My take on Bankruptcy Reform

This week the U.S. senate is scheduled to look at the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S.256). The meat of the act is that if a person can afford to pay back debt, they must. And the determining factor is if the debtor is above the state median income.

It illustrates in my mind the type of thinking that is wrong with this country. Who in their right mind would argue that people that accrue debt should NOT have to pay it back.

My biggest complaint about the act has nothing really to do with the act. It has to do with some of the major backers; credit card companies and the auto finance companies. These companies are predators. They feed off the American dream to have the "good life" now and pay for it later. And they know full well that most Americans don't pay off the full mount of their debt every month and the interest eats them alive.

Don't get me wrong; I think that those people are morons (excluding yourself, of course). [Susan and I have two debts, the house and one of our three cars. We don't do credit. We save and buy. And sometimes we have to wait for the things we want. And sometimes we don't get what we want at all. But we know that bankruptcy is not in our future.] I believe credit is a bad thing. And I have a hard time listening to people who say that it's required, even if just for emergencies. Saving a little something on the side is good for emergencies, credit just puts it off.

And the thing about bankruptcy is that the stigma of filing is gone. You hear about huge corporations filing all the time. and they stay in business, make acquisitions, get bailed out by the government. And with the current laws, personal bankruptcy doesn't have to change your life. You keep your house, your car, no one is going to repo that PCyou bought because you were feeling blue. What's supposed to happen to break you of your habit is your credit is shot. I hear stories though of people in bankruptcy that can get approved for new credit cards.

You can look at the stats yourself, bankruptcy filings are going through the roof. I am glad to see this reform go before the Senate. I think you should go out and find what your senators and representative are going to do and make sure they know what you want them to do.

And save some money, don't rely on credit. Because if you file bankruptcy, someone has to eat that debt, and someone else is going to have to pay for it.