posted
I read an article in the Washington Post on Sunday written by a reporter complaining about bankruptcy laws . She cited one couple that filed for bankruptcy and was told by the court that any money had to go to the debtors before their church, and how unfair that is. This really takes place during filing Chapter 13 bankuptcy. Basically any income other than "reasonable expenses" must be paid to your debtors over 3-5 years.
I don't really want to argue this, but I would like a little clarification from religions where tithing exists. I personally can't imagine a church wanting their members to give money that they can't afford to give. In fact morally I would think they would insist that the debts be paid first.
I have no problem with tithing. Especially considering how much money most Americans "tithe" to the gods and godesses of Hollywood each year.
posted
Hmmm I need to think about that for a bit. It was my impression you should still pay your tithing on your income even though most of the income ought to go towards paying back your debts. With how much literature my church has put out about staying out of debt and getting out of debt, I'm suprised I do not know for sure how they address the tithing issue.
edit: You might be able to argue within Mormonism at least that the believe we should be subject to kings, majestrates, etc and rendering unto ceasar would indicate that until the debt is paid as the govt has dictated the nature of how payment ought to be made, you are exempt from tithing until the debt is paid. But that is a possibility NOT in anyway to be considered doctrine.
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posted
Aw, poor babies. They have to give money to the people they ripped off, before the church that is the mainstay of their lives? How terribly nasty of the court. Persecution of Christians!
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posted
I'm not sure how I feel about the rule or the ethics of donating when one is in bankruptcy. I do think that the difference in treatment needs to be remedied.
From the perspective that this is a change that was almost certainly unintended by Congress (or at least many members), and leads to disparate treatment (in fact, harsher treatment for those paying more of their debts), I think a change is needed. No real strong feelings on which way it should go.
I do really like Michelle Singletary. She has taken a lot of flack recently for urging people to pay debts even when they can get out of them. I like the way she refuses to separate morality and money, even when I disagree with a specific application. For example, she actively discourages people from refraining from saving for college because it hurts financial aid options. She gives two reasons, the purely financial one (this is a very risky strategy) and the ethical one (financial aid is designed for those who can't save up). She does make recomendations on the form of savings that include an analysis of impact on aid.
At the same time, she has called for substantially increased financial aid to be available and for restructuring student loans to allow more people to take public service jobs.
I recomend anyone looking to redo their finances to read her back columns. I keep meaning to get her book, but keep forgetting.
Posts: 26071 | Registered: Oct 2003
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quote:Originally posted by King of Men: Aw, poor babies. They have to give money to the people they ripped off, before the church that is the mainstay of their lives? How terribly nasty of the court. Persecution of Christians!
KOM: Ill remain civil, but for SOME Christians it is believed that the paying of tithing guarantees that God will assist you in your finances. They COULD be under the mistaken belief that if they cannot pay their tithing then God will not help them.
I suppose that just gives you further cause to scorn them, but I doubt they are trying to screw their debtors over by flushing all their finances into a church fund.
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quote:Originally posted by Dagonee: I'm not sure how I feel about the rule or the ethics of donating when one is in bankruptcy. I do think that the difference in treatment needs to be remedied.
From the perspective that this is a change that was almost certainly unintended by Congress (or at least many members), and leads to disparate treatment (in fact, harsher treatment for those paying more of their debts), I think a change is needed. No real strong feelings on which way it should go.
I do really like Michelle Singletary. She has taken a lot of flack recently for urging people to pay debts even when they can get out of them. I like the way she refuses to separate morality and money, even when I disagree with a specific application. For example, she actively discourages people from refraining from saving for college because it hurts financial aid options. She gives two reasons, the purely financial one (this is a very risky strategy) and the ethical one (financial aid is designed for those who can't save up). She does make recomendations on the form of savings that include an analysis of impact on aid.
At the same time, she has called for substantially increased financial aid to be available and for restructuring student loans to allow more people to take public service jobs.
I recomend anyone looking to redo their finances to read her back columns. I keep meaning to get her book, but keep forgetting.
In regards to Michelle Singletary, I second eveything Dagonee said. It is sort of why this article surprised me.
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posted
Ah, so their tithing isn't done for reasons of faith and charity, then, but only out of self-interest? Well, that's not very nice, is it? And if it is out of charity, well, charity is a fine thing, but not an obligation. While if you've borrowed money, then you have an obligation to repay it. If that means your god gets pissed at you, well, that's just too bad; you borrowed the money, deal with the consequences. Staying on good terms with your god is not more important than personal integrity - or perhaps you believe in "Lying for Jesus"? Indeed, the linked columnist quotes the Bible for this : "The wicked borrow, and do not repay."
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posted
I believe that our church does not encourage members to file for bankruptcy, at all (AFAIK), unless there are some seriously unusual circumstances. But I don't know what they would be. In most cases, I think the Church of Jesus Christ of Latter-day Saints and the leaders thereof would counsel people to pay off their debt rather than file for bankruptcy. I've heard on several occasions that many consider paying your debts part of "dealing honestly with your fellow man" (which is important if we want to participate fully in the works of our church.)
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posted
I read that article in the Post as well. My favorite part of the article was where the last paragraph quoted Psalms admonishing people to pay their debts. Posts: 26077 | Registered: Mar 2000
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quote:Originally posted by King of Men: Ah, so their tithing isn't done for reasons of faith and charity, then, but only out of self-interest? Well, that's not very nice, is it? And if it is out of charity, well, charity is a fine thing, but not an obligation. While if you've borrowed money, then you have an obligation to repay it. If that means your god gets pissed at you, well, that's just too bad; you borrowed the money, deal with the consequences. Staying on good terms with your god is not more important than personal integrity - or perhaps you believe in "Lying for Jesus"? Indeed, the linked columnist quotes the Bible for this : "The wicked borrow, and do not repay."
KOM: In all the time you've spoken with me can you honestly say that I believe in not paying my debts? Or lying for Jesus? Anyway,
Its more, in the act of giving back to God what is already His, you are cultivating selflessness, and one of the promised blessings is "He will pour out a blessing that you won't have room to receive." Some interpret that to mean your finances, or your available food, Christianity is not "Do this and get bribed, or else its the fires of hell for you." Its "Do this because it will make you more like God, and he is truely happy."
Some people do keep the commandments out of fear and out of a sense of bribery but I doubt you can find God endorsing the practice.
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quote: I believe that our church does not encourage members to file for bankruptcy, at all (AFAIK), unless there are some seriously unusual circumstances.
This statement seems to assume that somebody would file for bankruptcy without seriously unusual circumstances. While there may be a very few unscrupulous people that do this, they account for a tiny, tiny, tiny percentage of the people that file for bankruptcy. I believe around 90% of bankruptcies are caused by health problems, job loss, or divorce where their finances get so messed up it's virtually impossible to get out of debt. Unless you're saying that 90% of bankrupticies are seriously unusual, I think your statement is off. And while the LDS church is excellent at providing aid to help people avoid the point where they can't get out of debt, they do encourage bankruptcy when that is the case.
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posted
I'd disagree I think the majority of bankruptcies are a result of bad business planning, lack of good budgeting and prioritization.
All I've got is anecdotal evidence but every bankruptcy I can recall I can clearly see where the financial plan was lacking and it all came crashing down.
I admire stories of folks who work their butts of years to repay debts rather then simply declaring bankruptcy and walking away from it. I have family that took the latter route and it makes me sick.
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posted
I'm talking about personal, not corporate bankruptcy, and there are specialists in my ward, at least, who will help people work out a plan to get out of debt, including utilizing state and local programs to pay back medical debt, etc. Also, in times of health problems or job loss the Church can help with medical expenses, rent, food, etc. if you can't afford it, and most local leaders would prefer you ask for that help than go into debt.
I have heard many times from our local leaders, at least, that bankruptcy should be avoided if at all possible, and to go to your bishop if you are in financial trouble so that you can (hopefully) figure out a way to get out of trouble.
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posted
I agree that people should pay their debts, because they have already received the goods or services, and so if they do not pay, they are, in essence, stealing. I think "not stealing" needs to come before "tithing" or "charity." I see not paying your debts as more a sin of commission than ommission, if you will.
But I see no need to be an arrogant, insulting jerk. Posts: 13680 | Registered: Mar 2002
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posted
Tithing is first. Tithing, then savings, then bills, then fun stuff. You'll need the Lord's help to get out of debt, and this is a pretty good place to declare where your ultimate loyalty lies.
The first answer would be: don't get into debt in the first place. What about people with mortgages and student loans? Should they also not pay tithing because they owe money? I think people should not get into debt in the first place and then cut all fun stuff until they are out when the worst happens, but tithing doesn't count as fun stuff.
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posted
Black Blade, I don't have the time to look up the statistics right now, but I guarantee that 80- 90% of personal bankruptcies are because of the three reasons I listed. If you're interested, later tonight I'll try and scrounge up sources.
I think when it comes to bankruptcy, it's very easy for people to say it would never happen to them. They're not irresponsible like those people that make you sick. But when something horrible and unexpected happens to you and yours, bankruptcy is sometimes the only way out. People should absolutely do everything they can to try and prevent against disaster, but that still doesn't provide any guarantees. Unless the government moves to socialized health care, mandatory prenups, and better unemployment coverage, there are always going to be a great deal of people that go bankrupt for legitimate and completely unshameful reasons.
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The first answer would be: don't get into debt in the first place. What about people with mortgages and student loans? Should they also not pay tithing because they owe money? I think people not get into debt in the first place and then cut all fun stuff until they are out when the worst happens, but tithing doesn't count as fun stuff.
Oh, I would never say someone should use their mortgage alone as an excuse to get out of tithing if that is part of their faith. But when a budget has been stretched thin with just the basic living expenses and you have debt, I think tithing should be behind those.
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posted
I think that getting into debt that cannot be gotten out of is not good as well. Bad things happen, but that's the point of saving for the rainy day. I don't think it's the government's job to remove the obligation to save for a rainy day.
I'm glad that bankruptcy laws are there - they are essential.
Isn't the average credit card debt for American households something like $6,000? That's a huge amount - that's more than 15% of the average annual income. If that's an acceptable burden of debt, then no wonder a crisis will put someone into a financial tailspin.
Posts: 26077 | Registered: Mar 2000
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quote:Originally posted by Amanecer: Black Blade, I don't have the time to look up the statistics right now, but I guarantee that 80- 90% of personal bankruptcies are because of the three reasons I listed. If you're interested, later tonight I'll try and scrounge up sources.
I think when it comes to bankruptcy, it's very easy for people to say it would never happen to them. They're not irresponsible like those people that make you sick. But when something horrible and unexpected happens to you and yours, bankruptcy is sometimes the only way out. People should absolutely do everything they can to try and prevent against disaster, but that still doesn't provide any guarantees. Unless the government moves to socialized health care, mandatory prenups, and better unemployment coverage, there are always going to be a great deal of people that go bankrupt for legitimate and completely unshameful reasons.
I'm always game for illumination. I'd appreciate the effort.
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quote:You'll need the Lord's help to get out of debt...
Leaving aside the issue of whether it's ethical to bribe the Lord in this way, I need to point out that I got out of debt without the Lord's help.
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posted
With personal bankruptcy do the people have to pay back all the debt eventually? I was under the impression they didn't have to, since that's the way it seems to be in corporate bankruptcy from my experience of it. When Delta went into bankruptcy a couple years ago they owed my dad a lot of money from contract work and only had to pay him around 10%, which has left us in debt up to this day. So I'm not a big fan of corporate bankruptcy laws.
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quote:Originally posted by King of Men: Ah, so their tithing isn't done for reasons of faith and charity, then, but only out of self-interest? Well, that's not very nice, is it? And if it is out of charity, well, charity is a fine thing, but not an obligation. While if you've borrowed money, then you have an obligation to repay it. If that means your god gets pissed at you, well, that's just too bad; you borrowed the money, deal with the consequences. Staying on good terms with your god is not more important than personal integrity - or perhaps you believe in "Lying for Jesus"? Indeed, the linked columnist quotes the Bible for this : "The wicked borrow, and do not repay."
KOM: In all the time you've spoken with me can you honestly say that I believe in not paying my debts? Or lying for Jesus?
No, obviously I know that you do not believe in those things. But that's where your post was going, and by pointing this out, I had hoped to make you reconsider.
quote:Its more, in the act of giving back to God what is already His, you are cultivating selflessness, and one of the promised blessings is "He will pour out a blessing that you won't have room to receive."
Well, that makes no sense. It's one thing to give what's yours; but if you are bankrupt, then we are speaking of money that's not yours to give! How are you 'cultivating selflessness' by giving away other people's money in the hope of getting a blessing?
quote:Some people do keep the commandments out of fear and out of a sense of bribery but I doubt you can find God endorsing the practice.
Well, this is obviously a place where we have different assumptions and are never going to agree. Since your god doesn't actually exist, it 'endorses' whatever the people who believe in it do in its name.
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quote: Well, this is obviously a place where we have different assumptions and are never going to agree. Since your god doesn't actually exist, it 'endorses' whatever the people who believe in it do in its name.
Fair enough
quote: Well, that makes no sense. It's one thing to give what's yours; but if you are bankrupt, then we are speaking of money that's not yours to give! How are you 'cultivating selflessness' by giving away other people's money in the hope of getting a blessing?
Again I have not established my personal views on the matter, you commented on a possibility. I said, "Hmmm I need to think about that for a bit."
But personally speaking I think I am in your camp in regards to debt. I think its right to pay back your debts as you do not really have income until you do, thus you can't be tithed.
Posts: 14316 | Registered: Jul 2005
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quote:Originally posted by Rappin' Ronnie Reagan: With personal bankruptcy do the people have to pay back all the debt eventually? I was under the impression they didn't have to, since that's the way it seems to be in corporate bankruptcy from my experience of it. When Delta went into bankruptcy a couple years ago they owed my dad a lot of money from contract work and only had to pay him around 10%, which has left us in debt up to this day. So I'm not a big fan of corporate bankruptcy laws.
For personal bankruptcy it depends on the income. Lower income people get to have non-secured debt (credit card for instance) wiped clean. Higher income have to give anything they reasonably can to their debtors for a set amount of years. (Dagonee feel free to correct me.)
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posted
If I understand the issue correctly, it's not that you are absolutely prevented from tithing if you are in debt, but rather that you are prevented from doing so and receiving bankrupty protection. That's a very different thing, at least to me.
I mean, if I understand this correctly, if you really believe that it is more important for you to give money to the church, that option is still available to you, just at increased personal cost, i.e. you don't get bankrupty protection.
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quote:I mean, if I understand this correctly, if you really believe that it is more important for you to give money to the church, that option is still available to you, just at increased personal cost, i.e. you don't get bankrupty protection.
More accurately only the more forgiving form of bankruptcy protection is available to you. My major problem with the policy is that it was put in place by accident. It's such a sweeping change that it should have been addressed by the legislature directly.
Not that this is different from hundreds of other changes that get passed each year, of course. Stupid legislatures.
quote:Dagonee feel free to correct me.)
Don't know the details. In very (very, very) general terms, one forgives debt but liquidates all assets and the other puts debtors on hold, puts the bankrupt party on a strict budget, and allocates the rest to creditors. I don't know what the second does to assets.
Also, lots of assets are protected. I just don't know which ones. I'm most likely wrong about something in this description.
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posted
"the linked columnist quotes the Bible for this: The wicked borrow, and do not repay."
The Bible also forbids usury. Most bankruptcies are driven by usurious lending practices as defined by the various states' laws, from which financial corporations are exempted.
quote:Originally posted by TomDavidson: I need to point out that I got out of debt without the Lord's help.
Oh, He told you that, did He?
Y'know, if I had made such a comment as this on somebody's theist beliefs, winkie smiley or none, people would jump all over me about what an arrogant jerk I am. But perhaps there's no need to show respect for the beliefs of an atheist?
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quote:Originally posted by TomDavidson: I need to point out that I got out of debt without the Lord's help.
Oh, He told you that, did He?
Y'know, if I had made such a comment as this on somebody's theist beliefs, winkie smiley or none, people would jump all over me about what an arrogant jerk I am. But perhaps there's no need to show respect for the beliefs of an atheist?
You are welcome to call people out when you feel they are rude or ungracious towards your beliefs or any atheists.
Posts: 14316 | Registered: Jul 2005
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quote:Originally posted by katharina: The first answer would be: don't get into debt in the first place. What about people with mortgages and student loans? Should they also not pay tithing because they owe money? I think people should not get into debt in the first place and then cut all fun stuff until they are out when the worst happens, but tithing doesn't count as fun stuff.
Does that mean that people shouldn't buy houses unless they have $300,000 in cash lying around? 'cause that's how I'm reading what you're saying.
quote:Originally posted by King of Men: Y'know, if I had made such a comment as this on somebody's theist beliefs, winkie smiley or none, people would jump all over me about what an arrogant jerk I am. But perhaps there's no need to show respect for the beliefs of an atheist?
KoM, when have I ever jumped all over you for your beliefs? I totally respect your beliefs, and your right to express them here.
I intended my post as a bon mot, and had figured that Tom would take it as such. I have not often seen the same good will in your posts, or respect for other people's beliefs.
Before you start calling the kettle black, I suggest you check a mirror, Pot.
That said, if Tom did consider what I wrote to be an inappropriate mockery, then I sincerely apologise to him. I was not intending disrespect.
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Keep accounts for how much you should have tithed, while paying your secular debts. Then, once you are out of trouble, you can give back the money ..with interest if you wish. I am sure the Lord is more patient than the lender.
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posted
I do not see bankruptcy as a sin or immoral. It is the law of the land, first off. It is part of a system of laws governing financial transactions in this country and, while subject to some famous abuses, it is also part of a safety net built into the financial structure of this country.
What that means is that the interest rates that creditors charge already assume (and have for years) a certain level of bankruptcy.
During the years when they were buying Congressional influence to "reform" the bankruptcy laws, the major creditors were earning record profits. Despite the deplorable abuses of the bankruptcy laws.
So...let's get real here people.
If you could go without more than three paychecks without being in a financial hole deeper then you could reasonable escape from in a decade, I applaud you. That status would probably put you among the 1% most financially stable in this country.
For most people, loss of one partner's income in a family, a serious illness (even WITH insurance in some cases), or just a bad setback at just the wrong moment (like your car getting wrecked and not having enough money around to pay your deductibles) is going to mean hardship and sometimes well beyond the breaking point.
You can moan all you want about how people shouldn't get themselves into these situations in the first place, but let's get a grip. How many people do you know living basic normal lives who you would say could survive a major financial hit and not be quickly thousands in the hole?
I know more people who would be homeless inside of 3 months without a paycheck than I do who could be stable.
And people who are just starting out are in the most precarious position.
And, truthfully, how many people get any sort of education on how to manage their credit? It's a lot easier to get a credit card than it is to even find a course on how to manage credit. Until you're in trouble, of course...
I think our bankruptcy laws are ridiculous, but the changes made recently are not making it better. They so favor the credit card companies and don't do anything for the consumers. Did the legislature stop predatory lending practices? No. Did they close the payday loan places? No. Did they cap interest rates? Sure...at 30%
Is it possible to stop pre-approved credit card offers from coming to you? Have you tried this? I have. It's awfully difficult. You practically have to be on a first-name basis with the credit reporting companies and renew your "do not solicit" orders periodically because they magically get "erased" so that the card companies can send you stuff unsolicited.
Do you know how difficult it STILL is to get your own credit info? Every person is entitled to a free report from each rating bureau once per year. But if THEIR records have a mistake in it on a crucial field, then you can't just order the report, you have to call them and play 100 questions and then they'll "research it" and send you a record. And you try to fix it? They don't have to fix the record. And even if they do fix it, if the same creditor that sent the bum information before sends another report (which some do monthly) then the bad info is RE-entered onto your record. It doesn't STAY fixed. Did Congress address any of that? NO! NO NO!!!
I'm not trying to say that people shouldn't be more responsible with credit, they should be. But let's fix some other aspects of the system at the same time.
They didn't because the bill that was passed was written by VISA. Check the history on it. Check who the major campaign contributors were to the "authors of record" in that committee. Seriously. This was the biggest boon to the financial industry in decades.
posted
I think a couple of you are misreading Kat. I don't believe she was saying nobody should get a mortgage. I believe she was saying that the fact that mortgages are a fact of life, and that a serious setback can leave you unable to pay your mortgage, make the advice "don't get into financial trouble in the first place" an unsatisfactory answer to those who are in debt and believe they should tithe. I believe she was saying that debt is just about unavoidable, and that bankruptcy can be a matter of misfortune as much as irresponsibility.
Am I misinterpreting you, Kat?
That being said, I agree with King of Men, actually: that money isn't yours to give, if you're in bankruptcy. You are living with belongings you have not paid for.
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posted
The only thing I disagree with Bob is towards the beginning of what he wrote. About building the cost of bankruptcy into the interest rate. Many businesses build shoplifting into their cost of doing business. Does that make it ok to steal from them? Insurance companies build fraud into your premium, does that make it ok to fake a claim?
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I don't know that Bob is saying that anything is okay, just that banks are not the victims here.
I will say that I have experienced the exact same thing with inaccurate charges reappearing on your credit report after you go through the effort of getting them off. I think that part of the system stinks. They have all the power. All a creditor has to say, pretty much, is "Yup. He owes us money," and you do. I expect there's a legal recourse, but who has the time, money, and energy to deal with that?
(Did anybody else cheer at the end of Fight Club?)
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quote:Many businesses build shoplifting into their cost of doing business. Does that make it ok to steal from them? Insurance companies build fraud into your premium, does that make it ok to fake a claim?
That's not the same thing at all. Bankruptcy is legal. It is legal to declare bankruptcy. It is not legal to commit fraud or to shoplift.
When I was a kid growing up, my dad was a coal miner -- and we went through some very rough years due to layoffs and labor disputes and strikes and more layoffs. Ultimately my parents had no choice but to file for bankruptcy. It was the last thing they would have ever chosen. Without bankruptcy laws, there would have been no mechanism by which my parents could have pulled themselves back up. I think we would have become homeless.
Bankruptcy is not theft. It can be abused, but it's such a drastic and devastating thing for most people to do, I can't imagine abusing it is a very common thing.
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posted
I'm not saying you should steal because the store builds the cost of pilferage into their prices. Nor am I saying that beating credit card companies out of money is okay. What it is NOT is it is not illegal. If you qualify for bankruptcy, the law is there to protect your assets and, basically, as a stop-gap against having debtor's prisons and work-houses like in the bad old days.
But c'mon. The law is blind to who the creditors are. You declare bankruptcy owing Visa $1,000 and the small businessman at the end of the street out of $1,000. The law says you pay them back at an equal rate. Even though VISA has been able to charge ALL its customers an interest rate that more than covers its anticipated losses for the year (record profits, rememmber!) and the small businessman might just go out of business himself for want of payment. Why is the law written that way? To be fair...of course. Under one definition of "fair."
Is that good for the economy?
Is it good for the economy to allow VISA to charge an interest rate as high as it does AND also let them write bills for Congress to pass protecting them from losses? Well...let's just say the convinced Congress it was the right thing to do.
I don't have a lot of sympathy for them, really.
The small business person who has people declaring bankruptcy and them losing payment for services and goods...you bet. That's horrible and it hurts the economy, the community, and real families.
Visa gets to declare those losses on their taxes.
The small contractor can too. If his business survives and makes enough of a profit that he needs to offset it with losses.
Look, I'm not even saying that bankruptcy laws didn't need some reforming. But the reforms we recently ended up with were pretty darned one-sided and it's not just me saying that. The Wall Street Journal had a series of articles on how bad it was for the US economy for Congress to have sold out to the credit companies. It SHOULD have been a national scandal. It would have been were it not for more pressing matters of terrorism. As it is, I think people are just now waking up to how incredibly ham-fisted Congress was when they revised the statutes.
I wasn't aware of this issue of tithing, and I really have no comment on it except to say that the discipline of tithing may make people more conscious of their spending habits and choices, and thus find that they are generally better off after getting into the tithing habit than they ever were before.
I think it's in churches best interest to help their parishioners deal wisely with money. If they can offer budgeting and financial management courses at low cost, that's a boon to parishioners that may just have a pay-off for the church too. But a church full of people who are always strapped for cash has bigger problems than just money woes. When people are stressed out over money, their relationships with each other start to fall apart. Spouse and child abuse increase. Alcoholism go up. All sorts of bad things.
And, at least for people who ARE active in the church, they are going to turn there for help in getting things back on track. A good church doesn't shun people in that situation, it helps them. Whether or not they can tithe.
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pH: Don't be ridiculous. There is a huge difference between consumer debt and a mortgage.
Bob, I don't see anyone advocating shunning or even suggesting it as an option. Can you show me where someone did?
quote:I don't believe she was saying nobody should get a mortgage. I believe she was saying that the fact that mortgages are a fact of life, and that a serious setback can leave you unable to pay your mortgage, make the advice "don't get into financial trouble in the first place" an unsatisfactory answer to those who are in debt and believe they should tithe. I believe she was saying that debt is just about unavoidable, and that bankruptcy can be a matter of misfortune as much as irresponsibility.
This is close. I do think mortgages are a fact of life, and student loans can be.
What is NOT a fact of life is consumer debt, and getting into consumer debt - owing anything to VISA at all that you can't pay back in a month - is setting yourself for financial disaster.
The $6,000 average consumer debt is not referring to a mortgage or medical bills - it's means you're spending more than you make, consistently. If American households had $6,000 in liquid savings as a matter of course instead of $6,000 in consumer debt as a matter of course, bankruptcies would dry up dramatically.
I know it isn't easy and things happen. However, the first step to disaster is taken that first month you don't pay off your credit card bill completely. That's avoidable. I think the easy credit Americans get into leads directly to the high bankruptcy rate.
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I am relatively healthy and have good insurance. I have a decent job. I have no credit cards. I will never be able to afford a house. I am roughly $600 in debt for medical bills just from some minor procedures last month. I can't imagine what would happen, even with insurance, if I had something serious happen to me. I would use up my savings and be on the streets in 6 months.
Posts: 11187 | Registered: Sep 2005
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I have a friend who just turned 19 and has ten major credit cards. She is shocked that anyone would ever accept less than a $1000 limit on EACH CARD. She is $19,000 in debt without student loans (which she also has). I really, really want to know where she got the idea that this sort of thing was okay. What's even better is that she becomes hostile when she realizes that I DARE to pay for things with a debit card because apparently, I shouldn't be spending money that I have, or something.
quote: I think the easy credit Americans get into leads directly to the high bankruptcy rate.
This is a very commonly held belief that isn't backed up by the facts. In the US, the leading causes of bankruptcy is illness. A Harvard study found that in 2001 half of all personal bankruptcies in the US were the result of illness and medical bills. The next leading cause of bankruptcy is divorce. Another study found that families with children were more than twice as likely as families without children to file for bankruptcy.
I know that there are people who a reckless spenders and who don't seem to grasp the basics of interest and debt. I know quite a few of these people and I am sure that there are bankruptcies that happen primarily because people don't know the basics of money management. But those are the exceptions and not the rule in bankruptcies.
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The question is, would those illnesses lead to bankruptcy without a prior history of credit card use? I don't know one way or another, I'm asking.
Posts: 10645 | Registered: Jul 2004
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Some perhaps not, given the provision of comprehensive healthcare insurance. The average hospital stay in 2002 cost more than $17,300, and it is now well up over $20,000, IIRC. The cost of a hospital stay can run up into the hundreds of thousands of dollars, although of course that is more rare.
Median household yearly income in 2005 was $46,326.
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Edited to add: I am sure many people who declare bankruptcy do have some form of health insurance. However, I am concerned that much of such coverage is not what I would consider "comprehensive"; i.e., many out-of-pocket expenses, including high deductibles and pre-existing uncovered conditions.
Of course, once someone loses his or her job, usually the health insurance is lost with it, unless one can afford COBRA. (Without a job, that is rather difficult, as COBRA generally runs in the $600-$1000/mo range.) And then the pre-existing conditions clauses may kick in, even if you do get another job. Hard stuff.
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