my answer. |
Wcv63 | Tuesday, October 17, 2000 - 12:46 pm  IMO banruptcies are caused by the prevalence of credit cards and the increased legalization of gambling in many states. Credit cards encourage people to live beyond their means with the "buy now, pay later" hook. Once hooked, you pay interest and realize that the hole you dug yourself into is too damn deep to claw your way out. Gambling is a scourge and as someone who lives with the consequences of having a family member addicted to gambling I know whereof I speak. |
Ocean_Islands | Tuesday, October 17, 2000 - 12:49 pm  At my house, someone is addicted to a message board about a tv show, and now that the tv show is over, the message board is 'pretending' to have the tv show on their board so that they can get their fix! What a mess! |
Wcv63 | Tuesday, October 17, 2000 - 12:54 pm  LOL OI... |
Karuuna | Tuesday, October 17, 2000 - 01:52 pm  My two cents: Bankers/lenders have grown by marketing and pushing credit cards, making them easy to obtain, easy to use, and easy to abuse. Then they began to whine about the high bankruptcy-by-convenience rate. From my understanding in the last year the consumer bankruptcy filing rate has decreased by 8%, the largest drop ever, due entirely to tightening of credit standards by lenders. So I think lenders have already taken the first necessary steps to fix a problem they largely have created themselves. I also see changes on the parts of lenders in their marketing to younger consumers. Anyone heard of the VisaBuxx program? It's a fixed amount of spending, rather than the open/revolving limit of a credit account. I also remember seeing some stats that there is a higher than ever rate of bankruptcies due to catastrophic illness, which accounts for about 1/3 of current bankruptcy filings. The solution for this segment is going to fall on the health care and insurance industries, maybe some governmental intervention. And that's way too complicated for me to tackle at the moment! |
Wcv63 | Tuesday, October 17, 2000 - 02:06 pm  Just wanted to add one more thing to this discussion. There has been a "destigmatization" where bankruptcy is concerned. What used to be a personal shame is now considered de rigeour (sp?). Also because many people feel like their credit is already ruined they have no problem with the 7 year reporting period for bankruptcies. |
Norwican | Tuesday, October 17, 2000 - 02:13 pm  The "destigmatization" is because people that file bankruptcy can obtain credit so easily after they have their debts discharged! There are plenty of banks/companies perfectly willing to extend credit with outrageous interest rates to these people so that they can get in over their heads all over again! |
Karuuna | Tuesday, October 17, 2000 - 02:13 pm  I agree, Wcv, that is part of the problem. People seem to almost have some pride in getting out of paying their bills. One of the ways of dealing with this would be to make it less attractive financially - some kind of "means testing", whereby the debt is not so easily excused and more of it must be paid back. |
Ocean_Islands | Tuesday, October 17, 2000 - 02:32 pm  It's not true that people in bankruptcy can just turn around and get more credit cards. Do you know anyone who has gone bankrupt? I do. She can't get credit cards and it's been probably two years now. I hardly think bankruptcy is becoming de rigeur, which means fashionable -- it's just not the horrible shame it used to be. In France, there are no bankruptcy laws as we have them. Debts are not 'discharged'. There also are debts which cannot be discharged in U.S. bankruptcy, such as child support and education debts. |
Guruchaz | Tuesday, October 17, 2000 - 02:41 pm  What's the solution to all of this mess then? |
Norwican | Tuesday, October 17, 2000 - 02:41 pm  Ocean, I do know several people that have declared bankruptcy and as soon as their debts were discharged they had mailboxes full of junk mail from car dealerships and credit card companies with pre-approved application offers... it's ridiculous! |
Wcv63 | Tuesday, October 17, 2000 - 02:41 pm  Ocean don't forget tax liability. That one can follow you to your grave, your children's graves and your children's children's graves. Actually I know many people who went bankrupt. One family purchased a conversion van within 2 years of declaring chapter 7 and having their debts discharged. In some circles it is fashionable. |
Karuuna | Tuesday, October 17, 2000 - 02:50 pm  Perhaps it depends on which level of bankruptcy you file. My mother filed bankruptcy, because she neglected to pay the real estate taxes on her house for over 15 years. When they finally came to sell the house for back taxes due, she explained that she didn't think she had to pay the taxes once her mortgage was paid off. Sigh. At any rate, she filed, and was also able to almost immediately take out a $20,000 loan on the "equity" in her house at 20% interest. Too bad there was no actual equity in her house, since the past due taxes were double the house's value! She passed away last year and I'm still getting high-interest rate, pre-approved credit card offers in her name... |
Guruchaz | Wednesday, October 18, 2000 - 04:37 pm  That's insane. People seem to plan for failure by either ignoring the problem or not admitting to the problem and definitely not seeking proper help for the problem. |
Wcv63 | Wednesday, October 18, 2000 - 04:57 pm  Let me tell you a little story of high interest, pre-approved credit cards. If someone has credit problems they offer these cards with ridiculously high interest rates 24%. There is usually an annual fee and/or a processing fee. What they don't tell you is the fee is charged to the card, considered a cash advance and charged at the higher interest rate for cash advances. Then if totally paid off before the next billing you still get charged interest on what they determine your "average daily balance" is based on that cash advance. It's crazy. Therefore even if you have a 0$ balance they can charge you interest. These credit companies supposedly trying to "help" people with bad credit are just taking advantage of them. |
Nikkid | Wednesday, October 18, 2000 - 05:02 pm  The thing about the credit cards... I've never applied for one, because... On a late night watching some comedian. He was on a spiel about credit cards. "Yeah, I got a credit card - Just for emergencies... Turns out - I'm a panicky guy!" But in the last 5 years, the banking corporations, and lending institutions have made it almost impossible to live without one. So I guess my only recourse is a pre-paid. |
Guruchaz | Wednesday, October 18, 2000 - 05:37 pm  How about a Debit Card? It has the same benefits as a VISA, but no interest. That's what mine is and it's a VISA. |
Nikkid | Wednesday, October 18, 2000 - 05:57 pm  Ah that might work - but I have found out that rental car companies (the reason I'm finally breaking down) are not accepting them now. I'm not sure about most - but definately the one I was using. |
Wcv63 | Wednesday, October 18, 2000 - 05:59 pm  Nikkid...you've got to watch those secured cards too. Read all the fine print. |
Affinity | Thursday, October 19, 2000 - 12:56 pm  Ahh, credit cards. I hate my credit cards so much. Everytime I think I paid a lot for them, they only go up. I have this addiction to buying things online. I think its about time to snip my credit cards. I am only a college student geez |
Ocean_Islands | Thursday, October 19, 2000 - 01:00 pm  Take them and cut them in half now. If you need one for special items, go rent a safe deposit box and keep one -- only one -- in there. |
Norwican | Thursday, October 19, 2000 - 01:04 pm  If you're an impulse buyer... then you definitely should not have credit cards. I have a couple because I don't like to carry cash around.. but if I can't afford to pay the balance in full every month... then I won't buy it! I'm the daughter of a CPA so I got this drilled into my head at an early age... and boy am I glad! |
Affinity | Thursday, October 19, 2000 - 02:02 pm  Yeah, I think I will cut all but one. My co-op job is almost done, ends in december. Then I start school again, which I will make very little money compared to what I am making now. I need to have my cards paid of by then. Snipping them will be the only solution |
Guruchaz | Thursday, October 19, 2000 - 08:29 pm  Cool! Everyone here should hit some credit card sites and sign up for as many as they can. You could buy all the cool clothes, electronics, and all the misc shit your arms could carry. It's the American Way!!! Do it today!! |