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The Perspectives series, featuring insightful commentary from members of the community, is heard on KQED public radio in the San Francisco Bay Area.
Every year the banks and credit card companies go to Congress asking to put the screws to debtors seeking protection of the federal bankruptcy laws. This year is no different.
And, every year this multi-trillion dollar industry of credit crunching cry babies floats the false notion that bankruptcy is dishonest, corrupt and a haven of hooligans. As Picasso would have said, let's get a little perspective.
Credit is the sale of money. Credit card companies generally sell money for the highest price and the longest period of any lender. A credit card is no more than a license for the card user to buy money at hellacious interest and, possibly, never pay it back. Credit cards are the heroine of the credit industry. Card companies pursue potential borrowers with the same gusto as a drug dealer offering their pernicious product even when the consumer goes over the deep end. Many borrowers continue to receive credit card promot ions long after they are drowning in debt. Borrowers are encouraged to make only the minimum monthly payment, the interest only. The principal remains a lifetime obligation. Credit card companies thus collect their usurious interest indefinitely, expecting a profit even though a small fraction of card holders will go bankrupt.
From years of experience working with consumer debtors, only a tiny fraction of insolvent people have used their credit cards intentionally to defraud their lenders. The vast majority of borrowers honestly intended to pay their debts, but got sick, or injured or lost their job and ran up against the stone wall of insolvency. The bankruptcy laws only protect honest debtors. Fraud has always been exempt from protection. The FBI aggressively investigates bankruptcy fraud and the Justice Department prosecutes perpetrators.
In a humane and civilized society, where debtor's prison has been long outlawed as barbaric, bankruptcy is a legal, moral, and necessary, if bitter, antidote, for those who can not handle the addiction of debt. Let's not cave into the inhumane notion that we must make raise the bar further to the bankruptcy court.
With a perspective, this is Robert Kroll.
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