Does anyone know where you can find info about how much bk affects the avg citizen?

[kl030505]

Believe me, I do not feel sorry for the blood sucking creditors. I understand they write it off, they received more in interest and fees from me than I probably ever spent, so the amount they are writing off of me is probably not $$ actually "lost" to them.

I've been hearing other random people trash talking bk filers - even those who are not abusing the system and just honestly trying to get a fresh start. Some people even have no sympathy for people who file because of medical debt. One of the "arguments" they use is that the people who file "get off easy" and end up costing everyone else $$. I'm only too aware of the fact that it's not the least bit easy to file and that while abuse does occur, most people are just trying to get a fresh start. But, if I think about the general impact on the economy as a whole I can see their point a little about how bk can cost everyone else $$ in the long run... But their argument is really only a "theory" as far as I can tell - I've seen no direct evidence. So, does anyone know of anywhere that talks about the general cost to society as a whole that bk filings may have? Are you all following me? It's hard to explain what I mean here...

[HHM]

The main counter to that argument is how much worse things would be if there was no BK.

As for medical bills...realize that doctors and hospital have loss insurance.

I think your instinct is correct, these arguments about BK effecting the average person are hypothetical.

Consider this, on average there are 1.5 million BK's filed each year...the US has an adult population of about 215 million. Forgetting that a good percentage of those filings are couples, that means only 0.69% of the population file BK in a given year. I hardly doubt that would have a meaningful impact on anything.

The average amount of unsecured debt that gets discharged in a BK is around $20,000 which would mean about $30 Billion gets discharged in a given year.
CITIBANK alone, has gross revenue of about $147 Billion in a given year.
CHASE alone, has gross revenue of about $100 Billion a year.
The US Gross domestice product is $13 Trillion Dollars. I hardly see how $30 billion, or even $60 billion, is really costing anyone anything.

Maybe if we did the math, BK's in this country cost a US Adult, per capita, all of $279 per year.

[JollyGG]

Additonally the economic loss to sociaty would assume that everyone who discharges debt would have paid that debt. Well we all know that to be a faulty assumption becasue no ones chooses BK until there are no other options.
Additonally the discharge of these debts in many cases free's up consumer dollars so that comsumer spending can increase.

[boinga]

Maybe if we did the math, BK's in this country cost a US Adult, per capita, all of $279 per year.

While that may be true in theory, I really doubt that if there were suddenly no BKs that the average consumer would see any savings.

Do you think credit card companies would lower their fees because of fewer BK losses? Lower their interest rates? (OK, don't laugh too hard now...) The fact is that the credit card companies and sub-prime lenders could already lower the number of bankruptcies by not extending so much credit to high risk customers, and not offering so much credit to good customers that they can easily overextend themselves.

Just today (2 weeks after filing) I got a pre-approved offer for a $10K limit card. Presumably it would not still be approved, but apparently just before my BK was filed I still looked like an ideal CC client: no savings, up to my eyebrows in debt, and paying the minimum religiously so I would stay that way as long as possible. If anyone bothered to look at my annual income, my monthly payments, and my total debt they would think it was insane to offer me another $10K card. Anyone who really cared about avoiding BK losses that is.

Here's a quote from an article about the CC hearings going on in Congress today:

In May, Senator Levin introduced the Stop Unfair Practices in Credit Cards Act. If passed, the law would stop credit card issuers from charging interest rates on debt that is paid on time and require that interest rate hikes apply only to future credit card debt and not debt already incurred.

However, credit card companies say such a law would have dire consequences on all consumers by making credit more expensive and less easily available."

(emphasis mine)

Does this look like an industry that is worried about losses? It appears to me their #1 goal is to get as many cards into as many pockets as possible, at as young an age as possible.

In the subprime mortgage market it was routine practice to base a borrower's ability to pay on the 1-2 year "teaser" interest rates, not on what they would be paying for the other 28 years. Where I live the infamous "interest-only loan" is popular, and with falling house prices these people are SOL if they need to sell or refinance. If these kinds of loans were not available we'd see far fewer BK's. I also think it's unlikely housing prices would have gotten so inflated to begin with, because few would even be able to afford even a modest house. But the lenders sell the idea as doing a favor to the consumer. They get to rake up the interest payments, and if the cost is a certain number of BK's that's just factored into the equation.

I don't think banks and CC companies want BK's, but they have certainly been doing everything in their power to make sure as many people as possible are close to needing BK relief. And if that means quite a few actually fall over the edge, it appears that to them it's just the cost of doing business.

I battle with guilt myself over not fulfilling obligations by filing BK. But really, the people who are so aggressively selling and attractively advertising being in debt are not stupid. If they were that worried about the number of BK's all they have to do is be more selective in approving credit. I don't hear merchants clamouring for stricter credit approval either -- sooooo much easier to pull out that VISA card for a spur of the moment purchase than forking over real cash.

[nazstar]

I'm not going to blame cc companies for my situation - yes, they made it easy but no one put a gun to my head to use the credit. However, I am really ticked off that they offer these cards to young kids. My youngest brother just turned 19. He has 4 credit cards that he got through pre-approved offers. They are all maxed out. He goes to college and works part time for minimum wage. He can't pay his cell phone bill. He lives with my parents so at least rent and food isn't as issue. But what sense does it make to issue credit to a teenager that exceeds his income by fourfold?!