Well, compared to sleepless nights, physical and emotional illness, or loss of a valued relationship, maybe not so much, eh?  If you can’t bear to hear the phone ring, let alone to answer it, if you know the local process servers by sight if not by name, if you have a mountain of unopened bills that you know you can’t pay, maybe then bankruptcy sucks a bit less.

Fill a hole or build a castle?  Let’s make a dubious assumption:  You have enough income to pay off all of your debts and provide for your and your family’s needs for the next five years.  (It’s a dubious assumption because if nothing else you will be dealing with the stress of fighting off your creditors and their collection agencies and attorneys.)  Let’s further assume that you owe a total of $20,000.00 in unsecured debt, and that interest on that debt will be adding up at a rate of 10%.  You’re going to pay an average of about $420.00 per month for each of the 60 months during that five years.  At the end of the five years, you have filled that $20,000.00 hole, and all you have to show for it is a filled hole.  Assuming, again, that you in fact have the $420.00 per month over and above your reasonable living expenses, what if you instead invested the money?  Well, then at the end of the five years you would have (again assuming 10% interest) $32,910.76!  Even with NO interest you’d have $25,200.00.

How do you want to spend the next five years:  Filling a hole (and trying to survive the stress) or building your castle?

So, bankruptcy sucks?  I don’t think so.

Thanks for your time and interest!

Mark Emmett, Consumer Bankruptcy Lawyer

Member National Association of Consumer Bankruptcy Attorneys

Mark R. Emmett, Esq.
mremmett @ gmail.com
716 East 4500 South N240
Murray, Utah 84107-3619
801-438-4050

Christian Weller, an economist and senior fellow at the liberal think tank, the Center for American Progress, sums up the state of credit card companies in a pithy post at Credit Slips today.

Default rates are surging: “In the fourth quarter of 2008″ writes Weller, “credit card companies charged off — declared as uncollectible — a whopping 6.3 percent of their debt.”

(And the numbers are continuing to get worse — Bloomberg reports that the average “charge-off rate” in January 2009 was 7.1 percent.)

Weller observes that all this is coming after the credit card industry’s successful effort to solve their “deadbeat” problem by getting the laws changed to make it harder for borrowers to declare bankruptcy. And then he delivers a stinging conclusion.

The worst part of this crisis is that it was foreseeable. For decades, credit card companies have layered fees and excessive interest rates on their borrowers. Instead of addressing the consequences of high, complex, poorly understood credit card costs, though, the high default rates were simply explained away by declaring defaulting borrowers as deadbeats. Now that there won’t be another round of bankruptcy reform that could be sold as salvation, credit card lenders will have to come to terms with the fact that their practices were actually detrimental to their own financial health.

But don’t worry too much about your own outstanding balance! Bankruptcy may not be as easy an option as it once was, but the credit card companies are still looking out for us: They’ve created a new Web site for beleaguered borrowers: helpwithmycredit.org.

You won’t find any information on how to declare bankruptcy at helpwithmycredit.org, but you can have loads of fun looking up the phone numbers of accredited credit counseling organizations. One wonders, though, whether the sponsors should take a taste of their own medicine.

Companies participating in Help With My Credit include credit card issuers Bank of America, Capital One, Citi and Discover Card, as well as the payments networks MasterCard and Visa.

Didn’t I hear somewhere that some of those companies were having credit problems of their own? Maybe they need a Web site.

Mark R. Emmett, Esq.
mremmett @ gmail.com
716 East 4500 South N240
Murray, Utah 84107-3619
801-438-4050