This is classic. The push for credti card debt is overwhelming. One needs to go no further than their mailbox to confirm the daily barrage of credit card offers. And for those who have just gone through bankruptcy, the push not only comes from credit cards, but from car dealers who are willing to finance that new car.
But then, would anyone expect anything different from a debt based monetary system?
"The theory is that people who have just declared bankruptcy are a good credit risk because their old debts are clean and now they won't be able to get a new discharge for eight years," said John D. Penn, president of the American Bankruptcy Institute, a nonprofit clearinghouse for information on the subject.
But the new law makes for an even better gamble for lenders, consumer groups say. It not only makes bankrupt debtors wait eight years to clear their debts again, but it also requires many of those who do go back into bankruptcy to pay previous credit card bills that may have been excused under the old law.
Consumer groups say the new law has put millions of Americans at risk of being in a continuous debt loop through their credit cards. And while the banks have taken a short-term financial hit because of the new filings - leaving banks holding the bills - they will benefit in the long run because the new law makes it much easier to make money on people who live near the edge every month on their credit cards, some consumer groups say.
Credit cards are the most profitable part of the banking industry, with late fees and high interest charges helping make them so. Last year, more than five billion solicitations for new cards were sent out, nearly double the number from eight years ago.
a third of low- and middle-income American households reported using credit cards for basic living expenses - rent, groceries and utilities - in any 4 of the last 12 months.
Those with the worst credit card debt were people ages 50 to 64, who owed $9,124 on average, the study found.
"The people I'm seeing right now, they're mostly middle or lower middle class," said Jack Burtch, a bankruptcy lawyer in Washington State. "In a good many of the cases, credit cards are what got them into trouble. And I don't see how credit cards will get them out of it."
