Re: Question on new BK law

Posted by Paul (207.44.154.35) on December 31, 2003 at 17:14:44:

In Reply to: Question on new BK law posted by WoodWorker on December 31, 2003 at 16:14:02:

The major reason CC companies are pushing for CCCS is to increase the “external” costs of filing a bankruptcy. They want to increase the burden of filing so as to lessen the frequency. This “Reform” has been tossed around for years. It hasn’t happened yet, because most economists will tell you that increasing the costs of bankruptcy will lessen total borrowing which would serve to put a “brake” on the economy at large. Reform might be good for MBNA in the short term, but it would hurt the economy at large by making people more hesitant to borrow and spend, if they didn’t believe the relief valve of bankruptcy would be available if they had accidents or job loss. So don’t hold your breath waiting for it to come about before the next election cycle. The President wouldn’t want anything that might crimp the economy to hurt his chances for re-election. As long as the CC companies are enjoying record profits, there is still as yet no major clamoring to change the laws outside of MBNA and its cohorts.

Whenever you squeeze a balloon, it bulges somewhere else. There is no great consensus that curtailing bankruptcy would at all be good for the economy at large.

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