commissioner.org
| Source | Doug Henwood |
| Date | 05/03/01/13:48 |
| >To make a comparative (and pro-consumer) analysis I need some info re.
>personal bankruptcy regulations and, specifically the way they are >applied to credit card debt. Thanks. In the U.S., it's pretty easy to wipe out credit card debt with a bankruptcy filing, and the consequences for getting credit in the future aren't all that severe. Few questions are asked; when I watched a bunch of people streaming through bankruptcy court about 10 years ago, the trustee just asked "Did you buy any luxury goods? Jewelry? Furs?" Everyone said no, and their papers were stamped. There's some red tape to go through before you get to that point, and some lawyers' fees to pay, but it's nothing compared to sweating out debt service. The U.S. bankruptcy code has basically two routes for individuals - chapter 7, which results in a complete discharge of debts, and chapter 13, which commits bankrupts to a paydown schedule. Chapter 13 is usually a bad idea - many people fail at it, but lingering Calvinism makes it appealing to some. The bankruptcy reform bill in Congress would force people with incomes above the median into chapter 13, instead of giving them the option, as they have now. Some kinds of debts can't be discharged: notably taxes, mortgages, and student loans. The major culprit, however, has been credit cards. Now that people are borrowing heavily against home equity, things may change, since those debts can't be discharged. |
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