Bankruptcies Are on the Rise

Obviously the advice to contact a counselor is terrible, but understandable since it's from a debt counselor.

Bankruptcies Are on the Rise
Personal filings threaten recovery

http://www.newsday.com/news/local/newyork/ny-bzdebt243101317jan24.story

By Tami Luhby
STAFF WRITER

January 24, 2003

After hitting a record of 1.5 million last year, bankruptcy filings are expected to climb even higher in 2003 as consumers continue to struggle with mounting debts. And this could threaten one of the pillars of the economy - consumer spending.

"Bankruptcy is booming in the United States," said Sam Gerdano, president of the American Bankruptcy Institute, in a telephone news briefing with a panel of experts yesterday.

More middle class, older and younger people are seeking relief from their debts, experts said. This is due in part to a lack of financial education and responsibility, as well as an abundance of easy credit.

"Younger debtors are being saddled with both student loans and credit card debts and credit card balances that you never would have seen 20 years ago," said panelist Henry Hildebrand, a bankruptcy attorney in Nashville, Tenn. "Older families are coming into bankruptcy with limited or even fixed incomes, but have second or third mortgages on the only asset they really have, which is their house."

Also, many filers are "underemployed," temporary workers with no health insurance so a serious illness could overwhelm them financially, said panelist William Brown, U.S. Bankruptcy Judge for the Western District of Tennessee.

What's worse, the number of repeat filers is growing, said McLean, Va. bankruptcy lawyer Jason Gold, a panelist.

The consumer spending boom, however, isn't all bad. It helped bring the U.S. economy out of recession in 2001, economists say. Though spending is expected to moderate this year, the economy should remain afloat because of an increase in business spending, said Anthony Chan, chief economist with Banc One Investment Advisors in Columbus, Ohio.

Locally, some consumers are already curbing their spending. Deer Park resident Donna Lang and her husband are more cautious about using credit cards.

"Because of the increased price of gas, cable and other services, I now think more about spending frivolous," said Lang, 43, a nurse at Nassau University Medical Center, who is saving for a house.

The slowdown has already hurt Bobby Choudary, who sells hair accessories and scarves at Alamode kiosk in Walt Whitman Mall in Huntington Station. With $10,000 in credit card debt, mostly for his business, Choudary, 36, has stopped buying things for himself.

"I'm going into debt so how can I purchase things?" he asked.

The real key to helping debtors is improving financial education, experts said. Panelist Karen Gross, president of the Coalition for Consumer Bankruptcy Debtor Education in Manhattan, said, "We teach better about sex than we do about money," she said.

DEBT ADVICE

Start to live on cash and stop incurring new credit card debt.

Track your spending and carefully prepare a budget including fixed and flexible expenses.

Collect all your credit card statements and make a list that includes the interest rates, total amounts and minimum monthly payments. List the cards with the highest rate first and so on. Apply all of your additional funds toward the highest-rate card.

Transfer high interest rate balances to one card with a low interest rate and stop using the card. Calculate how much you can pay over the minimum. Really stretch your budget. For instance, let’s suppose the minimum payments on your credit cards total $350 a month. Try to pay $500.

If you can’t manage it yourself, contact a counselor. Debt management programs usually can organize debts into one low monthly payment, reduce or eliminate interest charges and help restore credit ratings.

Source: Consolidated Credit Counseling Services, Inc.

It is a typical fashion of the newspapers to take opinion and put it forward as fact and carefully hide behind the fact that it is quotes of "experts."

Anyone can expert shop and come up with a panel of "experts" that say exactly what you want them to say.

Bankruptcies are not on the rise because people are suddenly less money wise today than they were 5 years ago. Bankruptcies are on the rise because the economy sucks. This article tries to make it the other way -- that the economy sucks because of too many bankruptcies and we all need to knock off filing bankruptcy in order to save the economy.

When Alan Greenspan juggles the interest rates and the supply of money he accomplishes what he wants, but there are unintended consequences of his actions. The stock market bubble, it's subsequent pop, the wreck of the economy and the looming housing market bubble are all things he's caused, unintentionally, by his actions.

In short, if you're bankrupt, file bankruptcy. Pretending you're not is a waste of time.

Well said :)

I've been following press releases for a while, and I see why there's so much bad advice. The finance industry pays for a lot of propaganda. Unfortunately, consumer organizations don't do much to counter. Most (all???) also recommend credit counseling. It's pathetic.

.... in several ways. banks are offering big credit lines to an ever increasing number of inexperienced and/or irresponsible users, based soley upon these magical scores. nearly all borrowers with large, secured loans [home, car, etc....] are paying some form of score-related penalty, and are then offered truly superb rates on unsecured loans, putting those creditors most at risk should the borrower become insolvent. the insurance industry has joined the fray-- this is a non-tangible purchase, so if the insured goes belly-up, they're stuck out in the cold. how do they compensate for this? you guessed it-- everbody's insurance rates are jacked up every year. if i don't come to a full stop at a stop sign, or if an aggressive city cop decides to give me a citation rather than a warning for travelling 30 yards on a one-way street in the wrong direction when it wasn't properly marked, should my mortgage rate increase??? this is the same mentality FICO scores allow the insurance folks to apply in reverse, not to make the roadways safer and reduce faud, but to simply price-gouge consumers. this economy is half-way down the john already, and if it's not to be gone tomorrow, somebody has to carry the load. chase bank just offered me another $50,000 at 2%, not for a year, but until paid. this debt is unsecured, and i'm damn well going to make use of it; if for nothing else, i'll just pay down my mortgage.

many of those with nothing to lose will milk as much as they can out of this system, and then file bankruptcy. most with something to lose are more likely to pay attention to consumer debt, but at the same time are penalized on mortgage loans and insurance. a structure of this kind can be built only so high before it collapses. FICO scoring introduces a variable most commonly known as "risk based pricing", which atrificially bends the realistic statistical bell curve to keep this whole bloody thing going. in politics, it's called communism [marxism]. computer models place each individual at a particular point along the curve, and government mandate has showered its blessings upon corporations in charge of respective industries to leach everyone accordingly. the original intent has been grossly subverted and it's now running on backward logic, but so long as profits remain high, there is little concern among powers that be that consumer rights are rapidly vanashing under Big Brother's New Automated System. don't bother to scream-- human suffering was never worth programming into the computer.

the entire credit industry is setting itself for one big fall and when it hits, there "ain't gonna be no" congresional bailout, because it will be beyond the means of the federal government to cover the losses. yea and behold, we're about to start a war that is not presently necessary, and with a bit of intelligence, very well never will be.

.... so down the road to hell we march-- some whistling a merry tune, others putting up a fight. what worked for stalin must be good for the US economy, and so our leaders drag us all along. in the last three years as the stock market tanked, {UN}fair isaac's shares have tripled in value. they're now poised to export their quako-bot economic poison into the european union of countries. watch FICO stock triple again before election day 2004. the quote at the top of every page on this site speaks as true now as when solzehnitsyn penned those words years ago from inside the "evil empire" soviet union, which has since been cast aside, rendering a new life to more than two generations of humanity it enslaved, tortured, and murdered. today, the same mentality that gave rise to such a political system has already eliminated the free market of consumer lending in this country, and threatens to spread out to every economy willing to sacrifice individual rights in favor of a new Big Brother, promising to increase corporate profit and foster greed to the fullest extent possible. what government could ever refuse as it fills their coffers in times of prosperity, and maintains viability in times of hardship. ours didn't; do you think theirs will?
...... how proud stalin would be, if only he could see. i wouldn't be surprised to read in some tabloid that he's trading {un}fair isaac stock from six feet under, a little office in hell, or wherever else he may be.

it's only going to get worse before it gets any better, unless the agencies and constituents able to do something about this crap wake up and smell the coffee, before the pot with that little atom bomb inside boils over. time is running out, and it doesn't seem that anybody cares.

goodnight--

Doug, you make me smile :)