Contrary to popular opinion
it is not poor people who file for bankruptcy. In fact, bankruptcy is almost exclusively the tool of the middle class and the upper middle class.
The poor really can not get enough credit to "get into trouble." So, when the poor do file for bankruptcy, it's usually a very very special case. For one thing the poor seldom have garnishable wages---that are worth going after......
Also, the poor are generally not worth going after because they are said to be "Judgment Proof" To wit: ....it's more trouble than it's worth to chase them.
Now, the middle class and the upper middle class are another story.
These people have wages....often high wages. And these can be garnished after judgment, and THAT almost always sends them into the bankruptcy courts...... And it is these middle class people that use credit cards the most.
Here's the problem.
While bankruptcy is occasionally abused by some high wage earners, that is not very usual. These people generally pay up.
The middle class, on the other hand, frequently "live beyond their means" and eventurally end up with high credit card bills, that they try to rid themselves of in bankruptcy.
Credit Cards are mostly "unsecured," and are thus totally wiped out in bankruptcy.....unlike car notes or mortgages, and some other kinds of secured transactions. Secured transaction are seldom troubled by bankruptcy...they just repossess their "stuff." Yet:
MIDDLE CLASS PEOPLE LOVE TO FILE BANKRUPTCY ON THEIR UNSECURED CREDIT CARDS!
But, what happens if you take that "right" away......?
Very likely OTHER middle class folks will used their credit cards less....once "horror stories" start to circulate about the NON-DISCHARGABLE DEBTS that credit cards can become.
The fact that many MIDDLE CLASS folks could start to shun credit card debt entirely could have unforeseen effects on the economy.
Even those who may not file bankruptcy may be less likely to use their credit cards for the purchases, at the margins,.....if this new stricter bankruptcy law is passed.
And, of course, THOSE WHO DO FILE WILL BE STUCK PAYING OFF THEIR BILLS! And they will HAVE TO spend less.....during their period under court supervision.....and be thus, OUT OF THE MARKETS AND THE MALLS!
IN SHORT, THE BANKING INDUSTRY COULD BE KILLING THE GOOSE THAT LAID THE GOLDEN EGG....BY BEING TOO GREEDY ON BANKRUPTCY CASES.....
I WOULD ADVISE TRYING TO GET SOME "SECURITY" ON CREDIT CARDS FROM WAGE EARNERS...WHO MAY BE "AT RISK."
BECAUSE:
If credit card debt is "made special" and "non dischargeable" for the middle and upper middle classes, that will mean less consumption, and a generally weaker economy longer term.....
DON'T MESS WITH THE BANKRUPCTY LAW!
IT'S JUST NOT WORTH THE RISK......
