Is BK good for the economy?

[sigferl]

A poster in another forum stated 'Bankrupcty is good for the economy...'. I was the only one to disagree with the post so I am not sure how others feel.

How can BK be good for the economy? My tax money is going to banks that are getting bailed out because people are not paying their bills or their mortgages. Fannine and Freddie are costing me lots of money.

Personal BK is only good for the person filing and the lawyers so please do not make the decision to file BK because you think no one will be hurt because people are hurt.

Personal BK is a wonderful tool for those with severe permanent medical disabilities.

Vote Libertarian.

Originally Posted by ....
The option for bankrupcty encourages people and companies to 'if at first you don't succeed, try, try again'. Lots of bankrupt people end up very rich, and bankrupct companies end up employing thousands of people, which leads to more tax income, and etc. Bankrupcty is good for the economy- the only shame in it is being able to file, and not taking advantage of that constitutional right~

[hereforinfo]

No, it's not good for the economy. I think it is necessary to relieve people of debt when a hardship or misfortune makes it impossible to pay it back or when the burden of paying it back is too extreme. Unfortunately it has evolved and become overused and abused, partly by people gaming the system and partly by banks changing credit terms to the point where the borrower can't make the required payments and has to file.

What's really scary is the statistic I read recently that said 43% of households spend more than they make each year.

[JoePlumber]

BK on the Economy...

This Topic has become transformed in recent years for many reasons, first BK is for most part a second chance for a Company or Individual to start over and if you have positive income the various Chapters make it repayment or deletion of debts owed. That's why there are Trustee's present to verify the legality of credit claimed as well as income claimed. If anyone begins a Business in America and risks all they have to make that work, along with borrowing with Credit to get going and using CC to keep things afloat, then things are well and dandy, and a few years go by and your using lots of credit, but you can pay your bills... then something happens and our economy and Consumers begin to hold their money... jobs get lost and industry's change over the years....
See where i'm going, you shouldn't Loose your Lifes work, your home and your means of Transportation cause you made mistakes and lived up to your means(not smart) for years and paid your bills ON-Time for years with Zero late payments, you worked alot and did what you had to and remained current... Then income stops keeping up and then your using Savings to pay bills... then your using borrowing from your own Assets such as Retirement.. now your realizing the end of your Road... at the least talking with a Bk Attn. to discouse options... many people never ever would have thought to dismiss their debts, but there comes a time when your income gets cut to 25% of what it was for years and now your just in plain trouble and not knowing when your going to get your next Job or Client,,, what do you do? Wait till they Take your home??? To say that BK is only Bad, is just bias and wrong,,,, yes many consumers abuse the BK rules, and as we have seen Many of the Creditors we are dealing with daily Accepted $Billions in Tax payers Dollars only to have our Gov to appoint people to help them run their companys now... they would have been better off in BK reorganization and kept their business's Theirs, yes they would have to rebuild and regroup they way they did business, yet The Same goes for American's who need a second chance or a fresh start Due to some over spending yet, again the CC Company's need to be held accountable for their Lack of doing their Jobs to check Repayment ability not just based on someones Word, but documented income...yet they chose to give credit based on a flawed system... The one the grips so many Americans for Profit, they know they won't get all the credit back they lend, But they know for sure in the time they get those payments from CC bills out their over the years they get back more than was charged on that Card... Do the math what's your Largest Card?? Do you pay a bit more than the min. well add what you've paid over the last 5 yrs and i'll bet its more than your Bal... Mine is for sure... yet i know that they raised my Interest and now they changed the Rules... So I say when I lost my job and had to borrow against our retirement to the tune of nearly $15K and that just bought us time..... Ya see not all of us are just Bailing out of our debt.... We have no options I'll keep and pay all my secured Debts if allowed,, and if my Mort. Co Mods our loan we will plan to remain in our home as well.... But BK is a fail safe that says to the American public. you can and will get a second chance if you mess up... that's how i have to view it... I don't think i have another option since i'm just above 25% of of my past 6mos take home income average which had 2 of those months unemployed. I'm not rich but i enjoyed a good income then to go to a quarter of it equals tragic reality....A Family nor a Business should be totally lost for bad times, yet i'm not for the Bailouts they got either, my Mortgage holder got $25Billion and I didn't get anything and am not looking to get anything but a Loan-Mod I think they can meet me somewhere in the middle, they made bad judgements and i've never missed or been late on my payments.

Just your average american...Living in Northern California

Owe over $1/2 Million in Total Debts and looking to keep about $400K and pay ontime still...so dont' tell me all of us are bad for the economy... All my creditors got plenty of money out of me and if they did their jobs, they wouldn't have kept giving me more credit to strangle myself with... if you give an addict his device, that just make them an accomplice as guilty as we were at building the CC's up to the point they are now. Its my fault, i'm just saying they need to be held to higher standards, instead of the crooks they are.

[momisery]

I will simply say that my father supported 7 kids, bought a farm when he sold his little city house. He stocked the farm with cattle and machinery used of course. We had a huge farm house and we never went hungry nor were we cold. We had a washer, dryer, freezer, stove, indoor plumbing, a new car every three years a Ford, and one used car that he drove (truck), and he worked in a factory to do all of this. People are going BK because they used credit far too much. The reason for using credit far too much is because their incomes dropped. You now have mom and dad and 2.7 kids and it takes both to have less than what we had. If our doubt me, then please point out a factory worker with 7 kids that can afford to save enough money up and still feed and clothe his kids to buy a farm. We have had a re-distribution of the wealth since the 50/s. Ceo's pay increases had to come from someplace besides exporting jobs and it came from lower wages and credit. You bought a car in 3 years and a home in 15. Today it is 5-7 years and 30-40 years on a home is more average. You tell me, how can we go to more household members working, fewer mouths to feed and not come out ahead if I am wrong? The shift has been going on for decades with people believing they were better off. It took one huge depression/recession to show them what is wrong. Now we have advice to start sewing again, fix your own stuff at home, garden and can and freeze. Things our parents did when mom stayed at home. Today we have both parents working full time and their kids have to be active to get into a good college. So we are going to put more on their backs by expecting them to work full time, raise a family, and be suzy homemaker? What part of stupid are people anyhow? The increase in BK's was expected. What bugs me is business can do it and wipe the slate clean by changing the business name and getting a new t.i.n. People can't do that, they are pretty much stuck with their ssn.

[Ifonly]

(yawn) I know this horse is dead, but isn't it decomposed by now?

[JoePlumber]

recalling the day...

I have to add to Momisery

I recall being a kid in the 70s and such that many of my kid friends Mom's stayed home and the Dad's worked 40hr jobs and we all had food, clothes, Nice (not always new) cars and decent homes for the times... now today the past two decades for sure the cost of things have gone through the Roof as well as the costs to properly insure your assets and your lifes work... I agree with Two good incomes today you simply can't afford to live even simple means as we did just a short time ago.... I remember when there was small Mom/Pa shops all over the place selling daily goods familys used... and often times a line of credit could be had...paid monthly. Extremely rare nowadays.

[mgmadara]

(yawn) I know this horse is dead, but isn't it decomposed by now?

It's never going die until we all start ignoring the troll.

[walkthaplank]

BK IS good for the economy in a macro sense. It is the checks and balance of the financial industry. Where it starts being a problem is when the government starts bailing out lenders with poor lending practices. All of the big banks right now should also be filing BK with the loans and unsecured credit issued over the last decade.

So yes vote libertarian and keep the government from bailing out lenders who knowingly make bad loans.

[MSbklawyer]

It's dollar effect on the economy is neutral. No money or wealth is created or destroyed by the bankruptcy. For every dollar of net worth increase that the debtor gets in the discharge, the creditors suffer, dollar for dollar, a loss in their net worth.

However, it does free up people to be productive again instead of having to hide from creditors and try to find jobs that pay under the table. They are back in the mainstream economy again. In that sense, it is good for the economy.

[sigferl]

Thanks for your post MS. I have a few questions.

If not paying for items is OK, is shoplifting OK?

What impact does BK have on those that never file BK?

Why did the government make BK harder in 2005 and why didn't Obama make it easier to file BK to help cure the recession?

PS. Can I borrow $100,000 from you?

God Bless America

It's dollar effect on the economy is neutral. No money or wealth is created or destroyed by the bankruptcy.

However, it does free up people to be productive again instead of having to hide from creditors and try to find jobs that pay under the table. They are back in the mainstream economy again. In that sense, it is good for the economy.

[sigferl]

Thanks for your post JP. I also remember much smaller houses, free TV if any TV, very few cloths, very large gardens.

I also remember people working much harder then they do today, back then a larger portion of the work was at home tending the garden, painting house(no vinyl siding), reparing cars/appliances.

Freedom is not free.

I have to add to Momisery

I recall being a kid in the 70s and such that many of my kid friends Mom's stayed home and the Dad's worked 40hr jobs and we all had food, clothes, Nice (not always new) cars and decent homes for the times... now today the past two decades for sure the cost of things have gone through the Roof as well as the costs to properly insure your assets and your lifes work... I agree with Two good incomes today you simply can't afford to live even simple means as we did just a short time ago.... I remember when there was small Mom/Pa shops all over the place selling daily goods familys used... and often times a line of credit could be had...paid monthly. Extremely rare nowadays.

[MSbklawyer]

Thanks for your post MS. I have a few questions.

If not paying for items is OK, is shoplifting OK?

Ok with whom?

What impact does BK have on those that never file BK?

It makes them insanely jealous, that's the impact it has. While they are running on your loan shark interest treadmill trying to dig out from under an impossible debt load, the people who have escaped have gone on with their lives.

Why did the government make BK harder in 2005

Because I was having too much fun running it up the loan shark's a**** long, hard and deep. That's why.

and why didn't Obama make it easier to file BK to help cure the recession?

He may yet. He's only been there about 9 months. And like I said, I don't think bankruptcy does help the overall economy. But then again, neither does usurious interest rates or people losing their homes because they incurred catastrophic medical bills that they have no hope of paying.

[MSbklawyer]

Thomas Jefferson's letter to Sam Kercheval seems apt.

"To preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers." –

Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39

[quote]

[sigferl]

Thanks for your post MS. I respectfully disagree with you completely.

1. Is shoplifting OK with the shop owner? Is shoplifting OK with the customers who do not steal?

Ok with whom?

Banks have to charge high interest for risky loans to people that are likely to not repay the loans. Why is my loan interest low? Banks want you to repay your loans on time.

It makes them insanely jealous, that's the impact it has. While they are running on your loan shark interest treadmill trying to dig out from under an impossible debt load, the people who have escaped have gone on with their lives.

Why do you borrow money if you do not like the interest rate?

Because I was having too much fun running it up the loan shark's a**** long, hard and deep. That's why.

I have not read one story from any economists that states that personal BK is good for anybody except the person that filed.

He may yet. He's only been there about 9 months. And like I said, I don't think bankruptcy does help the overall economy. But then again, neither does usurious interest rates or people losing their homes because they incurred catastrophic medical bills that they have no hope of paying.

Again, can I borrow $100,000 from you?

Do unto others as you would have them do unto you.

[sigferl]

Thanks for your post MS. I think Jefferson was talking about hones debt and not BK abuse caused by laziness and materialism in the 'land of opportunity'.


[QUOTE=MSbklawyer;330485]Thomas Jefferson's letter to Sam Kercheval seems apt.


Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39