If you want to file bankruptcy, do it soon.

[valkyrie]

On October 17, the new bankruptcy law will go into effect, making it more expensive and difficult for debtors to take advantage of the "fresh start" bankruptcy provides.

You can read about it here.

[AGDee]

And almost simultaneously, the credit card companies are being forced to increase the minimum payments. So, your payments are doubling and it's going to be harder to declare bankruptcy so you better make sure you can pay those credit card bills.


From ABC News website:
Watchdog Group Cracking Down on Companies

The Office of the Comptroller of the Currency, a bureau of the U.S. Treasury Department as well as a watchdog to protect consumers from abusive and deceptive credit card practices, is cracking down with tougher guidelines on interest rates, marketing tactics and account management practices. According to BusinessWeek, credit card companies had a banner year in 2004, bringing in record profits of $30 billion, in large part due to fees and high balances.

In response to the OCC's call to credit card issuers to help their customers get out from the layers of debt, many national banks and credit card issuers are increasing their monthly payment requirements. For the millions of Americans struggling to pay off their credit cards, the mandated jump in monthly minimum payments may seem a bitter pill to swallow.

However, the change in requirements could just prove to be the best medicine in terms of helping consumers dig their way out of debt. The typical monthly minimum will double from about 2 percent to 4 percent. Under the change, minimum credit card payments will cover not only fees and interest charges, but more importantly, a portion of the original debt. This means that customers paying off their credit card bills should be able to make a dent in their debt and actually pay it off more quickly.

[jharb]

Originally posted by AGDee
And almost simultaneously, the credit card companies are being forced to increase the minimum payments. So, your payments are doubling and it's going to be harder to declare bankruptcy so you better make sure you can pay those credit card bills.

I would think this would be a good thing, forcing people to pay more so that they pay down their bills quicker. I know I always pay more than the minimums each month so that I try and make a faster dent in the CC debt I so foolishly gained during college.

[AGDee]

In some ways it is, unless they are already living paycheck to paycheck and really don't have double their minimum payments available. I've read that the average person (maybe household) has $8000 in credit card debt. That would mean an increase in the minimum payments from $160 to $320 a month (2% to 4%). Some just don't have an extra $160 a month to do that. I would suspect that those who have that much extra a month don't have to use much credit. I realize they are trying to make sure people can actually pay it off sooner, but if they end up charging stuff like gas and groceries because they don't have cash available after their minimum payments, it will just sink them further.

The Democrat in me wondered if the new bankruptcy rule was to reduce the number of personal bankruptcies during Bush's term because, during his first term, they were at record numbers.

Personally, I think it would be more helpful to require credit card companies to limit the amount of credit available to reasonable amounts. As I paid off any card, they increased my limit, sometimes doubling it. At one point, I had over 150,000 in credit available to me! That's just insanity. And who doesn't get multiple credit card applications in the mail daily? They just keep dishing it out! I have a friend who had to declare bankruptcy last year because she was more than $60,000 in debt. She STILL gets credit card applications almost every day, all geared toward people who've declared bankruptcy with outrageous annual fees and interest rates. Maybe total credit limits should be limited to like 30% of your income or something.

Dee

[valkyrie]

If people aren't going to be able to afford the new minimum payments, THEY SHOULD CONSIDER FILING BANKRUPTCY NOW. I'm serious. I know it's a drastic step, but in some instances it is worth it.

The credit card companies have been trying to get this legislation passed for YEARS. They were working on it years ago when I was clerking for a bankruptcy judge, and they finally got it passed through the republican-controlled congress. I have never encountered a bankruptcy judge who thinks it's good legislation.

[Rudey]

Why would I complain?

With this legislation and the recent M&A activity for credit card companies, I've made some green.

-Rudey

[madmax]

Originally posted by valkyrie
On October 17, the new bankruptcy law will go into effect, making it more expensive and difficult for debtors to take advantage of the "fresh start" bankruptcy provides.

You can read about it here.

Good. Tell your customers to take back their $2000 rims and pay their bills.