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It's All About the Money - The Fucking Bluebird of Goddamn Happiness [entries|archive|friends|userinfo]

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It's All About the Money [Apr. 15th, 2005|07:18 am]
[Current Mood |cynicalcynical]

The Bankruptcy Reform Bill has sailed through Congress.

Because the Republicans care about you.

The rationale is that individuals should be responsible for their own poor decisions and not shift the burden of their debts onto others. Which is true. I can't argue that point.

But whatever happen to corporations being responsible for their poor decisions? Why should the credit card issuing institutions - who were the impetus behind this reform - be rewarded for their foolish and aggressive marketing strategies that issue vast amounts of credit to people who clearly are incapable of repaying the debt? Business to business, companies monitor the debts and credit rating of their clients because they know that if they overextend and a company goes belly-up, they are unlikely to see a dime in return. But in order to increase their profit margin in a competitive marketplace, credit card issuers have been handing out plastic like Santa hands out candy canes. And there are a whole line of Santas, each ready with one more, no matter how many you already have stuffed in your pockets. It seemed like the more the economy dipped, the more solicitations arrived in the mail. 0% APR for 6 months if you roll your debt onto this card! Or this one! 4.5% for life!

You see, credit card companies like you to carry a big balance. Sure, they had to front the expense of your purchase, but they'll make you pay for it many times over before they're done. Responsible consumer spending bums them out - if you pay off your bill every month, you are barely worth their business. So it is in their best interest to encourage consumers to spend more than they make, to run up debt. So they push cards at consumers, and they push consumption so that you'll run up that card.

A truly capitalistic system would recognize that part of the risk of doing business in this way is a pretty high default margin. And a little research seems to peg that rate at about 7%. Which is a lot. But this is a trillion dollar a year industry, and it got that way by aggressively selling debt. Default margins are a cost of doing business in this way. Suck it up and deal with your choices. That is capitalism. End of story.

Except. When you have that kind of cash at your disposal, it's really easy to throw some around in Washington, DC, and paint yourself as the poor victim of those terrible, rotten shiftless individuals who took advantage of your good will in badgering them continually to buy your product. Now, they're all "gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires - often celebrities - who buy mansions in states with liberal homestead exemptions to shelter assets from creditors."

Come on.

Certainly, those people are out there (the child support part is bullshit, since child support obligations are not dischargeable under current bankruptcy law), but a lot of them are people who've lost their jobs, or people who have crushing medical bills and no insurance. Or the very same single mothers who have been abandoned by those deadbeat dads and can't make ends meet.

Of course, the next appeal is to how this will help "all of us" because default costs an average of $400 per household in additional interest charges.

In other words, the credit card companies are already shifting the burden of their bad business decisions to Joe Consumer. And if you think that credit card interest rates will actually fall as a result of this plan, I have a nice bridge to sell you.

I'll let you buy it with no money down and no payments for the first year.

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[User Picture]From: christilyn
2005-04-15 11:38 am (UTC)
I was going to make a post about this today.

I totally agree.

I got offers for thousands and thousands of dollars worth of credit cards as a college student. I resisted the temptation because I knew better--but I have friends who are still reeling from that debt.

It's disgusting.

Would you mind if I link to this post in my journal?
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[User Picture]From: zoethe
2005-04-15 11:40 am (UTC)
Not at all!
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From: flcodemonkey
2005-04-15 11:46 am (UTC)
The part about the bankruptcy bill that REALLY raised my blood pressure was that the bill contained special language shielding asset trusts (read: wealthy family bankruptcy shelter) from creditors. The amendment to remove it was defeated on a straight partisan vote.

Also, amendments proposed to end the practice of companies filing for bankruptcy raping the retirement and benefits of their employees were also defeated.

Of course, poor families or people with unexpected medical bills can lose their house, or be stuck under crushing repayment schedules. Bravo!
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[User Picture]From: fragiletender
2005-04-15 11:49 am (UTC)
Too true, at the start of the year I cut up my one and only credit card because I'm trying to clear the balance on it and I didn't want the temptation of that "free" money sitting in the drawer. I've been carrying a balance for ages because everytime I got it nearly paid off I would use it to buy another big thing - a really bad way of using a credit card but oh so easy to do, even if you're not being extravagent (I wasn't, I was using it for flights home, birthday presents, Christmas - that sort of thing). It drives me nuts that I've spent so much on the debt already and on the day it's finally clear (should be later this year) I will dance for joy.
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[User Picture]From: fuschia
2005-04-15 12:12 pm (UTC)
Ugh. Just...ugh.
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[User Picture]From: kythsharrie
2005-04-15 12:14 pm (UTC)
My mother, fortunate with an inheritance not too long ago, actually used a good portion of that to pay off two credit cards and lowered the third one to an amount she could comfortably handle. The two companies she paid off all of the sudden gave her trouble with that and she had to call them several times saying "I'm closing my account, please do not contact me again". It's like, good grief, back off.

And, of course, suddenly she's getting more offers for more credit cards. She just tears them up and tosses it in the trash.

For the first time in a long time, I'm glad I don't have credit cards. 'Course, that leaves me with no credit history at all if I want a student loan or.... This industry sucks.
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[User Picture]From: girlfromsouth
2005-04-15 12:24 pm (UTC)
Here via christilyn. And this...

"Or the very same single mothers who have been abandoned by those deadbeat dads and can't make ends meet."

I mean, THAT right there is why I'm enraged over this bill. Entirely. That woman was my mother, and we suffered for ten years when I was a kid because my father disappeared and left us holding the bag of all the debt he'd run up. But, well, naturally that's just her own poor choices, and she should have to live with that.

I hate these people. HATE.
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[User Picture]From: calamityjake
2005-04-15 12:26 pm (UTC)
This argument also works against NHL owners.
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[User Picture]From: wyrrlen
2005-04-15 01:45 pm (UTC)
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[User Picture]From: paranoidgrl
2005-04-15 12:30 pm (UTC)
The really annoying thing about credit card companies for me is that I'll help people get a discharge in bankruptcy, and the next day, they'll go home and find new cards in their mail. They don't care that people have proven themselves to be bad risks. They love newly discharged people, because they know they'll get paid (either voluntarily or through a lawsuit) for the next seven years.

I really feel for people with unexpected medical bills under this new law.
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[User Picture]From: kibbles
2005-04-15 12:42 pm (UTC)
Those multimillionaires can still use shelters that were left protected yesterday.

Been looking to see who voted on this, in my own state, Clinton abstained/wasnt there/something like that (NOT pleased with that), Schumer voted Nay. Can't find what my reps voted, I looked but maybe it was too soon to see?

We don't have credit card debt, but my husband was in a trade school (nothing to do with his union) that gave him a personal loan for school but he didn't realize that it wasnt like a regular student loan. Not only is the interest rate nearly 20%, but it had to be paid back immediately, not after a certain amount of time like a student loan and not flexible with anything. We tried, and they just said they wouldn't work with us, they'd sue us instead.

They won, of course.

The school says they have nothing to do with the loan...
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[User Picture]From: zero_design
2005-04-15 01:03 pm (UTC)
It's foolishness like this that makes me want to instigate Project Mayhem! :p

(read Fight Club if you need to know what Project Mayhem is)
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[User Picture]From: zoethe
2005-04-15 01:18 pm (UTC)
Fight Club is one of my all-time favorite movies. I know from Project Mayhem. And I understand your feelings.
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[User Picture]From: force_of_will
2005-04-15 01:17 pm (UTC)
PBS has been tracking these ideas pretty well. Frontline worked on the credit card industry, NOW worked on the unstable nature of the new economy and the shift of hardship burdens to the individual.

You do not mention the nature of the "revolving" credit line either which allows the companies to basically change your rate any time they feel like it.

It's a suckers game and I will always remember that, I believe it's somewhere in Plato's "The Republic" that he advances something along the lines of "Moneylending will be the downfall of great nations"

The US is a collective idiot with a big stick...
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[User Picture]From: zoethe
2005-04-15 01:21 pm (UTC)
It's the callous indifference to the average person - couched in doublespeak - that outrages me. Particularly when I have no faith that the average person will be smart enough to vote them out at the next election.

We need a good old-fashioned tar-and-feathering and to run these crooks out of town.
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[User Picture]From: haplochant
2005-04-15 02:28 pm (UTC)
Thank you for this article. I am a 21 year old college student who, during a 6-month bout of weakness two years ago, ran up $20,000 in credit card debt. My minimum monthly payments are absolutely crippling-- even on a debt management plan they total $500/month (it was almost $1000/month without the plan). Now I have to work two menial jobs on top of a full class load. I have almost no time to study, frequently miss classes or assignments because I'm so exhausted, and STILL almost never make enough during a month to cover my bills and my debt payments. There is rarely a day that goes by without me anguishing over my poor choices, and I blame myself 100% for my situation.

But, there is something very wrong when someone who can't legally buy a beer, someone who makes less than $10,000 in a year, has the ability to spend more than double over her annual income in a mere six months.
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[User Picture]From: zoethe
2005-04-15 02:34 pm (UTC)
It's appallingly easy to do. Brava for you, working so hard to pay it off. There is no way you should have been able to buy that much debt, but the companies don't care. To them, YOU are the commodity.
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[User Picture]From: hookncrook
2005-04-15 02:49 pm (UTC)
Evil Republicans. Do you really think morgage companies and credit card companies and whoever is charging us the consumers that $400 a month because of unpaid debts is really goign to jump up and say "Hey, you guys get a break...here is $400 less to pay a month..or a year...or.."

My point is, I doubt anyone will see that $400 break at all because capitalism means taking instead of giving and even when a break is cut your job as CEO is to see your stockholders richer, not your consumers richer.

So i'm against this change..and it terrifies me of what is to come in the next three years and how long it will take us to undo this damage.
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[User Picture]From: richtermom
2005-04-15 04:02 pm (UTC)
About 10 years ago, I was saddled with like $9000 in credit card debt and I just got sick of dealing with it, and by giving up on virtually any fun or shopping for about a year, I paid it all off. Fwomp. Unfortunately, that didn't give me the Life Lesson I needed, as shortly after we bought our house, I whipped out the Discover card and charged less than $1000 in paint, house crap, etc., but I kept missing payments or skipping months or whatever, and I ended up owing over $2400 a few years later. I vowed that I'd never let them wake up my soon-to-be-born daughter with a freaking collection call, so I gave up on all shopping and fun, cut our grocery bill to the bone, and paid it all off within a few months.

Unfortunately, DH doesn't have the same mindset or discipline. When we bought the house six years ago, he had over $15k in credit card debt. Now, six years later, he's still over $8k in the hole. For the most part, I don't care what he does with his mad money, but when he starts using our financial well-being as a reason to not have another kid, it crosses the line.

MINIMUM PAYMENTS DON'T WORK. We're putting some Citibank exec's kid through college and we can't have another kid of our own?
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[User Picture]From: shermel
2005-04-15 04:03 pm (UTC)
I spend a lot of time on a UK debt advice board and it's awful the mess some people get into without even realising. Banks that let people apply for unsecured credit of around 3x their annual salary and then when they're in trouble try to push them into loans secured on their homes. It's nice to watch posters get wise and have their 'lightbulb' moment.

Banks...they're all bleating about 'personal responsibility' but their working practices make the situation worse.

Which is why I take every opportunity to screw the banks when I can. Until last October I had 20k of credit card debt. All at 0%. All sitting in a savings account earning me 5% interest. It's called stoozing, it takes a little work and a lot of organisation but it's very satisfying. I would still have it too, but my credit record needs a rest.
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[User Picture]From: theferrett
2005-04-15 05:44 pm (UTC)
That is such a weird concept. But it's good to know.
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