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     | Friday, February 04, 2000 - 04:01 am  A bankruptcy candidate walks into a courthouse and says, "ouch." A second candidate helps the pathetic, defeated blockhead through the door. The first guy gets a big pang of guilt and runs out, holding the bump on his head, and vowing to pay his debts even if he and his wife and three children have to eat beans and rice for 5 years. He sees a credit counselor and makes a pact to pay his $20,000 of debt in payments of $450 over five years. The counselor raves about how that is effectively only a 12.5% interest rate-- much lower than the 20+% the guy could be paying (plus late fees) otherwise. The poor credit card companies (who give money to the counselor) are saved. Hooray. The second guy stays, and petitions the court for relief through bankruptcy. The judge (who administers justice) justifies the declaration, and it is so. It is just because the court made a wise decision, what it is paid to do. With his debts gone, he is now able to save $200 a month for two years-- and his stream of payments grows to $5,000 in two years. In two years, Guy One still has... well, he still has 3 years to go. The credit counselors hope he makes it because the downtrodden credit card companies are threatening to reduce funding to the counselors again-- just as they did in 1999. Number Two buys a house using the FHA loan program which states that he can do so only two years after a bankruptcy* is discharged. If only Number One knew that! Why didn't anybody tell him? Now he's got a credit report that says that every one of his debts are behind... because they are: he is not paying as originally agreed; he is paying less than originally agreed. He gets behinder and behinder every month that he pays less than he first agreed to pay back. His credit report takes it on the chin. His wife divorces him. His children become doofs. But he did the right thing, gosh darn it. He files for bankruptcy anyway. Number Two makes the minimum required down payment of 3%-- $3,000-- on his $100,000 house and throws a $500 party to celebrate. He still has $1500 left. Hokey smokes. Only in America. Only with the right information. *Mortgage Credit Analysis for Mortgage Insurance on One- to Four- Directive Number: 4155.1 (http://www.hud.gov)
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| | Friday, February 04, 2000 - 06:50 am I could not agree more. I think people are often suckered into feeling that credit counselers are working for them, when it is just the reverse. It is very hard to feel sorry for Credit companies that can offer a college student 10k in credit who does not even have a job. Or (in the case of my wife) over 50k in available credit who makes only 20k per year! Factor that with deceptive advertising, the ability to charge late fees based on the when THEY process the bill (not the post mark), and the ability to up and interest rate to over 24 percent with no reason: and you've got a mirror of what people feel cigarette manufacturers have done. Think about it, do our kids need to get a toy for christmas that has a credit card that looks amazingly like a Master Card and says "your approved" when it is swiped. How can you not think that the CC companies are behind that. Lets tell kids that credit cards are fun and are harmless (Joe Camel). I'll feel sorry for Credit lenders when they are forced to lend to people who can afford it, have to disclose how much a purchase will cost, and offer true conseling such as how to live on cash!
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| | Saturday, February 05, 2000 - 12:32 pm I couldn't agree with you more. However, in my younger days, I did customer service at a major credit card company. It was my major gripe to hear people complain about the "postmark" rather than the posting date. "But I mailed it TWO days in advance!" To this day, I still do not understand this reasoning. But life goes on. :)
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