Debt Forgiveness Plan - thoughts?

camrude

"Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.

The Office of the Comptroller of the Currency rejected the request for a special program that would allow as much as 40% of credit card debt to be forgiven for consumers who don't qualify for existing repayment plans...."
https://www.latimes.com/business/investing/la-fi-credit13-2008nov13,0,2449151.story

Thoughts?

My two cents - good, I'm glad it failed! I'm really sick of the bailouts...large corporations and individuals. At some point people need to be held accountable for their actions and corporations need to deal with the fallout of the economy. I do understand that things happen beyond our control and that's why some people are in tough financial spots. Those people I feel bad for. However, those that played with fire when the market was "good" and are now getting burned - I don't feel so bad for.

AnnapolisLari

Here's an idea: don't spend money that you don't have. Problem solved.

excitedtobemrs

I do NOT think people should be forgiven of their debt, but I don't think it's as simple as "don't use money you don't have" either.

 

xbrooklyngrl

ditto excited! I have loans up the ass for my business which we had to close. I wouldn't expect anyone to forgive those debts but things do happen that you don't expect.

However, I am responsible for those debts and wouldn't expect anyone to bail me out.

MelandJeff

While I personally feel that my debts are mine to be responsible for, I think that your tone is pretty bitter.

There are a LOT of people that didn't buy more than they could afford, that didn't plan on losing their jobs, had savings and depleted said savings due to the economy and not being able to find another job.

rach&jay

MelandJeff:

While I personally feel that my debts are mine to be responsible for, I think that your tone is pretty bitter.

There are a LOT of people that didn't buy more than they could afford, that didn't plan on losing their jobs, had savings and depleted said savings due to the economy and not being able to find another job.

ditto.... and some of these people had to use cc just to live day by day.

 

I'm confused on your point too, about what playing the market has to do with consumer's cc debt.  To me, one has nothing to do with the other.  

eclaires

I honestly have a problem with the bailouts in general - because when the hell does it STOP?

At what point do companies, individuals and whoever take responsibility for mistakes they made?

Sure there are people who got burned who did very little wrong, but I think the bailouts of everyone else make it difficult to help those people.

Not to mention, where the hell is the money coming from??????  Oh right, we're just printing it off willy nilly.  Jesus.

krub

I don't think it really fixes the problem, i.e. what caused all of the debt to begin with.  Let's fix ridiculous healthcare expenses which bankrupt families, let's do something about making higher education more affordable so that people can afford to live and pay back their student loans, let's do something about Social Security that we're all paying for (at the exclusion of our retirement accounts) and will probably never benefit from, let's do something about how in many areas you have to be a dual working family only to have a few $$$ left after you pay for childcare.  I think many families would not be in debt if the US really cared about family values, like we like to say we do.

Jodi&Joe

ditto eclaires.

But then again, I'm more of a "pull yourself up by your bootstraps" kind of girl.

I'm actually TICKED OFF that the government is bailing ANYONE out, companies included.

xbrooklyngrl

Do you all realize that without helping some companies there will be even MORE people not able to pay their mortgages? Its not just about helping the high level execs that focked it all up. There are thousands of "little" people that work for these companies.

goodhartedmommy

I just don't see how it could ever help people learn. I got royally screwed by health insurance--companies were switched, I got forced to pay 5 sets of very high deductibles in a little over a year, along with things that they refused to pay. I honestly feel that the insurance companies suck for what they did to us, but it was ultimately my responsibility to pay off that $20k that I racked up in medical debt. Paying it off was hard, but it also really helped us learn how to budget very effectively, and life now that it's paid off is very different for us. I think personal responsibility is an invaluable lesson, even if it sucks at the time.

I feel for those who are stuck. But a lot of it could be different with lifestyle changes. You can almost always downgrade, you can get rid of cable, you can eat nothing but ramen, live somewhere cheaper, drive older cars or take public transportation. Obviously nothing is black and white, and you have job losses and just plain bad luck in there, but it's just too hard to know where to draw the line. 

veloelle

I'm glad it failed. I don't want my tax dollars used to bail out greedy people that can't save $$ and have to have instant gratification. Of course I haven't read the article, but on the surface yea, I'm glad it failed. We just did a shitton of work to our house that we paid for all in cash. People were astounded that we didn't put it all on CC or get a HELOC. Well, we planned 5 years in advance and knew we'd have these costs.

I had CC debt out of college and I worked w/ DH to pay it off. No more spending $$ I don't have. there is always that case where you are backed in a corner and have to use CC (extended job loss, medical emergency) but that is probably 1% of all CC debt out there.

MelandJeff

goodhartedmommy:

 

I feel for those who are stuck. But a lot of it could be different with lifestyle changes. You can almost always downgrade, you can get rid of cable, you can eat nothing but ramen, live somewhere cheaper, drive older cars or take public transportation. Obviously nothing is black and white, and you have job losses and just plain bad luck in there, but it's just too hard to know where to draw the line. 

 

I have got to say GHM, that was a pretty ignorant statement. You can make a lifestyle change, but that doesn't erase the fact that the mortgage STILL exists, or that your auto loan is still there waiting to be paid, and that if you really fed your kid Ramen, you would most likely answer to CPS. And, good luck renting anything cheaper if you DO make a lifestyle change and haven't been able to make the above said payments. Its a vicious cycle that you, with no mortgage, no auto loans and no car payment know nothing about.

You would like to buy a house someday, no? Well, you buy a house that you can afford, with in your means, you need to repair a roof, well, hello Visa. You have a car break down, hello new car or hello again Visa. You may use savings? Even if you have a whole years expenses saved up as you said you do, what happens when you lose your job, and expire all of those savings? What do you do after 1 year?

 

 

excitedtobemrs

I agree with this statement:

Obviously nothing is black and white, and you have job losses and just plain bad luck in there, but it's just too hard to know where to draw the line. 

I'm sure people have done stupid things.  And yes, people should be responsible for their debt and should have to learn lessons the hard way. 

I'm just really sick of everyone being lumped into the category of stupid, lazy or greedy.  But, generalizations of any kind piss me off.  It's just not that simple people.

MelandJeff

excitedtobemrs:

 

I'm just really sick of everyone being lumped into the category of stupid, lazy or greedy.  But, generalizations of any kind piss me off.  It's just not that simple people.

EXACTLY.

eclaires

xbrooklyngrl:

Do you all realize that without helping some companies there will be even MORE people not able to pay their mortgages? Its not just about helping the high level execs that focked it all up. There are thousands of "little" people that work for these companies.

x - I get this, but at the same time, I really feel these bailouts are NOT the solution.  From what I understand they aren't even being used properly and I was reading yesterday that Secretary Paulson has decided a different way to spend the money?  I mean, I think this bailout was passed in a panic and that there might be better solutions.  I also read that there were very few limitations placed on the companies who are getting the money which is also ridiculous.

I also think krub is on a better track.  Because funneling money into corrupt businesses or to people who mismanage money does nothing to fix the problem - it just enables it to continue.  And that, in the end, helps no one.

eclaires

Also I wanted to add that I read today that Morgan Stanley and Goldman plan to give out bonuses this year after receiving federal bailout money.

That pisses me off.  They should use that money to pay their workers and operating costs or whatever, not give their execs golden parachutes and bonuses.  It's sickening.

So what?  Are we supposed to keep funding these people's bonuses to keep the little people from losing their jobs? I just can't wrap my head around that being the solution.

xbrooklyngrl

e  - I was wathching him last night and DH and I both said they really just don't know what to do with that money. I think it's a good idea in theory but I don't think its going to be used very well. They seem totally clueless.

 

eclaires

xbrooklyngrl:

e  - I was wathching him last night and DH and I both said they really just don't know what to do with that money. I think it's a good idea in theory but I don't think its going to be used very well. They seem totally clueless.

 

LOL, that is DEFINITELY the truth.

They should send it to me.  I'd get the economy going. 

sparky88

I do not agree with bailing consumers out of their own CC debt.  If they get forgiven their debt, why can't they erase my student loans, too?  I agree with the idea that bailouts are a slippery slope and there is no good cutoff...(except NOT bailing people/companies out in the first place--but we already crossed that line).

xbrooklyngrl

eclaires:

keep funding these people's bonuses to keep the little people from losing their jobs? I just can't wrap my head around that being the solution.

 Simply put, Yes.  here on Wall Street, it seems to be the norm. We all know the big shots are getting huge bonuses not only for year end but even as a retention. Simply put, they can't lose their "talented" people. Without these talented people, us little people would have no one to work for.

Its just how it works. Not saying I agree, but it is what it is. I see stories come out where I'm like "are you serious" but things aren't so black and white in the corp world.

 

rach&jay

I agree that bailing out companies who seem to only be using the money to line the pockets of greedy top level execs is bad.

My hope is that someone smart and honest is appointed to overesee all of the money that is used for the bailout.  Kind of like a trustee.  But that doesn't seem to be happening on the needed level, just on the really high levels.  Does that make sense?

The problem is, if many of these companies fail it will result in devasting consequeces for the little guy.  The Hartford is set to do layoffs in the coming months.  As a result, there are a few restaurants in the area that thrive on their lunch business from workers at The Hartford.  They are poised to either lay off themselves, or totally close their doors.  So now, there's more people that don't have jobs.  Revenues from the mom&pop dry cleaners will go down because fewer people are working and fewer are dry cleaning, and they too will close their doors or lay off people.  Sure, these people can 'adjust their lifestylfe', but seriously, do you think that cutting out cable is going to pay a mortgage?  How do you adjust a lifestyle to still be able to pay a $1000 mortgage?    You can put your house up for sale, but no one is buying it because the banks are afraid to lend, and people are just scared that they will be in the next round of layoffs.  So what can they do?  Perhaps they will lose their house.  Now that is one less house that is paying property taxes in the area.  Not to mention the restaurant and the dry cleaner previously mentioned that had to close and are no longer paying property taxes.  So the town, due to the deficit, either lays off employees or raises taxes. 

So, while companies are being bailed out at the taxpayers expense... the bottom line for not bailing them out will still result in higher taxes. 

Sure, we want to be smarter moving forward.  But, what is the alternative at this point?

krub

xbrooklyngrl:

eclaires:

keep funding these people's bonuses to keep the little people from losing their jobs? I just can't wrap my head around that being the solution.

 Simply put, Yes.  here on Wall Street, it seems to be the norm. We all know the big shots are getting huge bonuses not only for year end but even as a retention. Simply put, they can't lose their "talented" people. Without these talented people, us little people would have no one to work for.

Its just how it works. Not saying I agree, but it is what it is. I see stories come out where I'm like "are you serious" but things aren't so black and white in the corp world.

 

I agree with that.  Many of them get small salaries and their bonuses are based on how their products perform. They're really more like commissions, than bonuses.  Would it be fair to withhold commissions from anyone else that earned them?   I just hope their bonuses are smaller this year.

xbrooklyngrl

I disagree that they get small salaries but everything else is true!

excitedtobemrs

rach&jay:

The problem is, if many of these companies fail it will result in devasting consequeces for the little guy.  The Hartford is set to do layoffs in the coming months.  As a result, there are a few restaurants in the area that thrive on their lunch business from workers at The Hartford.  They are poised to either lay off themselves, or totally close their doors.  So now, there's more people that don't have jobs.  Revenues from the mom&pop dry cleaners will go down because fewer people are working and fewer are dry cleaning, and they too will close their doors or lay off people.  Sure, these people can 'adjust their lifestylfe', but seriously, do you think that cutting out cable is going to pay a mortgage?  How do you adjust a lifestyle to still be able to pay a $1000 mortgage?    You can put your house up for sale, but no one is buying it because the banks are afraid to lend, and people are just scared that they will be in the next round of layoffs.  So what can they do?  Perhaps they will lose their house.  Now that is one less house that is paying property taxes in the area.  Not to mention the restaurant and the dry cleaner previously mentioned that had to close and are no longer paying property taxes.  So the town, due to the deficit, either lays off employees or raises taxes. 

So, while companies are being bailed out at the taxpayers expense... the bottom line for not bailing them out will still result in higher taxes. 

Sure, we want to be smarter moving forward.  But, what is the alternative at this point?

GREAT explaination.

hopefulmom

Don't spend money you don't have...hmmm...tell that to a family who have no job but still have kids to feed and shelter to provide.  Or maybe a person without insurance who just found out he has cancer or a child that is very ill.  It is surprising how much debt (credit card) is due to medical illness and a lot of those people DO have insurance.  I have a friend who didn't happen to have insurance and her husband has throat cancer.  They have depleted their savings...their retirement nest egg, they sold their home which was paid for, they've maxed out their credit cards and now they are trying to get Medicaid.  The hospital bills are unbelievable.  I don't think you could just tell them that they should spend what they don't have.  Please!

As for the bailouts...I think it needs to come.  First of all, regarding the corporations like GM...the free trade agreement did them in...as well as many other businesses.  People lost their jobs because of NAFTA (thank you President Clinton).  It was the governments idea that free trade would "even out" the playing field.  People in other countries would have a much higher standard of living and we would have a little lower.  Well, it didn't work out that way.  We lost jobs and because of that we can't afford to buy automobiles without credit and yet we have to get to work.  Not everyone lives near mass transit (the burbs around Detroit have nothing).  Obviously if the auto industry gets a bailout...the executives need to take some drastic paycuts.  There is no reason they should be making millions when $250,000 would be plenty for what they do...BTW...what DO they do?  Go to meetings and basically don't make decisions.  They just pass them down the line until it reaches the managers (which do NOT make anywhere near $250,000 a year...not even half of that!)  It is all a big mess.

snickerdoodle27

I agree, mostly. I feel bad for people who have to live off their credit cards b/c of medical bills, lost their job, etc, and I could see programs to help them. But many are in debt b/c they chose to live beyond their means, and no, i don't think they shoudl be bailed out.

eclaires

x- that makes sense.  It still chaps my ass that it works that way, though.

I guess I just wish there was a better solution where I didn't have to see stupid stories about bonuses.  It's frustrating.

xbrooklyngrl

hey I hear ya, imagine how we feel when we have to fight for some damn post its and a highlighters and these mofo's are pocketing bonuses, not salaries, BONUSES 15x's my salary! lol

sweetie1528

krub:

xbrooklyngrl:

eclaires:

keep funding these people's bonuses to keep the little people from losing their jobs? I just can't wrap my head around that being the solution.

 Simply put, Yes.  here on Wall Street, it seems to be the norm. We all know the big shots are getting huge bonuses not only for year end but even as a retention. Simply put, they can't lose their "talented" people. Without these talented people, us little people would have no one to work for.

Its just how it works. Not saying I agree, but it is what it is. I see stories come out where I'm like "are you serious" but things aren't so black and white in the corp world.

 

I agree with that.  Many of them get small salaries and their bonuses are based on how their products perform. They're really more like commissions, than bonuses.  Would it be fair to withhold commissions from anyone else that earned them?   I just hope their bonuses are smaller this year.

Actually, their salaries are pretty high and so are their bonuses.