I’m sending the following letter to my Senators and Congressman this week. I wanted to share it with all of you as well, because I think the subject is profoundly important.
I am writing to encourage you to vote against any changes to the existing bankruptcy laws when the current legislation comes before the House and Senate. I firmly believe that the existing laws work well, and to change them as is presently under discussion will benefit credit card companies at the expense of individuals.
I declared personal bankruptcy in 2003. Research has shown that nine out of ten personal bankruptcies arise out of the loss of a job, a divorce or family breakup, or catastrophic medical expenses. While my case was one of the few that did not fall under those categories, I honestly do not believe that I was or am an irresponsible, “deadbeat” borrower that the credit card companies would have you believe. I did get in over my head, which is easy to do – especially if you are young, inexperienced or for other reasons buy into the lines that credit card companies spin.
Indeed, if I am such a deadbeat, why is it that I began receiving credit card offers in the mail within literally weeks after my bankruptcy was discharged? During and after my bankruptcy case, I was deluged with offers of people wanting to lend me money to buy a car or for other reasons. And today I receive, on average, one credit card offer in the mail every day.
These offers contain lots of glowing phrases about “the credit you deserve,” and so forth. But they don’t talk much about their interest rates – the lowest of which was 15% and most of which were 23% or more! Nor about their fees and penalties. My husband and I each received copies of an offer this week which featured a 24% interest rate, a setup fee of $69, an annual fee of $69, and more!
The one credit card I do possess today, on which I do not carry a balance from month to month, features a similar interest rate, and will charge me an additional $29 if my payment reaches them even one day after the due date on my statement.
Such predatory lending practices draw millions of Americans every year into traps. Sometimes, especially if one suffers a setback in life, the only way to escape this trap is through bankruptcy. If the laws regarding bankruptcy are changed in the way the credit card companies desire, there will be no escape. Millions of Americans will be driven into virtual slavery, to fuel the credit card companies’ greed.
History has shown that part of the reason the Great Depression became so pervasive and the suffering it caused so deep, was because there was no means for individuals and small businesses to wipe out their debts and start anew through bankruptcy. It has been argued that the economy of Japan, which has been in a recession for well over a decade, continues to suffer in part because of the same reason.
To change the bankruptcy laws now would be dangerous for the economy, and would penalize millions who have fallen on hard times through no fault of their own. It would reward the credit card companies for their rapaciousness, predation and greed. That simply is not right.