Q: My sister declared bankruptcy last June and it was all over in December.
She now has obtained at least one new credit card if not more and is back to her old spending habits — that is, she is spending a lot of money she doesn’t have.
She stated it was so easy to declare bankruptcy and have it discharged that now my brother (who has also overspent all his life) is in the process of declaring bankruptcy.
I have always been very cautious about what I spent and have made my payments on time. They, on the other hand, have accumulated hot tubs, pool tables, cruises, sheds, expensive dinners several times a week and they have ridiculed me for being cheap.
Now they are even more relentless in their bragging about “getting away with it.” I feel, as a consumer, I am paying for their bad habits.
Why do bankruptcy courts so easily dismiss the overspending habits of individuals and not hold them responsible? Both of my siblings will be back in deep debt before the end of the year, having seen no penalties or having been denied a new credit card and I, again, will pay for their bad habits along with other responsible consumers.
I thought there were new hard line bankruptcy laws that were put into place to prevent this. Am I missing something? Thank you.
A: You’re not missing anything, but the new bankruptcy legislation hasn’t been (as of this writing) passed by both houses of Congress and signed by the president. Once that happens, and the new bankruptcy law takes effect, I don’t think it will be as easy for folks like your siblings to buy thousands of dollars worth of stuff and then discharge all of the debt.
While some consumer advocates feel the new bankruptcy legislation is too tough, I can’t help but feel as you do — that as a consumer I’m paying the price for some people’s reckless disregard for money and credit. It seems unfair that your siblings are basking in the Cancun, Mexico sunshine, on vacations they’ll never pay for, while you and I are working hard, paying for what we buy with cash, and saving money for our future.
On the other hand, sometimes people lose jobs, are widowed or divorced, or have severe medical problems and are under-insured. These major life events can’t be prevented and folks who fall into these kinds of deep debt holes must be given a way to start over.
The shame that for years was associated with bankruptcy has largely been erased as society has changed. Credit card companies realized that just because someone went bankrupt doesn’t mean they’ll never spend money again. And so, just a few months after a bankruptcy is discharged, new credit card applications find their way into the mailbox, and for some, the cycle begins again.
But for those determined to make a fresh start, and are committed to living within their means, getting a new credit card allows them to start rebuilding their credit, and within a couple of years, purchase a house. These people, having learned their lesson, can become productive members of society.
Make no mistake about it: Once signed into law, the bankruptcy legislation will force your siblings to pay back more of their debts the next time around. It will severely delay their ability to move on with their lives.
But then again, it sounds like they don’t want to grow up — which is really a shame on them.
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