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     | Wednesday, February 28, 2001 - 12:08 pm  Today's shedule from www.sentate.gov "At 1:00 pm, the Senate could begin consideration of Bankruptcy Reform legislation, as well as any available Executive Nominations." Bankruptcy Reform Act of 2001 S.220 Sponsor: Sen Grassley, Charles E. (introduced 1/30/2001) Related Bills: H.R.33, H.R.333 http://thomas.loc.gov/cgi-bin/bdquery/z?d107:s.00220: From an article in the Washinton Post: http://www.washingtonpost.com/wp-dyn/articles/A63911-2001Feb27.html Foes of Bankruptcy Bill Point Finger at Credit Card Issuers "... If versions of the bill pass the House and Senate, which they are expected to do, they would then have to be reconciled before a final vote. The legislation would then be sent to President Bush, who has indicated he would sign it. Both chambers passed the legislation last year, the Senate by a vote of 70 to 28 and the House by voice vote. But President Clinton said it was unfair to consumers and vetoed it. Whether the legislation becomes law this time around depends on whether its supporters can ensure that the House and Senate versions remain essentially unchanged from last year, when broad support was won only after carefully crafted compromises were hammered out. Even slight changes could unravel support, opponents and supporters of the bill agree. ..." I hope it unravels but I kind of doubt that will happen. It seems like the House, Senate, and Bush all want bankruptcy reform.
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| | Sunday, March 04, 2001 - 02:13 pm Thanks, Erik, didn't see this posting till today. So here are all the links, great. Now, has anyone actually READ the legislation? Or is there an ACCURATE summary of the changes? It really would be nice to know who will be impacted by the changes.
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| | Wednesday, March 07, 2001 - 11:19 pm I was reading an article about the new Bankruptcy legislation being proposed and came across this interesting tidbit. "The measure also requires consumers to get credit counseling prior to filing for bankruptcy, except in emergencies." I wonder if they mean CCCS type counseling? Does anybody know?
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| | Thursday, March 08, 2001 - 07:46 am This should be a boon to collection agencies since now there won't be any single deterrent to them bringing their onslaught--bankruptcy will be very difficult to achieve. Poverty will rule. No fresh starts. Just pay in ch 13 forever.
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| | Thursday, March 08, 2001 - 10:39 am I posted at Askme.com to see if we can't get some specifics. Unless you want to read my first confrontation with a moronic (ALL caps posting) collection guy (spaman, the #1 rated bankruptcy expert with over 1000 answers) you don't need to go there. I only got his response, and he thinks it'll be 2 years, if ever. It's very strange, with 237 "bankruptcy and debt askme.com experts" you'd think SOMEBODY would share. When I was a member of real estate organizations, I got legal opinions with the details on pending legislation. I am SURE that some bankruptcy attorneys know the details. Apparently the askme.com experts are all collectors and credit counselors, I've seen "there is no SOL on medical bills" and "you owe your debts forever" and "there is the SOL, but collectors can collect forever" and "go to credit couseling" along with the 800 #. I'm not making friends there  You'd think there'd be web pages comparing the new legislation with the current law, I can't find a thing.
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| | Thursday, March 08, 2001 - 10:48 am Instead of seeing mostly the druggies committing robery we'll start seeing typical debtors go to these extremes. Perhaps there should be laws placing limits on the amount of credit limits that card issuers can give. I mean what sense does it make that some people have credit cards with total limits that exceed their annual salary?
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| | Thursday, March 08, 2001 - 10:56 am The text of the bill is too long for me to read. Plus it changes from time to time since it is going through compromises between the House and Senate. Not that I would understand it even if I did read it. From what I understand though the main thing it is supposed to do is to make debtors pay off as much of the credit card debt as they can instead of simply discharging it. Push the people filing bankruptcy away from Chapter 7 and to Chapter 13.
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| | Thursday, March 08, 2001 - 04:29 pm I would think that changes to the bankruptcy laws would effectively put CCCS out of business. Why would debtors agree to reduction in interest rates and payments unless they feared the debtor could get an easy discharge through ch7?
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| | Thursday, March 08, 2001 - 07:02 pm I have studied the old bill and new bill in relation to the changes. I worked for several years as a legal secretary, but take my interpetations as purely that of a layman. The bill is trying to set "means testing" for individuals filing Chapter 7. Basically, as proposed and subject to modification anyone with an income of 50 K or more would be subject, although there are many other criteria set to determine ability to pay without BKR. The worst part I noted was that they are using living costs established by the IRS for the individual's area of residence, which in my experience are not very accurate. Financial counseling of one form or another would be required of filers exceeding the income/expense criteria. The filer must have within the preceding 6 month period contacted and been counseled, individually or in a group, via phone, internet, or in person on consumer credit counseling options. The court retains the discretion to require this option although it is being proposed as a "test". If the filer can provide evidence they did not qualify for credit counseling they may be allowed to file under Chapter 7, the trustee has the discretion to convert any Chapter 7 plan to a Chapter 13 if the situation indicates the debtor can repay (this is not really a change as it was always an option of the trustee). The bill as proposed in several versions does not indicate a REQUIREMENT for credit counseling. I work for a credit counseling agency. Clearly credit counseling is a better option to the creditor as they do retain interest and fees in some cases, while even in Chapter 13 they are lucky to get interest. The interest lost on the account is easily offset by the cost the creditor would have to spend on collections. Credit counseling benefits the creditor greatly by reducing their collection costs. Most credit card companies make a greater profit from late/overlimit/annual fees than they do from interest anyway. I have seen studies that indicate 25-40% of their profit margin comes from these fees. Bottom line, any money a creditor loses in any situation is passed on in costs to the remaining cardholders.
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| | Friday, March 09, 2001 - 05:29 pm Hal, thanks so much, did you also see anything about a $100,000 exemption for home owners?
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| | Friday, March 09, 2001 - 06:32 pm I believe this covers it Christine: SEC. 322. LIMITATION. (a) EXEMPTIONS- Section 522 of title 11, United States Code, as amended by this Act, is amended by adding at the end the following: `(p)(1) Except as provided in paragraph (2) of this subsection and sections 544 and 548 of this title, as a result of electing under subsection (b)(3)(A) to exempt property under State or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 2-year period preceding the filing of the petition which exceeds in the aggregate $100,000 in value in-- `(A) real or personal property that the debtor or a dependent of the debtor uses as a residence; `(B) a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence; or `(C) a burial plot for the debtor or a dependent of the debtor. So over the $100,000.00 interest value there seems to be a problem; however; in prior exemptions regarding principal place of residence it contradicts this. As long as it is the principal residence, I believe it is exempt. There, of course, may be modificatons to any portion of the bill before it is signed.
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| | Tuesday, March 13, 2001 - 12:14 pm Interesting article: http://www.salon.com/politics/feature/2001/03/12/bankruptcy/index.html "And what, exactly, do we get with this express-track bankruptcy bill? It would give credit card companies first dibs on bankrupt consumers' debts -- ahead of any other bills except for child-support payments (an amendment tacked on in the House to placate reluctant moderates). It will establish for the first time an income-and-assets test for those applying for Chapter 7 bankruptcy, which dissolves most debts and allows families to keep their homes and other essential possessions. This "means test" would drive hundreds of thousands of families each year from Chapter 7 into Chapter 13. That requires repayment of many debts, and makes it more difficult to keep those essential assets."
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| | Tuesday, March 13, 2001 - 03:26 pm YAY! Lower interest rates on credit cards!
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| | Tuesday, March 13, 2001 - 03:29 pm Or bigger boats for the CEOs!
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| | Tuesday, March 13, 2001 - 05:03 pm I'm willing to bet the banks will NOT pass on their savings to the consumer.
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| | Wednesday, March 14, 2001 - 06:19 pm You can bet that all you want, but there's this science called economics that disagrees with you. You see if profits in the banking industry go up beyond what you could get in the clothing, luggage, or computer component manufacturing field then new competitors will stop making clothing, luggage or computer components and start issuing credit cards instead. Buy this book. Then you'll understand. (Although it should be mentioned that Milton Friedman's work on the economic subject is untouchable, it's also not nearly as simple.)
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| | Wednesday, March 14, 2001 - 09:09 pm Without reading that book and just going by your statement: "You see if profits in the banking industry go up beyond what you could get in the clothing, luggage, or computer component manufacturing field then new competitors will stop making clothing, luggage or computer components and start issuing credit cards instead." Does that mean that if profits go up in the computer component manufacturing field beyond what you could get in the banking industry then new competitors will stop issuing credit cards and start manufacturing computer components? I seriously doubt that Hewlett Packard is going to just decide, "hey, Bank of America had a higher profit than us last year. Let's stop making those printers - we're going to issue credit cards instead!" People have been using credit like never before. The card issuers' profits have increased dramatically over the last couple of decades. Oddly enough, so has the computer industry. The malls certainly don't seem to be short on clothes and I just bought some new luggage today. All the while, the banks are raking in the money any way they can! Let's say they lower our interest rates. Then they raise the "interchange fees" (fees they charge the merchant and other 3rd parties for the privelege of accepting cards). Well, do you think the merchant is going to eat the higher rate? No! They will raise the price of merchandise to pass the cost on to you, the consumer. Although, I certainly don't even come close to being an expert on the subject. ;)
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| | Thursday, March 15, 2001 - 01:55 am interest rates will be lower due to Greenspan. However, most banks won't lend because of credit deterioration. we will have created a permanent debtor class throwing out two hundred years of a "fresh start" approach to bankruptcy. with the economy chugging lower, more layoffs coming, this bill is one of the worst ideas ever bought--yes bought. all of those corrupt politicians have been bought, they haven't a clue about the vast majority who find themselves in ch7. instead, they focus on the media villain, someone like a rock star or hollywood personality who has millions and has "abused" the system. this country is going to the "dawgs". the bill will make the economic downturn last much, much longer. the selected president will be remember for this "hooverish" move in signing it.
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| | Thursday, March 15, 2001 - 09:50 am It's a little before my time, but I recall hearing that during the 70s, when interest rates were through the roof (mortgages at 16%?!?), the credit card companys raised their interest rates. During the 80s when rates came down, the credit card companies didn't follow suit, because no one seemed to notice how high their interest rates were. Who's to say they'll lower rates if the new bk bill passes? With the prime rate so low, I know my credit card hasn't changed from the initial 23.99% they started charging 3 years ago. (Providian, and I pay on time, and slightly more than the minimum due.)
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| | Thursday, March 15, 2001 - 10:29 am Even if the card companies did lower interest rates by a half of a percent over this will it be worth it? They agressively target kids with their student cards who only find themselves trapped in a lifetime of debt and misery. Why not restrict who the card companies can grant credit to? That would certainly lower the number of bankruptcies file each year.
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| | Thursday, March 15, 2001 - 10:48 am Erik wrote: >Why not restrict who the card companies can grant credit to? That would certainly lower the number of bankruptcies file each year. EXCELLENT point.
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| | Thursday, March 15, 2001 - 11:08 am It's a little before my time, but I recall hearing that during the 70s, when interest rates were through the roof (mortgages at 16%?!?), the credit card companys raised their interest rates. During the 80s when rates came down, the credit card companies didn't follow suit, because no one seemed to notice how high their interest rates were. Who's to say they'll lower rates if the new bk bill passes? You've pretty much hit the nail on the head. Many people don't know what sort of interest they're paying on their credit cards (they should know, but that's another story), which makes it a lot easier for the card issuers to charge stratospheric rates. If more people were aware of their rates, as is the case with mortgages and car loans, there'd be more comparison shopping and competitive pressures might pull rates lower.
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| | Thursday, March 15, 2001 - 11:12 am Why not restrict who the card companies can grant credit to? That would certainly lower the number of bankruptcies file each year. That could be taken too far, making it impossible for people with less-than-perfect credit to get cards. Were that to happen, retail sales could fall and the economy would suffer. There has to be some sort of happy medium, between too-strict and too-lenient underwriting standards. Unfortunately, it's not easy to find a happy medium.
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| | Thursday, March 15, 2001 - 04:05 pm Credit Card interest rates are not bad. I find it very easy to charge on a credit card at 15.99% and lend the money out to people anxious for cash at 36-48 percent. The most outrageous interest rates around are charged by the "paycheck advance loan" places. They charge $45 for a two-week $255 loan. That's a 583.7% nominal interest rate. The effective annual rate is 19,356.8% So how do these places get away with charging that much money? Well, I can't speak for anywhere else but here in California you need a license to be able to legally do that kind of lending. Those licenses are not easy to get and the result is that competition is restrained. With the supply artificially depressed the price goes up. That's the whole point of licenses -- it's government's protection racket for its chosen few.
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| | Thursday, March 15, 2001 - 05:28 pm Did the California regs change? A couple of years ago all you needed for a license was $200 and a $25,000 UNVERIFIED net worth. I.e. your furniture and your car were plenty to get the Consumer Finance License. Since I put up the Transamerica page in 1995 I've said: Licensed to steal. And with the bankruptcy reform, they can steal even more.
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| | Thursday, March 15, 2001 - 07:49 pm Do those paycheck advance places continue to charge 500% interest rate if you don't come up with the paycheck? They claim they are a flat rate and I think there may be some merit to that. I don't really know that much about them though. Comparing interest rates from a 30 year home loan to a 2 week paycheck loan isn't really fair.
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| | Friday, March 16, 2001 - 09:40 am Do those paycheck advance places continue to charge 500% interest rate if you don't come up with the paycheck? They claim they are a flat rate and I think there may be some merit to that. I don't really know that much about them though. Comparing interest rates from a 30 year home loan to a 2 week paycheck loan isn't really fair. Paycheck loan places claim that it's misleading to look at annual interest rates (which they'll admit are astronomical) because most loans are for periods of two weeks or less. There would be some logic in that viewpoint, except for the fact that most borrowers can't afford to pay off their loans and have to keep rolling them over into new ones. In other words, loan terms in practice usually work out to much more than two weeks, and the absurd interest rates are more than just theoretical.
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| | Friday, March 16, 2001 - 02:42 pm Any time you want to borrow $500.00 and pay me back $550.00 in two weeks, just let me know....LOL.
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| | Friday, March 16, 2001 - 06:09 pm Yeah and I'll loan you the money for $549 paid back. Look -> competition already. As for licenses you need a $25k net worth, a $25k surety bond, license fees, to purchase copies of the relevant laws and your books must be open to view by the relevant state regulatory body at any time.
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| | Friday, March 16, 2001 - 06:25 pm Well I think CitiBank charges a 3% fee for cash advances. If you only need the loan for one day I guess they are charging over a 1000% interest rate for that loan.
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| | Saturday, March 17, 2001 - 04:35 am But the difference with Citibank is you have the option to pay the money back over time. Paycheck advance loan places take a post dated check from you on the day the loan comes due.
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