Ok, I know I have already posted once on this topic...but I want to take a different approach this time. The law hurts consumers, but it is also aimed at attorneys that practice bankruptcy law.
The first and most important thing is a requirement that attorneys do a reasonable investigation into the circumstances leading up to the bankruptcy and that they must certify, under penalty, that the information provided is based in fact. This little turn of legalistic phrase means that attorneys are going to have to investigate their own clients and make sure to report their findings (in the petition) to the court. So much for attorney/client priviledge. Be aware, attorneys are already expected to take this one to the Supreme Court, but that will take a lot of money and clients are filing bankruptcy...
The certification that the information in the petition is based in fact is backed up by the requirement that if someone objects to information in the petition and it is later determined to be inaccurate, the ATTORNEY will have to pay the court costs and attorney fees of the person or firm that objected in the first place. In easier terms, if a person says they do not have a boat, and the petition does not list a boat, and someone objects that there IS a boat, if anyone hires someone to prove there is a boat, and it turns out there is a boat, the attorney for the debtor will have to pay for the investigation, the attorney fees and it is likely that the debtor will not get a discharge in the bankruptcy court. If the attorney charged the debtor $750 for filing the bankruptcy - but the investigation cost $1000, then the debtor's attorney will have to not only forfeit their fee, but pull $250 out of their pocket.
Here is what one malpractice insurer said about the new law and their offering of insurance: expect the 10% no-claim discount to be withdrawn immediately. Expect increases in the 15-25% range until a claims history is established. Some firms have already suggested that they will no longer offer insurance to attorneys practicing bankruptcy.
In one survey done about 4 years ago (last time the law got close) it was expected that as many as 40% of attorneys would quit working bankruptcy. Based on some informal research, the 40% number is probably right for those that will change fields, quit or retire immediately. Another 30% will probably leave after just a couple of filings under the new law, and as many as 80-90% will leave within a year of it's passage.
What might happen to an average consumer? One scenario: Couple earning 50k, renters in a medium sized metro area. Earning too much to file a chapter 7, but too little to survive a chapter 13. With few attorneys willing to file petitions, they can try to file their own - not recommended now, definitely not under the new law - or they can deal with their creditors. Within a year, two wage garnishments will be filed....one each on the couple. Now, not able to pay their bills to begin with, they lose 20% of their GROSS income to garnishments. If they fall behind on their rent, and an eviction is filed, no bankruptcy can stop it. They will have to live in their car - provided it was not repossessed.....because their credit will be so bad, no one will want to rent to them. The alternative is quitting their jobs and trying to find something under the table - good luck. (Assuming the creditors do not go after them for trying to avoid the garnishments).
Don't forget the credit counseling services: they get new customers...the agencies - paid by the credit card industry - are the only ones currently authorized to provide the mandated financial education classes required under the new law.....and do you think it will be the credit card companies that PAY for those classes? or will it be the debtors?
So, in real terms, 80-90% of the attorneys that help consumers with debt will be out of business or gone elsewhere, the only people that will be allowed to offer the mandated financial education will the agencies paid by the credit card companies, and attorneys that do file, will be required to certify the information in the petition is accurate or risk their own money...without malpractice insurance.
Can you guess what will happen to the number of bankruptcy filings? 1.5 million down to less than 100,000 in less than 2 years. But the number of foreclosures, repossessions, garnishments and evictions will grow exponentially....banks and credit card companies will own more homes, cars and furniture than they will know what to do with....and in areas where foreclosures are high (in Wisconsin over 20k last year) the effect on real estate prices will drive others into trouble.
Tracy
Sunday, March 06, 2005
Wednesday, March 02, 2005
Opinion - Pay Rates
I have a new website for people to find out how their paycheck compares to others...it is just started so give it a chance! http://www.whatjobspay.com
Sunday, February 27, 2005
Opinion - Bankruptcy Reform
Why are credit card companies SO in favor of bankruptcy reform? It protects their cash cow.
On a credit card @ 18%, paying on the minimum payment:
A $2,000 balance will take 18.50 years to pay off
A $4,000 balance will take 24.25 years to pay off
A $6,000 balance will take 27.50 years to pay off
A $10,000 balance will take 37.75 years to pay off.
But do you know how long it takes for the credit card company to get back what it loaned?
51 months.....no matter how much you borrowed.
That means after 51 months of carrying a balance on the credit card, every penny paid to the credit card companies for as long as 33 years, is profit.
At 24%, it would take only 45 months to get back the balance but to pay off?
$2,000 would take 33.5 yrs
$4,000 would take 45.17 yrs
$6,000 would take 51.75 yrs and
$10,000 would take 60.25 yrs
ONE $6,000 credit card with a full balance would take someone their ENTIRE working life to pay off at the minimum payment. If the credit card companies have their way, the new law will make anyone with $100 a month extra repay their $6000 in ....5 years.
Let's make this easy. Instead of allowing credit card companies to structure their repayment plans over 30, 40 or 60 years, require them to schedule minimum payments based on the highest balance ever held.
$2,000 highest balance @ 24% would be $40
$4,000 highest balance @ 24% would be $80
$6,000 highest balance @ 24% would be $120
$10,000 highest balance @ 24% would be $200
In each case, the balance would be paid off in just 5 years....just like in bankruptcy....
Bet they will not like it...MBNA, the largest issuer of credit cards earns almost a billion dollars a year PROFIT.....cash cow indeed.
Tracy
On a credit card @ 18%, paying on the minimum payment:
A $2,000 balance will take 18.50 years to pay off
A $4,000 balance will take 24.25 years to pay off
A $6,000 balance will take 27.50 years to pay off
A $10,000 balance will take 37.75 years to pay off.
But do you know how long it takes for the credit card company to get back what it loaned?
51 months.....no matter how much you borrowed.
That means after 51 months of carrying a balance on the credit card, every penny paid to the credit card companies for as long as 33 years, is profit.
At 24%, it would take only 45 months to get back the balance but to pay off?
$2,000 would take 33.5 yrs
$4,000 would take 45.17 yrs
$6,000 would take 51.75 yrs and
$10,000 would take 60.25 yrs
ONE $6,000 credit card with a full balance would take someone their ENTIRE working life to pay off at the minimum payment. If the credit card companies have their way, the new law will make anyone with $100 a month extra repay their $6000 in ....5 years.
Let's make this easy. Instead of allowing credit card companies to structure their repayment plans over 30, 40 or 60 years, require them to schedule minimum payments based on the highest balance ever held.
$2,000 highest balance @ 24% would be $40
$4,000 highest balance @ 24% would be $80
$6,000 highest balance @ 24% would be $120
$10,000 highest balance @ 24% would be $200
In each case, the balance would be paid off in just 5 years....just like in bankruptcy....
Bet they will not like it...MBNA, the largest issuer of credit cards earns almost a billion dollars a year PROFIT.....cash cow indeed.
Tracy
Friday, December 03, 2004
Position - Commercial traffic
I have thought about this one for a long time. There are some obvious issues people would raise, but overall I like it.
No commercial traffic is allowed between 6am and 7pm with the following exceptions: public transportation, including intra and interstate buses; small package delivery vehicles (such as Fed Ex and UPS); and moving vehicles picking up or delivering personal goods (vehicles moving businesses would be restricted).
This restriction would apply in both urban and rural areas and include construction vehicles.
The result would be a significant reduction in traffic. It would also end commercial truckers driving more than 11 hours per day (in itself a violation). It would probably, over time, force much trucking onto rail for longer than two day trips.
It would also put somewhere between 15 and 25% of the labor force onto 2nd and 3rd shifts.
No commercial traffic is allowed between 6am and 7pm with the following exceptions: public transportation, including intra and interstate buses; small package delivery vehicles (such as Fed Ex and UPS); and moving vehicles picking up or delivering personal goods (vehicles moving businesses would be restricted).
This restriction would apply in both urban and rural areas and include construction vehicles.
The result would be a significant reduction in traffic. It would also end commercial truckers driving more than 11 hours per day (in itself a violation). It would probably, over time, force much trucking onto rail for longer than two day trips.
It would also put somewhere between 15 and 25% of the labor force onto 2nd and 3rd shifts.
Thursday, October 28, 2004
Position - Health Care
The federal government must do something about people not having health care...however, it's current method is creating higher and higher costs to individuals and businesses.
My suggestion: allow the federal government to pay the premiums necessary for everyone to purchase their own insurance. Corporations don't want to be in the health care providing service and employees don't want corporations involved in their health care. Consider the premiums to be income and those with higher incomes will pay taxes on the premiums. Raise the personal exemption to eliminate the tax consequences on lower income people. Let people be ranked by doctors according to an established criteria to assess risk for premium calculation and then let people have a voucher they use to select their own providers. HMO's and PPO's can compete for people and local hospitals and doctors can compete on providing services. Changing even the Medicare system to this system would reduce the anti-competitive nature of third-party pay systems. Further, companies would have one less expense they could write off and therefore could afford to pay their employee's just a little more....it would also make them more competitive with other countries that do not pay for employee health care.
Tracy
My suggestion: allow the federal government to pay the premiums necessary for everyone to purchase their own insurance. Corporations don't want to be in the health care providing service and employees don't want corporations involved in their health care. Consider the premiums to be income and those with higher incomes will pay taxes on the premiums. Raise the personal exemption to eliminate the tax consequences on lower income people. Let people be ranked by doctors according to an established criteria to assess risk for premium calculation and then let people have a voucher they use to select their own providers. HMO's and PPO's can compete for people and local hospitals and doctors can compete on providing services. Changing even the Medicare system to this system would reduce the anti-competitive nature of third-party pay systems. Further, companies would have one less expense they could write off and therefore could afford to pay their employee's just a little more....it would also make them more competitive with other countries that do not pay for employee health care.
Tracy
Position - Corporate Taxes
I just read a piece in Fortune about corporate taxes and frankly, it made me boil.
Berkshire Hathaway, Warren Buffett's financial tool paid $3.3 billion in taxes last year and it constituted almost 3% of the total corporate income tax paid. 61% of corporations paid NO taxes.
This is not reasonable. I understand accounting and investments, but if a corporation is paying less taxes than it's employees, you have to change something.
I am open to suggestions, but corporations must begin paying income taxes.
Tracy
Berkshire Hathaway, Warren Buffett's financial tool paid $3.3 billion in taxes last year and it constituted almost 3% of the total corporate income tax paid. 61% of corporations paid NO taxes.
This is not reasonable. I understand accounting and investments, but if a corporation is paying less taxes than it's employees, you have to change something.
I am open to suggestions, but corporations must begin paying income taxes.
Tracy
Position: Federal Budget
The federal budget is a monster. Even with tens of thousands of bureaucrats, no one seems capable of controlling, let alone monitoring it. However, I am opposed to the to a Constitutional Amendment to force balancing it. Both the President and Congress must be able to act when events occur that need intervention.
Therefore, I believe that the budget should be set based on the revenues received by the federal government in the previous year. Emergency spending could be authorized when events, such as 9/11, cause the need.
Therefore, I believe that the budget should be set based on the revenues received by the federal government in the previous year. Emergency spending could be authorized when events, such as 9/11, cause the need.
Position - Abortion
The litmus test for SC justices? The ban on partial birth abortions is correct. Despite the rarity of the procedure, it needs to be prevented from occurring at all.
I am for some limits on abortions after the 26th week. Once a baby is viable, abortion seems to be a radical approach. However, the threat to a woman's life must be a consideration.
Tracy
I am for some limits on abortions after the 26th week. Once a baby is viable, abortion seems to be a radical approach. However, the threat to a woman's life must be a consideration.
Tracy
Position or Opinion
Each post should title itself with either Position: or Opinion: over time, we will be able to define or refine positions based on the opinions of members.
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