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The erosion of our financial freedom – part 1

March 9th, 2005 Leave a comment Go to comments

Yahoo! News – Erasing Debts in Bankruptcy May Get Harder

A couple months back I watched a PBS special on how U.S. citizens are carrying more debt then ever before in history. In 2003 personal bankruptcy rates rose to record highs and more than 50% of them were under the age of 25 (2004 data isn’t available yet).

After reading the article linked above I realized this issue isn’t quite as cut-and-dried as I thought. Financial institutions have been pushing for almost a decade to make personal bankruptcy cases pay back more of their debts. Opponents argue that this legislation would hurt a lot of people because bankruptcy cases frequently involve the loss of a job.

Basically what they want to do is setup a system where if your income is at or above the state’s median income level, or if you can afford a roughly $100/month payment based on your income, then the judge forces you into Chapter 13 and you are put on a payment plan.

In the grand scheme of things this isn’t a huge deal, but I can’t help but think that the only thing separating me from $50,000 in debt is the fact that I toss all of those credit card offers. As our economy dwindles and those bottom lines fall lending groups try to support their performance by lending out more money. And when your company goes through some downsizing and you miss a payment or two those fees go straight to their bottom-line. It’s a sad state of affairs when the corporations of the world constantly inundate you with offers that are, make no mistake they are, too good to be true.

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