I have been closely following the "Bankruptcy Reform Bill" that is winding its way through Washington D.C. As regular readers of this blog might expect, I can almost make out the face of such a legal proceeding in my family's future. We're not at that point, mind you, but I would be a true Pollyanna to state flatly that it could not happen.
We have made no secret of the fact that the Hoggard family was on shaky financial ground even before Jinni was diagnosed with breast cancer. Even though we have been on a cash only basis for quite a while now, the credit sins of our past are now compounded by legalized usury and the building financial burden of Jinni's disease.
Although I have no one to blame but myself for our pre-cancer debt, the obscene (but legal and agreed to) practices of credit providers works to insure that, short of winning the lottery, my family will stay deep in debt with little hope of paying off what it actually owes despite heroic efforts to fullfil our obligations.
Here's but one example of the problem:
I have a line of credit attached to my Wachovia checking account that kicks in if (when) I overdraw my account. The interest rate is 19.8% and my balance is around $2,500. From time to time over the past few years, I have missed the payment due date because of lack of funds. That lateness alone incurs a $30.00 fee which is then added to the amount subject to the 19.8% interest. Of course the "minimum payment due" is just a maintenance amount and paying that amount does not reduce the principle amount in any meaningful way due to the exhorbitant interest rate.
I have met with my bank to see if I could at least get the high interest rate lowered so I could start paying down the debt as opposed to staying even or going backwards. Of course they say they can't (read won't) do it citing my occasional late minimum payments. So I'm stuck. I have other creditors with whom I have similar conundrums.
BizzyBlog has it nailed...
"As a number of sources have noted, the credit-card and lending industries, through their use of out-of-control penalty fees, “risk-based pricing” and the misnamed “universal default” clauses in the fine print of their agreements, have been making tons of money off of people in difficult circumstances."
So, now let's add to my financial mix the out-of-pocket $35,000 or so that Jinni's cure will add to our indebtedness and you can see why I am no great fan of "Bankruptcy Reform". A key component of such "reform" would preclude me from filing for Chapter 7 bankruptcy protections if it ever came to that, or as a group of 107 law professors who oppose the bill puts it, the measure would severly limit my options...
"The ability to file for bankrutcy and to recieve a fresh start provides crucial aid to families overwhelmed by financial problems."
As I said, I don't claim to be without fault in my precarious financial predicament but I'm not a dead beat by any means. Its just that my current cash doesn't match my current flow and this promises to get worse before it gets better. Make no mistake, the parasitic practices of credit card companies and the like are hurting my family much more than they are helping me actually reduce my indebtedness. Their current business practices seem bent on insuring financial ruin instead of alleviating their exposure, so if bankruptcy is in my future, such creditors will shoulder at least some of the moral blame in my view.
If it came down to it, would I file for Chapter 7 bankruptcy? Dunno. But the current "reform" would remove that option for my family. I have grown up believing that people who file for bankruptcy are somehow sub-citizens and have always asserted that there is no way I would ever undertake such a proceeding. The social stigma of legal bankruptcy is not something I would savor, not to mention the blow it would cause to my self image.
But now I find that I could possibly face such distasteful financial options in the future. Stigmas and self-image may have to be weighed against simple survival. If worse comes to worse, "Bankruptcy Reform" would greatly impact the latter for the rest of my life.
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Thanks to Instapundit for some links in this post.
11:33:13 AM 
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