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(Hopefully they will become more consumer-oriented like they used to be in the 1970-1980's instead of radical-left leaning as they are now) CENTER FOR DEMOCRACY & TECHNOLOGY CITIZENS AGAINST GOVERNMENT WASTE CONSUMER PRODUCT SAFETY COMMISSION CONSUMER PROJECT ON TECHNOLOGY ELECTRONIC PRIVACY INFORMATION CENTER MEDIA RESEARCH CENTER OF ALASKA
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BANKRUPTCY
Joe Bialek With a record large number of bankruptcies being filed in the United States, it is time to address the root causes. Soon after the age of eighteen, many young adults begin to receive unsolicited credit card applications. These are offers of credit with absolutely no determination of the person's ability (or desire) to pay back the debt. Most high school curriculums do not contain courses on financial management and media advertising is quick to promote immediate gratification. Consequently, a large number of young adults start down the path of credit card reliance which ultimately leads to bankruptcy. The primary reason working adults use credit cards is because it is convenient and/or serves as a means of spending future earnings. But if one loses their job or is unable to work because of illness or injury, bankruptcy becomes the alternative. Consumer credit counseling agencies have now become the last line of defense before someone files bankruptcy. Consumers are informed by these agencies that if they agree to funnel a "reduced" payment through them, all the debt enrolled in the program will be paid off in five years. This is because the credit card companies are mailed a "proposal" outlining the person's present financial condition including their ability to pay back the debt. The credit card company then "accepts" the proposal and begins receiving payments at a lower interest rate. This works well for those consumers who are less than ninety days delinquent as the creditors will "re-age" the account and soon begin reporting it "paid as agreed". However, the situation changes dramatically if the account is more than ninety days delinquent (or "charged off"). Once the credit card company charges off a delinquent debt, they can write it off their corporate tax returns so as to minimize the loss. The consumer, however, must contend with this serious delinquent mark on their credit report for at least seven years because no matter how much they funnel through the consumer credit counseling service, the account will never be re-aged. Unfortunately, these agencies do not inform the consumer of this and money is paid to creditors even though it would have been in the best interest of the consumer to file bankruptcy. The counter argument is that bankruptcy remains on a credit bureau for ten years. But what they fail to say is the amount of money the consumer will pay over five years just to save themselves three years of grief. In most cases, the consumer would save enough money over the five-year period to be able to negate the effect of those remaining three years. It is amazing how gruelling the process can be to qualify for a secured loan and yet how easy it is to obtain unsecured credit. The United States Congress needs to begin requiring credit card companies to utilize more stringent underwriting guidelines before granting consumers credit. A cash-only economy is no longer feasible as the buying power of two incomes buys the same as one income bought thirty years ago. The cost of living has grossly outpaced wages and salaries. If there were more financial management courses required in schools and a process used by credit card companies similar to consumer credit counseling agencies, bankruptcy filings would diminish dramatically. JOE BIALEK
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