Welcome to the News View for "Bankruptcy".
Here, on these archive pages, you'll find all of the articles on Payments News for Bankruptcy listed in date sequence beginning with the most recent article at the top of the page.
We conclude that the bankruptcy abuse reform of 2005 (BAR) contributed to the rise in subprime foreclosures because it shifted risk from credit card and auto lenders to mortgage lenders. The means test under BAR gives credit card and other unsecured creditors a stronger claim on borrowers’ cash flow, and that weakens secured lenders’ (implicit) claim on that cash flow."
The obvious implication is that US credit card issuers' credit losses would be even higher at the moment if the old bankruptcy law was still in place. See also this article titled "U.S. mortgage meltdown linked to 2005 bankruptcy law" by Dan Morgolies of the Kansas City Star.
The New Yorker's regular financial columnist, James Surowiecki, writes this week about the US bankruptcy laws - suggesting that the changes to US consumer bankruptcy law made in 2005 'ended up making the economy less dynamic and less flexible.' Surowiecki mentions a recent paper by John Armour and Douglas Cumming that 'found a close correlation between the nature of a country’s bankruptcy laws and its rate of self-employment.'
Visa and Experian announced an alliance to create unique risk management products for financial institutions. According to the companies, "the alliance intends to deliver a series of jointly developed risk management products designed to help financial institutions reduce credit and fraud risk losses."
Katherine M. Porter, Associate Professor at the University of Iowa's College of Law, has written an article titled "Bankrupt Profits: The Credit Industry's Business Model for Postbankruptcy Lending" that "examines what the credit industry's behavior toward recently bankrupt families reveals about its internal profit models and the likely causes of consumer bankruptcy."
In an Op Ed piece in today's New York Times titled "Banks Gone Wild", Joe Lee and Thomas Parrish write about how credit card issuers are seeking “revolvers” - people "who are likely to pay little more than the monthly minimum — and who eventually find themselves in thrall to mushrooming interest payments, abundantly garnished with late fees." They go on to ask whether anyone can afford to pay debts charged a 30 percent interest rate?
Richard Piersol writes for the Lincoln (NE) Journal Star about the experiences of local credit counselors who conclude that "it’s not so much wild spendthriftiness and irresponsible abuse of credit card debt" that leads to personal bankruptcy - rather, "medical costs from health troubles almost always lead to misfortune in employment and loss of income. Then comes bankruptcy." A new report from the Nebraska Appleseed Center for Law in the Public Interest titled "Debt Trends in Nebraska" (PDF) examines some of the issues in more detail.
Payment experts at Auriemma Consulting Group (ACG) suggest that by mid-year, bankruptcies should settle back to 2004 levels, thus significantly lower than the 2005 experience. So much for the good news. The firm is also convinced that overall bad debt levels are unlikely to decline simply because of stricter bankruptcy tests.
Almost one-half of all U.S. adults (45%) say their household does not have enough money in liquid savings to cover at least three months of living expenses, according to a new survey conducted by Harris Interactive and commissioned by LexisNexis Martindale-Hubbell's lawyers.com.
Andrew Ellison reports for the The Times on a forty percent growth in the number of personal bankruptcies in the UK during the last quarter of 2005.
Timothy Egan reports for the New York Times on how credit card issuers are pursuing newly bankrupt consumers - because it's harder for them to escape new credit card debt.
Liz Pulliam Weston reports for MSN Money on how credit card issuers and other lenders may be finding the recently enacted changes to the bankruptcy law costing them more.
The Financial Services Roundtable has announced new consumer education efforts, including a new Web site to provide consumers with additional resources and accurate information on financial management and the new bankruptcy system and guidelines.