Pay now, stiff them later lifestyles outlawed

Well, the day of the big spender may not be over but it’s going to be a lot tougher now to stiff your creditors.

As of Oct. 17, no longer will most people be able to go to court and ask a judge to wipe out all their debts in return for forfeiting some of their assets, i.e. multiple cars, vacation houses, etc. That’s good old Chapter 7 of the federal bankruptcy law, used by two-thirds of those who declare bankruptcy.

Those with an income above the state median who can pay at least $6,000 over five years ($100 a month) now will be forced to repay their creditors under Chapter 13. Those earning below the median could ask for Chapter 7 protection but the wicket gets sticky with the kick-in at the same time of another law requiring minimum payments on credit card debt.

Put those two laws together, along with the rising and unstable price of gasoline and heating oil, and, Houston, we’ve got a problem. It is the enormous use of credit cards that sends so many people to bankruptcy court. People cease to pay but they don’t cease to buy.

Personal bankruptcy filings hit an all-time high of 1.6 million for 2003.

According to the American Bankruptcy Institute in the Wall Street Journal, one of every 72.8 households in the U.S. filed for bankruptcy during the 12-month period that ended in March 2004. The highest state was Utah, with one in 36.5 households. Washington wasn’t far behind with one in 35 to 60 households. Alaska had the lowest rate at one for every 171.2 households.

People in the southern states, the WSJ says, are more inclined than in other regions to want to pay off their creditors. That’s where Chapter 13 was born, in Birmingham, Ala., during the Depression, to help workers make ends meet.

Coal and iron workers who couldn’t pay all their bills would send their paychecks to a state bankruptcy judge, who distributed payments to the employee’s landlord, banker and other creditors each month.

Women will be affected most by this new law, experts say in the Christian Science Monitor. More than 1 million will be in bankruptcy court this year, outnumbering men by 150,000.

Single mothers, who often work low-wage jobs, are 50 percent more likely to file for bankruptcy than married parents, and three times more likely than childless couples.

It wasn’t mentioned in the CSM news story but this looks to me like another consequence of the no-fault divorce law, encouraging women to dump their unsatisfactory or abusive husbands with little thought given to how they could support themselves on their own. The new law puts back child support and alimony on an equal footing with other creditors, which wasn’t the case before Oct. 17. Women now will be in the front line for payoff if the ex declares bankruptcy.

I don’t know when credit cards appeared on the scene or why so many people think it’s OK to charge everything they want and then run to court and plead inability to make the payments.

I got my first and only credit card back when I was attending national political conventions and having trouble cashing personal checks away from home.

When my husband and I married, I had money in the bank and he, just out of the Navy, owed 21 separate creditors. We both worked.

I wrote letters to each of his creditors, telling them he was married now and we would be paying off the bills. It might only be a dollar a week to begin with but it would be steady and increase as the total bills decreased until everyone was paid in full.

I never got a single complaint in return. We lived modestly, dressed modestly, could only afford one car for many years, and raised much of our own food, including chickens.

I canned fruits, vegetables, chicken, salmon, sauerkraut, deer, etc., and a typical vacation was a weekend at the ocean.

Regrettably, now that I have sufficient money to live comfortably, I’m too damned old to go anywhere or do anything with it.

Adele Ferguson can be reached at P.O. Box 69, Hansville, WA, 98340.

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