In these hard economic times, there are many of us that are extremely stressed and worried about our present and our future well being. We are living in a time where we have been persuaded that we deserve anything and everything we want. That’s true in some ways. We deserve a roof over our heads, clothes on our backs, food in our stomachs, good education and good health care. We not only deserve it, we have a right to it. We have a right to have the basics to live a good life.
In 2005 the US Congress passed a law to divert higher-income filers into Chapter 13 repayment plans, rather than allowing them to file for a Chapter 7 debt liquidation. There was a lull in bankruptcies in 2006, but from 2007 on, the number of bankruptcies filed have promised to exceed the number there were before the law passed. The same holds true for Canada where there were 8900 bankruptcies filed in September, 2008 alone. Personal bankruptcy is soaring.
Critics of the new bill claim that it unfairly punishes consumers while putting few restrictions on irresponsible lenders – the same lenders that are programming consumers to spend, spend, spend! In our Western culture, we have been programmed to think that the good life involves an unlimited number of shoes, handbags, jewelry, cars, video games, lattes, communication devices, and so on, and we should be able to BUY anything we want when we want it even though we don’t have the actual cash to do so.
Many consumers are financially illiterate. They have not been taught, whether by their parents, the school system, or creditors, how to handle their finances. In today’s economy it’s virtually impossible for most of us to save up enough cash to buy a house or a car without credit. Every new building project advertises luxury. Every new car has luxury features. We all want to feel and look rich! The builders, retailers and manufacturers know what we want. They know that if they make something look expensive, even if the workmanship is shoddy, we will pay through the nose for it.
The lenders love the “new economy”. Remember, the less we can afford something, the higher the lending rate will be. Don’t be fooled! Even if you get to the point of declaring bankruptcy, you can still get credit but at a VERY high cost. Don’t believe me? With the current so-called credit crisis, the banks of most of the western world have lowered their prime lending rates. If you can qualify in this market, you can get a pretty good mortgage right now. Now check your credit card interest rate. Has that changed at all? NO. If fact, credit card companies are ignoring these rate cuts claiming they charge based on risk, not on the cost of money.
Throughout this series, I will be going over bankruptcy processes, how you may be able to avoid it and if not, how to survive it.
 Credit card providers ignore base rate cut – Hilary Osborne