Growing fears credit boom may implode (Bankruptcy firms hire extra staff)

[truthpusher]

Growing fears credit boom may implode
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By Dan Roberts and David Wighton in New York and Peter Thal Larsen in London
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Published: March 13 2005 21:42 | Last updated: March 13 2005 21:42
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Bankruptcy advisers are hiring extra staff amid fears that an end to the global credit boom could spark a surge in business failures in the US and Europe.

Unusually loose lending conditions have encouraged record borrowing by speculative-grade companies, with leveraged buy-outs and debt refinancing on both sides of the Atlantic generating more than $100bn of deals in the past eight months.

(snip)

PwC, the largest corporate recovery adviser, said it was hiring insolvency specialists in sectors such as retailing, utilities and telecommunications in preparation for the expected fall-out.

complete story: http://news.ft.com/cms/s/5b00c6ae-93fc-11d9-9d6e-00000e2511c8.html

[merwin]

1. And thanks to the new bankruptcy bill, the banks will profit even

more from all of this.

[SoCalDem]

3. Actually they may end up on the losing end eventually...

and it would serve them right.

People who need to file Chapter7 and cannot will just bail..Companies who DEPEND on credit card sales..(department stores, clothing stores, toy stores, home improvement stores, etc) will feel a HUGE pinch, and the layoffs will be brutal..

Look for some malls to close, and since most towns no longer have small "downtown" stores, walmarts will be sprouting like toadstools after a rain.:(...

The downward spiral will be down and dirty for a long time to come..

[merwin]

4. The point of the new bankruptcy bill is to force people to pay back

the credit card companies, even when they can't. Kind of defeats the purpose of bankruptcy actually.

[Deja Q]

10. But with those interest rates, one could pay for 20 years and STILL owe.

18% for a credit card is robbery, pure and simple. The user of the card pays back with lots of interest.

[merwin]

15. 18%? Think more like 25% at least.

[Divernan]

20. New bankruptcy bill removes ceiling on how high credit rate can go?

I read somewhere on a DU thread describing provisions of the new BR bill that it removed an existing 30% limit on how high an interest rate a lender can charge.

Another trick the lenders are pulling with new, college age cardholders, is sending them statements indicating NO payment is due in a particular month, thereby encouraging them to run their balances higher, quicker.

[tccoyle]

24. Interest rates

There are few limits to credit rates now. The amendment was to limit them to 30% which failed. Payday loans are generally in the 500% range.($200 loan for 2 weeks, $22)

[nashville_brook]

33. you wouldn't belieeeeeve how many payday loan shacks are outside

the 101st airborne/ft campbell military base!

i know someone who owns one and takes home 25-30K a MONTH!

[Hoping4Change]

40. Hey there tccoyle

Welcome to DU. Glad you're here.:hi:

[tccoyle]

43. And a hardy

thanks for the welcome!

[KDLarsen]

42. This is why I haven't got a credit card

I've had a VISA before, and I quickly found myself spending more money that I earned. So out went the VISA, a bit of my savings account & in went a normal debit card. It makes one a bit more aware when you hold the cash in your hands rather than saying "put it on the card".

[WhiteTara]

39. yeah, I read one disclaimer for a CC with interest of 29%

 I don't use that card anymore

[LastLiberal in PalmSprings]

19. That's o.k., 'cause under the privatized S.S. plan creditors will be able

to grab assets that would have been unavailable under the current system. So much for "passing along part of your own money to your family."

And since most bankruptcies are related to extraordinary medical expenses, and such are usually associated with the latter stages of one's life, well ---

[ashmanonar]

31. ok, that's just fucking scary...

you touched on something here...this is why he wants to push through SS "reform"!

bc he knew they'd push through the bankruptcy bill quickly and easily, and now the SS funds will be available if he can get the SS "reform" through! this bankruptcy bill is the methodology they'll use, and the SS "reform" is how they'll make funds available!

fucking a. this is fucking sedition.

if you don't believe me, Bush Cabal

what these people are doing is government-sanctioned class warfare, pure and simple. gross larceny on a grand scale.

fuckers.

[NYC]

47. While making the credit card payments, they will

slip behind in their mortgage payments. Bank will foreclose; house will be sold. So much for protection of primary residence.

[kohodog]

6. WALL*MART, Thats the answer.

They will see a huge increase in business after they kill off local stores and start to raise prices.

[Coastie for Truth]

9. The new bankruptcy bill

will significantly magnify the effects of any recession -- prolonging the recession and driving it deeper.

[Warpy]

16. Agreed

The first people to feel a real squeeze will be the mid level retail stores. Discount places like Target and KMart will survive, as will WallyWorld. At the same time, second hand stores are going to start filling up some of those empty store fronts in rundown strip malls as people sell what they can on consignment in order to survive.

[madmark]

36. The bill will have all kinds of unintended consequences.

Unfortunately, I think that those cc lenders that position themselves most strongly in the odious, bottom feeding payday lending will beneft the most because that's wher all the people locked out of traditional consumer lending will go.

[kohodog]

2. I cut up my cards, guess they'll blame people like me

when it all goes down. And if the housing bubble breaks I'll go down with them. Only Bush the MSM can say this economy is booming. Like a house of cards, we're in great shape.

[truthpusher]

5. Like a house of 'credit cards'....

[kohodog]

8. nice graphic,

mind if I borrow it on occasion?

[truthpusher]

14. Googled it...

not mine...just pulled it off Google images.

[Tandalayo_Scheisskopf]

11. Boy, that was smart.

Getting away from the plastic loan sharks is the smartest thing a person can do. All a good credit rating, from those things, can bring you is more misery in the long run.

Starve the beast.

[kohodog]

44. And it feels great!

Paid off all but one. Figure I can do that in the next six months too. Car payment will take longer, but at 1.9% it's not really a worry. Those kind of loans can be beneficial and cannnot be changed at the whim of a shark.

[CheshireCat]

12. I'm doing the same thing tomorrow

While I only owe about 2K, that is 2K too much! Once these final payments clear, I am cutting up both cards and calling the bank to officially cancel.

While it has always been my policy to keep my debt under 1K, a medical emergency made me break my rule.

Considering how easily the interest rate can jump from 8.9% to 29.9%, I am no longer willing to take a chance.

My nephew just graduated from college and started a new job. He ran up more debt than he should, then made a payment 1 day late. His interest rate went from 9.9% to 29.9%. Yes, we have talked to the credit card company ad nauseum in an attempt to get them to lower the interest rate. No luck at all!

Does anyone have a suggestion as to how my nephew can get the credit card company to deal with him in a more reasonable manner?

[RawMaterials]

13. you could tell them your never going to pay them anything

then sometimes they will give you a chance to pay your debt for pennies on the dollar. but this will kill your nephews credit score. almost like filing bankruptcy.

[Skittles]

18. have him check rates on other cards and transfer the balance

30% is f***ing ridiculous

[Merlot]

25. Tell them you are closing your account and

doing a balance transfer to a lower card. Don't ask them if they will lower the rate. Then they know you're bluffing. Usually they try to keep the balance, feeling that a lower rate is better than nothing.

Also, always be nice and "sincere" to them on the phone. Tell them that it's a hassle to change cards, but you just can't afford the higher rate, etc.

Just don't try to reason with them, they NEVER go for reason, and rarely do what you ask. But if you make it their idea, they will bend over backward. I got 1 year at NO INTEREST. Don't really know how I did this, but no interest on this high debt is saving me ALOT of money.

[tccoyle]

26. Getting a credit card company

to negotiate is almost impossible...especially if the balance is low (under 5k). You can threaten bankruptcy, it might get a rise out of them...it does occasionally...however, such a threat can lead to further increases in the interest rate....catch-22%

Tracy

[villager]

28. had the same thing happen to me... they kept changing their story

about why the rate was raised. First it was a "two day late" payment. Then they claimed I just had too much debt on my "score" and they'd "sent a letter" a couple of months prior "explaining" this.

I had to yell at various droids -- they were all officious and no help -- until something about my insistence about never receiving a letter (I'd also filed a complaint with my state attorney general's office about them, and CC'd them) got them to "offer" me a chance to "close" the account and return to the old rate -- a mere 16%!

Now I'm looking to transfer the balance to a lower interest card...

sheesh...

[Thor_MN]

45. Cut up the cards, but don't cancel unless you have an annual fee

If you cancel all your credit, your debt to available credit ratio goes up and your rating goes down. Unless you have an account that has annual fees, you should leave the account alone - just don't use it.

With the number of things that are using your credit score to determine if you are an attractive customer, you want to keep your credit score as high as you can. Auto insurance rates are now affected by credit scores and most other types probably will take credit scores into account soon, if they don't already.

[midwestblue2]

46. Try this . . .

Have him contact the credit card company and insist that his payment was made on time. Don't back down from this contention. Continue to escalate the calls to managers. Don't take no for an answer. Trying to appeal to the CCs sense of fairness will not work. Remember, lending institutions are highly regulated. Once they set the criteria for accounts that qualify to have the APR increased, they must follow the criteria (Fair Credit Act). By insisting that the payment was made on time, you are giving the CC company a good reason to restore the APR (lending institution error).

Remember, your nephew is going to have to talk to at least 2 levels of supervisors above the regular phone reps.

If this does not work, ask for a payoff. Remember to get it at least 10 days out and transfer the balance to another card (or pay if off if possible).

[all.of.me]

29. i had mine taken away in 1987

i was out of work in a new england winter, but i had gas in my car and lots of tools from sears! they asked for the cards back, and i gladly gave them. i've operated on cash ever since.

i worry about small businesses, though. they are the ones that will feel a huge pinch (what is a word for 'huge pinch'?!)

[VegasWolf]

7. I am going to help my old mother-in-law now! n/t

[VegasWolf]

17. No more bankruptcy for poor people. This emasculates any reason

that poor and middle class people would have to file bankruptcy.
Bankruptcy now only makes sense for corporations and the wealthy!

[Us vs Them]

21. Debit cards are a dream come true!

They can do everything a credit card can, but with money you already have!

Suck on that interest rate vampires.

[he lied us into war]

30. Amen to that. I've never charged anything in my life

People are stupid to go into debt. Skip the house and the new car. Rent and drive a junker.

[caledesi]

37. Yeah, my husband was such a jerk to get laid off after almost

20 years at a major company and I behaved badly 6 months later by getting seriously ill and cannot work (such a lazy bitch).

Now the lying jerk said it was hard getting a new job because he is 50+ is working a temp job paying $9/hr w/ no health insurance & I can't even go to a neurologist....those brain MRIs are expensive. We are both dumb as a bunch of rocks and deserve to be in major debt worrying about $ every day. They shoot horses don't they?

I sure hope you don't act as stupid as we have.
/sarcasm

We went from middle-class to working poor in less than 2 years. Thank you *.

[purji]

38. I'm so sorry.

I hope every thing is going a little better now.

When I read your post ,my first thought was "did I write this."
Husband laid off after 9 years on the job,daughter was sick,and Hubie ended up with a 9 dollar an hour job.
No more collage fund for the girls, no more retirement for us.

[caledesi]

41. Thanks for the empathy and sympathy, Pur. It's just that post

about being stupid and runnng up debt made me mad! :grr:

[raccoon]

52. sorry that happened to yall

as for people being "stupid" to go into debt,

"he jests at scars that never felt a wound." --William Shakespeare

"there's things that'll knock you down you don't even see comin"
--Bruce Springsteen

[VegasWolf]

22. Get your "Proud to be Red" WalMart credit cards right here. n/t

[Media_Lies_Daily]

27. More flame-bait. Amazing....

...How about a card that says "I'm a Divisive Poster on DU"...would you be happy with that kind of phrase?

[VegasWolf]

34. Sure, I call them like I see them! No gain in just being one of the herd.

[Media_Lies_Daily]

23. Once the bill is signed, it won't go into effect for six months from....

...the date of signature. The bankruptcy advisors will need the additional staff to process all of the people, including myself, that will be beating down the doors to go Chapter 7 before the axe falls for good.

I'm just hoping that there will not be a provision that will prevent people from going Chapter 7 during the six month wait for the bill to officially become law.

[jaysunb]

32. I'm with you

I've already talked to a lawyer in my meetup group. Can't put it of any longer.

[tccoyle]

48. You can be sure that

trustee's will be more intense in their scrutiny of filings between signing and effective date.

We will be double checking our filings to make sure there is no abuse.

[nashville_brook]

35. i worked for the 4th largest bank in us and they started hiring

foreclosure and bankruptcy apecialist like mad last year.

[Media_Lies_Daily]

49. I just talked to my bankruptcy lawyer today, and he told me that his....

...practice which consists of four partners expects the doors to be blown off their lobby when people begin to realize what the new bill means to them. He is absolutely hating the prospect that so many people are going to be destroyed when they attempt to declare bankruptcy after this law becomes effective.

He is determined that I beat that deadline to take full advantage of the laws as they're written today. I would advise anyone else that's close to the edge to talk to a lawyer NOW.

I noticed that he had at least three new staffers in the office since I last talked to him about six months ago. I bet he'll have to hire four more before all of this is over.

[ProfessorGAC]

50. Well, Duh!

No more needs be said.
The Professor

[AnneD]

51. Imagine my surprise when my fav personal finance radio personality......

Dave Ramsey, a died in the wool GOP got on WSWeek and ripped into the industry, Congress, and anyone else vaguely responsible for passing this bill. He even went so far as to say this made him ashamed to be a Republican. He couldn't believe that he and Ted Kennedy were on the same side of the fence. To me, the most telling thing was what they exempted (wealthy asset protection), and what they didn't(military, health, divorce). This bill is the puff of wind to this house of cards economy. Many Americans in the middle class are one crisis away for bankruptcy-and now we don't have Chapter 7. I am surprised the didn't tack on the poor house/peonage provision. This will ripple throughout the US economy. Many (like myself) will stop using the cards entirely rather than take the risks. It breaks my heart to hear of those near bankruptcy. I have been almost there twice-there but by the grace of God. Those that voted for this will come to regret it and those DEM'S that voted for it should be ashamed (DINO's).