Dec
Bankruptcy: The Present Economy’s Fallout
In these troubled times, many people are declaring bankruptcy. It is a fact of life. Most of them are adults in between 40 and 60. Most are stable individuals who would thrive in a normal economy. The reasons for their financial woes range from job loss to credit card companies jacking their rates. Without those problems, they would have squeezed through this poor economy. One little thing tipped the proverbial apple cart. One more straw broke the camel’s back.
There is no excuse for crazy spending. Those who habitually spend beyond their means are fools. Make no bones about it. But what happens when folks who have economized and pared their spending to bare minimum find themselves financially overwhelmed?
There are cases where the only way to preserve prosperity is to file bankruptcy. It would be unconscionable if done only to dodge creditors. By the same token, it would be necessary if it is the only way to preserve part of one’s well-being. Life is unfair. Bankruptcy may be unfair to creditors, but it is certainly unfair to oneself to descend into poverty. Bankruptcy the only wise choice when there is no other way to avoid poverty. In this case, there are no winners. Everybody loses. Some lose more than others, but everybody loses.
Creditors who let greed do their thinking can burden debtors unreasonably. We see this with the credit card companies who jacked their rates. They did it after the president enacted laws to protect debtors. There was just enough time before the law went into effect that the credit card agencies could get away with a steep rate increase. Combine this with folks enduring an already weak economy and the people’s burdens multiplied. Credit card companies were unwilling to work out arrangements with their debtors. The ironic thing is that the people who got their rates jacked were not deadbeats. They were good customers who paid on time.
The result of the greed is a string of bankruptcies and a loss of revenue for creditors. The same kind of thing happened with the mortgage crisis, where greedy lenders played fast and loose with the rules. The resulting rash of bankruptcies caused by lender’s greed shook the banks to their core. Round 2 of this money shortfall is landing on the credit card companies.
There is a lot to be said for old fables that teach valuable lessons. Remember the story of the goose that laid the golden egg. It is a story of patience versus greed. In the case of the mortgage nonsense and the greedy creditors, again we see another instance of killing the goose that laid the golden egg. These things have been going on since the time of Hammurabi.
There is another lesson here. In the past forty years, we have come to rely more and more on credit. There was a time when credit cards were uncommon. The loans for average folks were for cars and houses. Both required large down payments. For other things, there were layaway programs. Most everything was bought with cash. People had no choice but to live within their means. Nowadays, credit cards are more common than cash. many things are bought on credit rather than cash. This type of installment plan is very expensive in the long run. By the time a debt has been paid, interest rates and time have conspired to double or even triple the cost.
We need to get back to living on what we have rather than making credit the largest part of our finances. For many, that means a change in priorities. Since the 1970s, there has been a shift in our society that emphasizes possessions over principles. That is a wrong attitude. As a society, there is an urgent need to shift away from the “I have got to have this” thinking. It is that mentality that gorges itself on credit like a pig in a turnip patch. We have to return to a mindset that is grateful for what it has. Happiness is not in getting more or having the next new thing. Happiness comes with being the right person, not how much stuff you can have.
The bad economy has burst the credit bubble. Just as people need to cut back on credit, so banks need to halt the greedy tactics. In the end, they are the ones who lose when bankruptcy becomes commonplace. Whether people are defaulting on mortgages or credit card debt, the banks lose. Most of these defaults would never have happened were it not for the banks’ shenanigans.
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The Heathen way is the practical way. When faced with a serious crisis, it is wise to discuss this with trusted people who are known for wisdom and common sense. It is hard to be totally objective in a very trying situation, so the perceptions of others can help. They are not in the problem, so they are not going to have their emotions getting in the way.
Though legal, the rightness or wrongness of bankruptcy depends on the individual situation. The greed of the credit card companies and bad mortgage lenders is also legal even though it is unethical. When subjected to an unfair burden, prior agreements are negated.
For those who are in circumstances that may lead to bankruptcy, help is available. There are advisors who are licensed or otherwise certified by law. Ignore the television commercials that claim they can give credit advice and reduce your debt. There are municipal or county agencies who can tell you where to find legitimate counselors.
If you choose bankruptcy, get a lawyer experienced with bankruptcy. Do not do it yourself or go through one of those Internet “file it yourself” services. You will save money and time and get the best results with a bankruptcy lawyer. This is a case where “do it yourself” is a very bad idea.