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 lonestar2004
Live to party,work to affordit.
Registered: 10/03/04
Posts: 8,978
Loc: South Texas
Last seen: 13 years, 21 days
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 Credit card relief? 
#9214215 - 11/09/08 08:17 PM (15 years, 5 months ago) |
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Banks, which are losing billions because many card holders aren't paying anything, seek OK to forgive up to 40% of strapped consumers' debts
"Big banks have joined with consumer advocates to urge the Government to allow a pilot program in which up to 40 percent of an individual's credit card debt could be forgiven, with the remainder to be paid over several years."
November 1, 2008
With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.
Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.
The new pilot program, which the banks hope will become permanent, could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent.
"There's obviously a financial benefit to the financial institutions to step up to the plate right now," said Susan Keating, president and chief executive of the National Foundation for Credit Counseling. "We absolutely support the proposal."
In an increasingly tough economic climate, banks and other mortgage lenders already have been agreeing to modify loans of distressed homeowners to help them avoid foreclosure. Now, banks making credit card loans have reached a point where they can lose less by forgiving part of the debt than seeing the consumer walk away entirely.
Credit cards now look to be the latest domino to drop in a financial crisis that started with subprime mortgages and continually takes new twists. Amid rising job losses, consumers - even those with strong credit records - have been defaulting at high levels on their credit cards. Banks already battered by the mortgage and credit crises are bleeding tens of billions in red ink from the losses.
Americans are lumbering under about $900 billion in credit card debt, according to the latest available Federal Reserve figures.
The new proposal pitched to federal regulators by the Financial Services Roundtable, which represents more than 100 big banks and other financial companies, and the Consumer Federation of America, would allow lenders to reduce by as much as 40 percent the amount of credit card debt owed by deeply indebted consumers in a pilot program.
Consumers, even those with solid credit records, have been defaulting at high levels on their credit cards. Banks battered by the mortgage and credit crises are losing tens of billions of dollars from the unpaid debt.
Big banks have joined with consumer advocates to urge the government to allow a pilot program in which up to 40 percent of an individual's credit card debt could be forgiven, with the remainder to be paid over several years.
HOW IT WOULD WORK. The program could involve as many as 50,000 people. On a case-by-case basis, the amount of debt to be forgiven would rise in sync with the severity of the borrower's financial situation.
- The Associated Press
http://www.newsday.com/services/newspaper/printedition/saturday/news/ny-bzcred015907148nov01,0,2060183.story
Do credit card companies need government permission to forgive debts? Or are the credit card companies asking for taxpayer money to bail them out?
I really do not understand?
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America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
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 adrug
Registered: 02/04/03
Posts: 15,800
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Jeez, it makes me regret that I've lived under a motto of fiscal responsibility all these years. All this time I could've been racking up thousands in forgivable debt!
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lonestar2004
Live to party,work to affordit.
Registered: 10/03/04
Posts: 8,978
Loc: South Texas
Last seen: 13 years, 21 days
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Re: Credit card relief? [Re: adrug]
#9214299 - 11/09/08 08:31 PM (15 years, 5 months ago) |
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I hear you, i just hope we (taxpayers) are not bailing them out!
"Innovest estimates that about 30 percent of Bank of America's credit card loans are to subprime borrowers"
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America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
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johnm214
Registered: 05/31/07
Posts: 17,582
Loc: Americas
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why do they need the government's permission here? Sounds like there's something we're not being told.
Agree with you lonestar.
If banks want to forgive loans in part or in full that is their buisness. Sounds like they want something. Are they fobidden from doing this currently for some reason? WTF? I thought the strenuous regulatiosn were only on thrift banks, weren't they? So wouldn't a credit card bank not have trouble doing this?
I don't get it. I wonder if their trying to extend statutes of limitations or the FCRA or something...
Really, I've heard paying off severly delinquent credit cards is kind of a dumb idea in many cases. While if the banks still have the card their may be hope, if you pay a debt collector it seems it may not help your credit rating much and only really if you need a mortgage or something where someone will be hand looking at your history and not going off fico or something.
Plus, if you make new payments, you reset the seven year period they can report the debt for, so you carry that burden along better. If your fucked and got debt collectors, often your best to ignore them, keep your money, and keep whatever accounts you can current from a FICO score or credit-approval standpoint for other credit cards and small loans/purchases.
For example, if you've got a two year old debt in collections it will drop off your report in five years presuming you've not made payments for five years. If you pay that sucker off you'll still have the bank's delinquency being reported, the debt collector(s) delinquency reported and teh debt collector will fuck you for seven years more, for a total of nine years since last payment, when you could have had it off in five years (for a total of five from the delinquency) if you make no payments.
Course your best to not get into debt anyways, but I wouldn't look at this program as really helping folks too much- they'll just screw up their credit report for a while under many circumstances due to the way the law is.
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lonestar2004
Live to party,work to affordit.
Registered: 10/03/04
Posts: 8,978
Loc: South Texas
Last seen: 13 years, 21 days
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Re: Credit card relief? [Re: johnm214]
#9214432 - 11/09/08 08:48 PM (15 years, 5 months ago) |
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right, thats why so many are now defaulting. but thats the credit card companies problem, not ours. I have a bad feeling we are about to get fucked again....
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America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
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adrug
Registered: 02/04/03
Posts: 15,800
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Re: Credit card relief? [Re: johnm214]
#9214510 - 11/09/08 09:03 PM (15 years, 5 months ago) |
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It seems that the banks want to forgive some of this credit card debt, but they don't want to be the ones to pay for it. Here enters the government...
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Redstorm
Prince of Bugs
Registered: 10/08/02
Posts: 44,175
Last seen: 5 months, 27 days
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Man, it kinda irritates me knowing I've paid in full on time every statement and this is what people who lack responsibility get. 
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johnm214
Registered: 05/31/07
Posts: 17,582
Loc: Americas
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Quote:
lonestar2004 said:
right, thats why so many are now defaulting. but thats the credit card companies problem, not ours. I have a bad feeling we are about to get fucked again....
yeah.. are the credit card issuers having trouble? I think sometimes they screw themselves. An irresponsible friend ran up some bills on one of his credit car he couldn't pay. Then congress stepped in and raised his minimum payment above what he could make. He could make that payment and stop paying three other cards or not make that payment and pay his others... so he did that. Stupid. You run up bills under a contract and then congress steps in and makes you pay more than you agree to. Why? To protect you. Thanks congress!
So then they charged him all these fees. He later got his other cards down and got enough money and tried to settle with the bank. He told them he'd pay off his balance of purchases, plus the statutory six percent or whatever since default, but he couldn't pay th money incurred during the six or so months they kept the card account open and charged him like 30% interest plus fees. They refused the net paymetn as settlement and wanted a payment plan for several years. (including all these fees and a 30% approx interest rate that doubled the balance of charges plus interest when he stopped making payments)
So he was looking at a card that he could get off his report in five years plus a few months with his other cards all in good standing, so a good credit history. Or, he could take the payment plan and pay over several years. Then he would have the same delinquency only it would last for a total of like ten more years instead of five more.
Why the fuck would he take that deal? Of course he told them to fuck off, and now they get nothing cuz the guy is noncollectable.
People should pay their bills, but I don't get why credit card companies refuse to cut deals like that rather than take no money. When they know its not in a person's best interest to take the deal, why wouldn't they negotiate for simply the balance of purchases plus 6% since he stopped paying rather than nothing?
I don't think people would try to do that on purpose... they ruing their credit history and still have to pay purchases plus a reasonable interest rate from when they last paid. For whatever reason though he says the bank wouldn't take the deal and so now he refuses to pay anything. So he'll get the thing off his credit report in a few years now when he'd still be making payments every month if he took the deal, with each one resetting the seven year credit reporting period. Honestly seems to me he made the right choice as far as his best interest- ignoring the moral duty to repay his debts.
I just hope they don't "help" the consumers with more bullshit laws making it harder for banks to turn a profit and thus harder for people like me to get loans if I need them. And I really don't think we need them bailed out or given handouts.
People default. Its a fact. The banks and consumers know this, and both should be held to the deal. The government needs to step out, and I don't want to be helping any company that I don't owe money to. Screw em if they gave bums bad deals.
Edited by johnm214 (11/09/08 09:26 PM)
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ScavengerType
Registered: 01/24/08
Posts: 5,784
Loc: The North
Last seen: 10 years, 5 months
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Re: Credit card relief? [Re: johnm214]
#9215202 - 11/09/08 10:52 PM (15 years, 5 months ago) |
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Credit card companies are fucked that way. I personally gota agree with redstorm. I assume that's how the responsible banks felt when the market crashed and bailouts were being issued. If the cc companies are asking for a bailout I'd be very vocal about it.
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"Have you ever seen what happens when a grenade goes off in a school? Do you really know what you’re doing when you order shock and awe? Are you prepared to kneel beside a dying soldier and tell him why he went to Iraq, or why he went to any war?"
"The things that are done in the name of the shareholder are, to me, as terrifying as the things that are done—dare I say it—in the name of God. Montesquieu said, "There have never been so many civil wars as in the Kingdom of God." And I begin to feel that’s true. The shareholder is the excuse for everything."
- Author and former M6/M5 agent John le Carré on Democracy Now.
Conquer's Club
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kidaihuan
First Growery Ban
Registered: 07/25/07
Posts: 3,173
Loc: Shanghai, China
Last seen: 13 years, 6 months
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Re: Credit card relief? [Re: Redstorm]
#9216180 - 11/10/08 03:05 AM (15 years, 5 months ago) |
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Quote:
Redstorm said:
Man, it kinda irritates me knowing I've paid in full on time every statement and this is what people who lack responsibility get.
Yeah, those idiots that complain about foreclosure and shit. What the fuck. They're the fucking idiots, not the credit companies that profited from their idiocy.
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Prisoner#1
Even Dumber ThanAdvertized!
Registered: 01/22/03
Posts: 193,665
Loc: Pvt. Pubfag NutSuck
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Re: Credit card relief? [Re: kidaihuan]
#9216460 - 11/10/08 05:41 AM (15 years, 5 months ago) |
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seems those credit companies arent profiting, just proving more
idiocy... well, until the welfare program kicked in
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kidaihuan
First Growery Ban
Registered: 07/25/07
Posts: 3,173
Loc: Shanghai, China
Last seen: 13 years, 6 months
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Re: Credit card relief? [Re: Prisoner#1]
#9216465 - 11/10/08 05:45 AM (15 years, 5 months ago) |
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Of course they're profiting.
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gettinjiggywithit
jiggy
Registered: 07/20/04
Posts: 7,469
Loc: Heart of Laughter
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Nothing specific was said in that article that they are asking for a bail out to cover the debt relief.
It sounds like they are asking the government to "waive" or rewrite current bankruptcy laws to do it. An example of some of the requirements are here-
http://www.nolo.com/article.cfm/ObjectID/B0B66870-4C52-4303-919B10B9611D3EF9
The thing is, it's the banks that asked for these stiffer laws and requirements out of greed, and now, it's back firing on them.
It is no surprise this is another domino in the chain to fall.
Look at the inflation jump over just the last year
http://www.usinflationcalculator.com/inflation/current-inflation-rates/
For anyone that was managing payments, living pay check to paycheck, that was enough to make their budget go TILT. Credit cards will be the last people pay off before food, rent, car, gas and utilities.
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Ahuwale ka nane huna.
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lonestar2004
Live to party,work to affordit.
Registered: 10/03/04
Posts: 8,978
Loc: South Texas
Last seen: 13 years, 21 days
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what do you predict inflation to be next year?
--------------------
America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
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zappaisgod
horrid asshole
Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 7 years, 10 months
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Re: Credit card relief? [Re: kidaihuan]
#9217177 - 11/10/08 09:54 AM (15 years, 5 months ago) |
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Quote:
kidaihuan said:
Quote:
Redstorm said:
Man, it kinda irritates me knowing I've paid in full on time every statement and this is what people who lack responsibility get.
Yeah, those idiots that complain about foreclosure and shit. What the fuck. They're the fucking idiots, not the credit companies that profited from their idiocy.
What profit? Assholes of adult age freely and of their own will entered into agreements wherein they received a benefit on the promise that the lenders would receive future benefits. Then they reneged. Idiots? No, asshole thieves. Every chump who borrows money and doesn't pay it back is a fucking thief.
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Icelander
The Minstrel in the Gallery
Registered: 03/15/05
Posts: 95,368
Loc: underbelly
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Re: Credit card relief? [Re: adrug]
#9217181 - 11/10/08 09:55 AM (15 years, 5 months ago) |
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Quote:
adrug said:
Jeez, it makes me regret that I've lived under a motto of fiscal responsibility all these years. All this time I could've been racking up thousands in forgivable debt!
I have to agree. How about we educate people in school on personal finance and then hold them responsible. Every time we do this shit we encourage citizens to become weak and ignorant.
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"Don't believe everything you think". -Anom.
" All that lives was born to die"-Anom.
With much wisdom comes much sorrow,
The more knowledge, the more grief.
Ecclesiastes circa 350 BC
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gettinjiggywithit
jiggy
Registered: 07/20/04
Posts: 7,469
Loc: Heart of Laughter
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Quote:
lonestar2004 said:
what do you predict inflation to be next year?
This one is tough. Gas coming down is good if it stays down. As far as I am concerned, it was the rising cost of gas prices that caused this last jump as the shipping of goods increased and that cost had to be passed on to consumers.
I think in 2009, the inability for business to get or extend credit to buyers is going to cost them in ways, they will have to pass it on to the consumer. I think those adjustments will be even higher then the ones we saw them make to cover for increases in shipping costs.
If and when the banks are ever forced to start lending out that money they received, as it flows out into the market place, we will see a devaluation of the dollar again.
Business will be incurring the costs of higher Capital Gains taxes and no doubt, an increase in unemployment insurance taxes. Those costs will be passed on to consumers.
I don't have a number as to how much higher it will go in 2009. I do think it's something Americans need to be discussing at the dinner table and planning for.
The smart ones will cut back spending if they haven't already started. This in itself will create a need for retailers to raise prices to cover for lagging sales.
I would be more then happy to hear from anyone who sees a reason for inflation to hold still through 2009/2010.
What are your thoughts?
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Ahuwale ka nane huna.
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Prisoner#1
Even Dumber ThanAdvertized!
Registered: 01/22/03
Posts: 193,665
Loc: Pvt. Pubfag NutSuck
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Re: Credit card relief? [Re: Icelander]
#9217899 - 11/10/08 12:35 PM (15 years, 5 months ago) |
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Quote:
Icelander said:
How about we educate people in school on personal finance
hahaha.... that's just ridiculous
when I was in school, personal finance was a required class
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Icelander
The Minstrel in the Gallery
Registered: 03/15/05
Posts: 95,368
Loc: underbelly
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Re: Credit card relief? [Re: Prisoner#1]
#9217929 - 11/10/08 12:42 PM (15 years, 5 months ago) |
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Maybe then most people are uneducatable.
I mean really educate them. I keep hearing on how kids graduate and can hardly read and spell. The personal finance education I got in school was pretty limited. It's amazing to me most people can't take care of themselves. Without culture to nurture their weakness they would perish.
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"Don't believe everything you think". -Anom.
" All that lives was born to die"-Anom.
With much wisdom comes much sorrow,
The more knowledge, the more grief.
Ecclesiastes circa 350 BC
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Jax
Stranger
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Posts: 84
Loc: New Jersey
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Re: Credit card relief? [Re: Icelander]
#9217983 - 11/10/08 12:57 PM (15 years, 5 months ago) |
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Personal finance was an elective at my high school and I still manage my $1000 credit limit fairly well.
But do you all really think that credit card companies taking advantage of stupid people shouldn't be held somewhat responsible? Why would you loan money to someone who has bad credit or is very irresponsible? That's an irressponsible act in itself...
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