In case you haven’t heard, a consumer group and financial services group requested that credit card issuers be allowed to forgive some of the debt of credit card holders. What? Are you kidding me? I could maybe get behind the new foreclosure plan that doesn’t actually forgive principal balances, because some people were genuinely defrauded by mortgage brokers, but no one was forced to use a credit card!

Why Credit Card Debt Forgiveness is Bad
Simply forgiving up to 40% of credit card debt is bad for three reasons:

1. This debt was accrued by choice. The typical debt is not the result of a medical emergency or falling home values. It’s a result of people buying stuff they can’t afford and then deciding not to pay off the bill at the end of the month. People who have their credit card debt forgiven without going through some kind of difficult process, like bankruptcy, won’t learn to budget. They’ll just wind up in this situation all over again.
2. We already have a system to forgive credit card debt. They call it bankruptcy. If you qualify, judges can reduce or eliminate credit card debt. If you don’t, then you get put into a payment plan. This plan applies to the types of situations where people would file bankruptcy, but without the pain or the process.
3. Banks don’t need the government’s permission to write down losses. They can do that it already, but they want the government to change accounting rules so that writing down credit card losses is advantageous to the banks. So, now the banks won’t learn a lesson either. No one made them issue those credit cards. They knew the risks, and they should accept the consequences.

Yes, I Do Think People and Banks Need to Accept the Consequences
When I was younger, I backed up without looking and caused $500 in damage to the car behind me. My parents made me pay for that out of my own pocket. From that I learned to be more careful while driving. If they’d just let me off the hook, I wouldn’t have driven as carefully in the future.

The same goes for the banks and consumers: the various government bailout programs are giving the impression that American consumers and businesses can be as irresponsible as they want because the government will fix it if it gets bad enough. Banks don’t have to manage risk because they can earn mega-profits and then Uncle Sam will cover any of the losses. The American people don’t have to get spending in control because the government will bail them out if it gets really bad.

I heard a great quote this morning from Newt Gingrich, a man I do not normally agree with: “You can’t have capitalism on the way up and socialism on the way down.” Amen to that. If I choose not to pay my electric bill, the electric company doesn’t forgive the debt. They shut off my electricity. But now various groups are looking to the government to keep the electricity for months after the bills have stopped being paid. That’s not fair to those of us who are responsible with our money, and it sends the wrong message to banks and people who choose not to be.

What do you think of the credit card debt forgiveness plan? What else is making you stabby in this week’s news?

Comments

62 Responses to “That Makes Me Stabby: Credit Card Debt Forgiveness”

  1. HS on November 4th, 2008 8:35 am

    So should I stop paying down my debts? and wait for my creditors to lower my balances by 40%?

  2. Mary@SimplyForties on November 5th, 2008 10:40 am

    Well that makes me “stabby” too! Reductions in interest rates and fees I could get behind, but principal? The only ones being penalzed by all this bailing out are those of us who are paying our bills. Bad precedents are being set.

  3. The Struwwelpeter Edition of the Carnival of Personal Finance on November 9th, 2008 10:46 pm

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  7. Michelle Dablemont on November 11th, 2008 8:43 pm

    Great article. I couldn’t agree more!

  8. Pat Navadomskis on November 12th, 2008 11:16 am

    But if they would just reduce all the late charges, Bogus interest rates…Look at my payment history. They owe me money can not get through to them. I have been harassed at work long enough.No one fixed the mistakes.
    I was run off jobs and kept from getting another. we needed Consumer protections.
    Maybe there is a lot of business mistakes you do not know about .You are lucky you do not know what I know. I want my money back, you can not give me back 12 years of my life trying to stay afloat from outsourcing, downsizing, Sabotage, computer crashes, mail lost. Relationships will never be mended.
    PTSD the feeling of wanting to barf the embarrassment of getting run off jobs FOR SOMETHING SOMEBODY ELSE DID I hope all you troublemakers burn a slow death in hell.
    The banks raised rates on people any time they felt like it. It is worse than a payday loan.
    If you are not stuck in the middle Thank GOD .

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  10. Samantha on November 13th, 2008 8:18 am

    I have agreed with your general philosophy for a long time, that people just need to live up to the responsibility of paying their debt. Then I became seriously indebted myself. No, not everyone just “chooses” to use a credit card…or at least not as casually as you infer. Some people decide they must put their everyday expenditures on their credit card because there are no funds to pay these expenses otherwise. That decision, by many of us, is made under the premise that things will eventually get better and then we’ll have the funds available to play “catch up”. In the meantime, you cut what expenses you can. When things don’t get better, you find that your debt has grown to such a proportion that you can’t even see the light of day. Then when your promotional interest rates have expired, the situation even worsens. You can stop tapping your credit, which is the only way you keep everyone else paid in full and on time…or refuse to go into debt any further and lose everything in short order. Some people DO continue going into debt with the intention of paying things back down when “times” get “better”. This is especially the case when you are self-employed. Have you ever been self-employed? We are self-employed. We have always made a good living and we have always had A1+ credit. We employ others who make a good living, and they pay their bills. When the economy turns bad, we all hurt. MANY of us do not go into debt just figuring that we can walk away from it later if we have to. We don’t PLAN it that way. Not ALL of us are irresponsible in that way. I think your blanket statements are just that…irresponsible. You don’t have all the facts surrounding each case, ma’am. You should get out there and actually talk to people and find out the details of their lives and what landed them in such a financial mess. I will guarantee you that not many of them really relish the thought of telling their creditors that they are not going to pay them.

    We work hard and we pay our bills. We have never not paid anyone. Not ever! But if things don’t get better soon, we may have to look into debt forgiveness or bankruptcy. The only other option is to lose everything we have, with nothing left to raise our children. Do you think we would actually look forward to seeing years and years of perfect credit ruined???

  11. Aryn on November 13th, 2008 11:04 am

    Actually, Samantha, I have been in credit card debt twice, and both times I paid my way out of it through hard work and improved circumstances. Both times the debt was for groceries and gas, but it was still a choice I made to use credit rather than scrimp on other things.

    I have also been self-employed and used credit cards to make ends meet, but again, that was my choice. I could have gotten a part-time job to cover the bill, but I didn’t.

    I realize that most people get into debt with the intention of eventually paying it back and then run into trouble, but we already have a system to deal with that. What we don’t need is a change in the tax code so that banks will receive a tax benefit for writing down credit card debt. I stand by that.

  12. Aryn on November 13th, 2008 11:06 am

    Pat,

    I have no problem with card issuers removing late charges and reducing interest rates. Credit card issuers have been bleeding consumers for years and I don’t support that. My issue is when credit card issuers ask the government to change the tax code so that they get a tax break for reducing the principal balance on credit cards. Credit card issuers can do that if they want to, but I don’t think the government should help them.

  13. » Blog Archive » A rant against the credit card debt-forgiveness plan on November 13th, 2008 12:11 pm

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  14. Polly Poorhouse on November 15th, 2008 2:11 pm

    There are lots of people, like me, who are in Samantha’s position. People who had great credit and ran into unexpected trouble, thought it was temporary, and fell afoul of predatory lending practices. If those practices caused the problem, what’s the matter with giving the victims a break?

  15. Aryn on November 17th, 2008 10:22 am

    Again, I have no problem with credit card companies reversing excessive interest and punitive fees. In fact, I urge Congress to do something about them.

    What I don’t agree with is a unilateral 40% cut backed by a change in tax rules to accommodate it.

    Last week, the government announced that it would not adjust the tax code to allow the credit card companies to benefit from writing down debt. They’re still free to write it down if they want to, but not with government help.

  16. Carnival of Personal Finance #178 : Carnival of Personal Finance on November 26th, 2008 10:34 am

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  17. carlos rodriguez on November 26th, 2008 5:40 pm

    Aryn: What you are saying that is OK for the Feds to help the rotten bankers but not the credit card customers that the majority for reason beyond their control, had to use their credit cards now finding they do not have a job to pay for them. The banks will not lose a penny if they forgive 40% of the debt. Credit card companies are not willing to write-down anything.

  18. Aryn on November 27th, 2008 7:57 pm

    No, Carlos, I didn’t say that. I opposed the bank bailout in an earlier rant.

    Also, the majority of people in this country with credit card debt are NOT in it for reasons beyond their control. They’re in it because they overspend on impulse purchases and figure they’ll pay for it later.

    If a credit card company chooses to write down a debt, then that’s their right, but I don’t think the govt. should change the tax code to make it easy for them. That costs the taxpayers money, and I’m not OK with that.

  19. Momo on December 5th, 2008 11:22 am

    I just got a notice from Citibank that the APR on my card would be going up to 24.99% for purchases and for balances. It’s at 11.9% right now, so it would be more than doubled. I have not been late with any payments, I am in good standing, I’m not behind, I don’t shaft the bank, I pay what they ask for and more when possible. I’m struggling to make ends meet like everyone else, and have no health insurance to boot. Now what on earth would make Citibank (who is getting a $300 billion dollar bailout for THEIR irresponsible behavior) increase my interest rate to such backbreaking proportions? They said, “increase in cost of doing business with our customers.” This is what the front line woman said and the account manager I asked for as well. They have been well versed on what to say, but what they say makes no sense. I asked her to bring it down and she gave me a 16.99. Whee. We may have used the cards and I am not disputing that, and we are not trying to run away from the debt, but the INTEREST RATES and FEES make it impossible to pay the principal. This is the truth of it. This is where credit card companies should not be trying to bleed us dry. ESPECIALLY people like me who are not defaulted and never missed a payment. The good people who are paying on time according to the agreement simply watch the agreement being changed willy nilly in favor of whatever the bank wants on any given day.

    It is unfair to even suggest that people who are in debt are in debt because they’re so irresponsible. We go in under one APR and the bank changes it. What then? If the bank changes the terms, why is that the consumer’s fault when they suddenly find themselves unable to pay? If the bank was stuck with issuing you an APR agreement for the life of your balance, that would make sense. But having the interest rate go up 100% is unconscionable and should never apply to debt already accrued.

  20. Aryn on December 5th, 2008 12:28 pm

    Momo,

    I totally agree about the fees and interest rates increases. We just received a notice for our Citibank card that our rate is going up to a minimum of 19.99%! Fortunately, we don’t carry a balance and rarely use the card. But it’s ridiculous. It’s like they’re trying to force people into default.

    Congress needs to stop listening to the CC industry lobbyists and make some interest and fee rules with real teeth.

  21. Kevin on December 8th, 2008 1:57 pm

    I do agree with certain aspects of what you said. But these credit card companies have had carte blanch for the last 30 years. They have been marketing and predatory lending to people they knew couldn’t afford to make the payments while increasing their credit lines. Not to mention that wages are still what they were in the 1970′s yet inflation continues to grow. Not to mention that those of you who pay their bill in full each month is affectionately referred to as a deadbeat by your credit card company. So to be honest, I don’t really care about the credit company and I wish they would have to forgive 40% of debt, most of it is interest and fees. I’m sure they would find a way to get by.

  22. David Justin Lynch on December 25th, 2008 1:12 pm

    There are situations where debt forgivness is necessary and appropriate as part of an overall plan to stabilize the economy. The current economic conditions have forced a reconsideration of the concepts of contractual obligations, property rights, and the use of market forces to allocate resources. The principles we used in the past may not work going forward. To dogmatically apply the rules of the past carries the same danger of literally interpreting scripture instead of considering the context in which is was formulated versus the context of its practical application. To this end, experimentation with new models of markets, contracts, and property rights should be encouraged in an effort to formulate a pragmatically effective paradigm for today’s world.

  23. Steve on February 24th, 2009 11:31 am

    I think if you are a tax payer then some of your credit card debt should be forgiven. Why? While I may have charged things to my card by my own choice, I DID NOT Choose to Bail out these same credit card companies. So now, not only do I have to pay my balances down, NOW I have to ALSO give them more of my money because they don’t know how to run their companies? NO! I pay my monthly credit card bills, it was my choice to use a credit card. But I also hold up my end and pay my monthly payments as agreed through the card companies. So that is not my fault. I WAS responsible, and I DO pay my payments. But NOW I also have to pay money through this Bailout because they don’t know what they are doing and cannot run their company properly and are the irresponsible ones. Dang right they should forgive at least a portion of the debt!

  24. Aryn on February 25th, 2009 12:07 pm

    Just one problem, Steve. The banks didn’t get debt forgiveness. They received cash in exchange for preferred stock. That means that they must repay the money in the future before they pay gains to other people. Would you like the same deal? Do you want to get out of credit card debt with government money, only to have to pay the government even more of your future income than you otherwise would?

  25. j.r. on March 3rd, 2009 6:50 am

    about the citibank rate going up………we got a notice too. fortunately i saw in our area paper about that and calling in to ‘opt out of it’. so i received my notice from 8.4% already paying $100 in interest a mnth to go up to 24.99%. i called to opt out and got it accomplished. i got the same response cost of lending but they get huge bailouts. well to opt out means you close your card when it expires and keep the rate you currently have until paid off. i sugges people doing this and to get their point accross! good luck

  26. phoenix carpet cleaning on July 3rd, 2009 1:36 pm

    There certainly is a lack of consequences in this nation isn’t there. Our founders would have much to say if they were here today about our bad Congress.

  27. Doug Schindler on July 31st, 2009 8:34 am

    Wake up . It is quite alright for the taxpayer to bail out these backs but to ask for some reciprocal action is considered insanity. In principle I agree with the authro however extenuating circumstances sometimes provide for extreme conditions that should receive some reasonable action to assist in.

  28. Jo on August 31st, 2009 1:47 pm

    I completely agree. Although there are people who have used credit cards to survive during this bad economy. I have been supporting homes that I could not sell. I did use credit for unforeseen circumstances yet I still feel I took a risk by buying without selling first. I refuse to buy anything and have until I am able to pay my debt. This has caused me alot of grief. I dont have cable, I have an old tube television. I do have a newer car bought with 0% financeing when I still had money before emptying my savings so I would not go under with my mortgage. I finally found renters but am still trying to reduce my interest rate which would give me room to actually pay down balances instead of just interest. My credit has suffered giving me less options. I realize people live like this on a normal basis but it is killing me to be in this position. I was told to file bankruptcy and I feel I can pay my bills if I could reduce my rates to the availalbe rates of today. I am battling through to make the situation better. I dont want a bailout just some understanding that some people want to pay their bills.

  29. Dave R on November 13th, 2009 12:34 pm

    Evidently the author of this article has never lived on hard times. I know personally that with my wife’s and my salary cut, and the cost of living in Maryland, she and I have lived off of credit cards the last 18 months… Paychecks going straight to rent, car notes, utilities, taxes and student loans. Nothign left over for savings or paying more than minimum of CCard notes.

    So before you get all high and mighty thinking CCard debt is just people who buy a 60″ flatscreen and dont want to pay it off, THINK AGAIN. There are a lot of us who would starve if it wasnt for ccards.

  30. Aryn on November 13th, 2009 5:02 pm

    Dave, I didn’t say ALL debt was from people over-buying, I said the “typical debt” is.

    I have, in fact, had hard times, and I did run up credit card debt when that happened. I’m not saying we shouldn’t use cards to get by if we need to. I’m saying that we shouldn’t expect the government to bail us out when we do.

  31. Rebecca Hipolito on November 30th, 2009 6:49 pm

    I truely think people do need to learn how to handle money wisely. That’s why I go to Debtor’s Anonymous, a 12 step group, and do not use cards any more.
    However I became completely disabled in 1997.
    I could work some if I could find a job, and I haven’t been able to.
    I think that alot of people are being arrogant and judgemental, if you walked a mile in my shoes maybe you’d see how hard life can be when you’re 100% disabled. Thank you.

  32. jwt on January 12th, 2010 7:46 pm

    We may not have been defrauded, per se, by the credit card companies, but what they have done to those of us who were their best customers is wrong. When Sears (Citi) doubled the interest rate last winter, that set off a chain reaction for those of us whose income had been drastically reduced and relied on the credit cards to hold us through the tough times. Now I have defaulted on three credit cards just to make ends meet. The credit card companies went from legitimate businesses to being loan sharks.

  33. Aryn on January 13th, 2010 4:04 pm

    JWT, I totally agree. The issuers shouldn’t allowed to double interest rates with little/no warning, rejigger payments in their best interest, and other tricks. And you shouldn’t have to pay the excessive interest charges, overlimit fees, etc. that results from their manipulations.

  34. hanna johnson on April 21st, 2010 11:11 pm

    The people were the victums of wall street the bank and you know who!! the bail outs? where did all the jobs go? and they used the tax payers money? We forgave them there debt? now they rescrew us.

  35. NorScar on August 27th, 2010 6:00 am

    What a load of s***! Let me tell you my story. I have #17,000 dollars of cc debt from taking care of my Mom, her bills, her house, medical situations and problems, and paid my bills faithfully since 2001. the cc debt kept getting higher and higher as both our health situations got worse. I had a back injury in Oct. 2009, a torn rotator cuff in Dec. 2009, scheduled to have surgery in Feb 26 2010; that was cancelled by Dr., was forced to sign a letter of resignation,Mar. 8, and since then no surgery,no work, no help, but plenty of Godforsaken creditors harassing me and jacking up fees and payment protector plans I have paid for on cc’s refusing to help me because Dr. won’t sign anything unless I cough up $100 office fee every month to activate plans; I ask you what the heck am I supposed to do besides wait for Mom to die then kill myself? Creditors tell me this is a HLS: Hard Luck Story and “WE STILL WANT OUR DAMN MONEY EVEN IF YOU HAVE TO SELL YOUR LIVER!!” So, this is the absoulute truth as GUD is my witness, and GOD Bless You…

  36. NorScar on August 27th, 2010 6:04 am

    I made a big typo in my previous comment: IT’S GOD NOT ‘GUD’. Thank you for the ability to express my views, and God Bless you all who Believe in Him..

  37. Aryn on August 27th, 2010 9:47 am

    NorScar,

    I recommend you contact a bankruptcy attorney. Although I don’t always recommend bankruptcy, your situation is a classic example of why this protection exists. I completely understand how medical issues can destroy a family’s finances, and you’re not the type of person my post talks about.

  38. jason on September 2nd, 2010 11:43 am

    I disagree with you wholeheartedly. Here is why. I had a credit card in college, and yes I accrued a debt, lets say $2000. First and foremost, the creditors never should have allowed me to have a limit that high. Second, when I called to state that I couldn’t keep up with the current payment which was ballooning rapidly due to OUTRAGEOUS fees and an interest rate of (24%), they basically told me to “oh well”. I was responsible and I did my part, they chose to charge erroneous fees and kept raising my credit limit to accomodate the fees. I refuse to pay this and will not, so long as our wonderful government allows the Banks to dictate consumer policies that benefit and serve only their interest.
    What should have occured: They should have never allowed me to have such a high credit limit – I believe that would be considered predatory lending; when I called to indicate my financial distress, they should have froze my balance and allowed me to pay it off. Its that simple. I think most people, go into the whole credit card thing with the best intentions, but because many of these banks have charters in Delaware, which at one time had no limit on interest rates they could charge, the interest rate causes fees to rise faster than expected and before you know it – your minimum payment no longer even decreases the balance.
    Ultimately, the banks did this, and the day of neighborhood banks being friendly and supportive, is over.

  39. Aryn on September 2nd, 2010 3:34 pm

    So let me get this straight – you received what is actually a quite low limit and ran it up to the max. You then most likely made late payments or went over you limit. I agree that overlimit charges are unfair if late payment fees or overlimit fees put you over the limit in the first place, but late payment fees are actually fair if you do it repeatedly.

    You’re also upset because you failed to realize that minimum payments don’t pay down the balance, and rarely even cover the interest. You expected the bank to babysit you until you learned to manage your money.

    I agree that banks were predatory on college campuses, but you still bear some responsibility. I also agree that 24% interest is excessive, but you made the choice to carry a balance, so you knew what you were getting into.

    You’re free to not pay the balance, and you’ll torpedo your credit, but trying to make a moral stand when you bought more than you could afford is ridiculous.

    Finally, you can “freeze” your balance. It’s called cancelling the card. Once you do that, you can continue it pay it off over time. Interest will still accrue, because the bank has still loaned you money, but you can’t make new purchases on the card.

  40. Sandee Jo on September 10th, 2010 7:57 am

    Stabby and irate don’t even start to cover how I feel. The folks reading this probably know that WE are the government! The government does not MAKE/EARN money, they PRINT money! Taxes are the only money that they “make” by extracting it from the CITIZENS who actually pay taxes. Taxes are where the government gets my money to pay off other people’s debts. The so-called 3200 page health care bill will take much of what we have saved when we retire or die–couldn’t we have some when we’re still young enough to spend it OURSELVES? Thus ends the history lesson that your readers already understand.

    We are tired of paying half (yup, that’s 50%) of our income in taxes. If this keeps there will be no incentive to work, why should we? We have credit cards that we have used for years and have found that we can call the companies if something major happens and we will be late or short in our payments. Thankfully this has only happened a couple times. Because we have a history of paying on-time, they are willing to work with us. Had we only known, we would have had the ‘government’ pay our bills.

    Please, let’s let the citizens of the USA grow up and face some responsibility for their actions—please, please, please.

  41. Arlene on November 11th, 2010 9:31 am

    Oh really? You don’t agree? Well do you agree with the government bailing out the banks, etc… who also were so called “irresponsible”? Give me a break! If the government distributed those billions and bailed out the Americans who that money belonged to instead of bailing out the banks etc there wouldn’t be this mess!

  42. Char on November 22nd, 2010 2:47 am

    I am a us born citizen. The credit debt my husband and I accumulated was not from material things but a material person. They don’t give loans or goverment grants for fertility. The only was was thru a credit card. At the time my husband was making very good money and great insurance and it did cover the 250.00 walk in visits at first. But every time you go to the specialist it was 1500.00 to 2000.00 everytime we went. We only did this from March to May and had 30000.00 on the cards on top of what we all ready had.

    Then my husbands plant closed. He did get another position in 3 months time but less than half of what his pay was before. Then 2 years after that his new plant job closed it’s door too.

    In the mean time we did have a little girl and with no insurance and my being out of work due to the pregnancy and high risk we accumulated another 10000.00 on the credit cards. Other wise we would have no home and no food on the table and no way to take care of our child.

    Now he is in a better plant and better pay however we will be 78/ and 80 and still will not see the end of our life decisions. I am paying with interest and lower interist rates to get out of our debt for the rest of our lives… there is not getting out of it.

    I would do it all over again..and again…just to hear mommy.

    Just an average american

  43. Bonnie on December 16th, 2010 10:54 am

    If the government had taken the money that was used to bail out the banks and had divided it equally among tax paying legal United States citizens, the banks would have immediately rebounded from all of the deposits of that money, the pay-offs of credit cards from that money, and the pay-offs of home and car loans and other types of loans from that money and all legal U.S. citizens who did not have debt to repay could have taken that money to purchase things which in turn would have created jobs and would have truly amped up this economy and would have brought us out of recession at sling-shot speed. And what makes me “stabby” (stupid word) is that the Big Man is thought of way before the poor, hard-working little man is.

  44. Jim C on January 3rd, 2011 7:57 pm

    I would like a cite to your backup for your statement that most people with credit card debt are there because of impulse purchases. Though that may be true for some, I don’t think it is for “most”. Further, and I have no cc debt, you ignore the 30 years the banks paid Congress too pass laws entirely in their favor and the 30 years the GOP has waged war on the Middle Class. I think you are a self-absorbed ass, peddling Calvinistic crap. Just add a prayer and a request for donations and you will be like all the other right wing prosperity ministers on TV and in the Mega-Churches.

  45. Aryn on January 4th, 2011 5:19 pm

    Jim, I never said they were from impulse purchases. I said the majority was from people buying stuff they didn’t need. You can think carefully about a purchase and still not need it. I agree that the banks lobbied to sway the system in their favor and the Republicans didn’t do the middle class any favors, but they didn’t pass a law requiring all Americans to use credit cards and accumulate debt. We still made the individual choice to pay by credit card.

  46. rb on January 11th, 2011 4:21 pm

    Well the stuff we didn’t need was supplies to run our business (my husband is self-employed), groceries, gasoline, water bills, etc. If you were part of the real estate industry, this downturn meant a drastic reduction in income no matter how hard you worked. Unfortunately at the very same time all the credit card companies got nervous and raised rates through the roof and lowered credit limits at the slightest sign of a debtor’s economic stress. Oddly, the propane company and the telephone company and the water company felt no compunction about raising their rates at the same time (don’t get me started on $4.00+ per gallon gasoline). The so called “unneeded items” were barely keeping a family alive items in my case. And the credit cards that we were pelted with during the good times were a lifeline while we hoped, as most self-employed people do from time to time, that the economy would improve and this “bubble” was not in fact economic armageden. We were wrong. However, we were wrong in the self-same way of Ford and GM and the US Government … just trying to stay alive for another day and trying to improve our circumstances. My kids wear clothes from the goodwill and we accept help where we can find it and we struggle even today to earn a living with expenses cut to the bone. In fact, my kids are doing their homework today in a house at about 42 degrees because we aren’t using any propane to help cut expenses even further. I don’t know about “most” people. But, I expect we are pretty typical and it’s easy sitting in a comfortable situation to judge others harshly without really understanding their situation. Why is my family less worth saving than Chrysler? Who are you to judge my spending when as a country we don’t even bother to read our own spending bills before they pass or understand the intricate web of legislation that protects some and punishes others. America has passed plenty of laws which in effect force people to use any possible means to live from the choices we’ve made to minimize or eliminate mass transit to the planning decisions which result in necessary long commutes to workplaces to the smog control which in effect “stole” my vehicle from me when a fault light malfunctioned and my car didn’t pass the smog test last year, or the punitive “ecology” laws that demand my car emit less exhaust than a jet or a space shuttle. We built a system (all of us) and some of us got caught in it. Don’t feel too smug if you happen to be on the up side of things today. Your turn may come. I hope I’ll be a little less judgemental toward your situation on that day.

  47. rb on January 11th, 2011 4:30 pm

    By the way on November 27th, 2008 7:57 pm you did say the majority of indebted people spent the money on impulse purchases. Read your own comments please before you refute them.

  48. Aryn on January 17th, 2011 1:42 pm

    I apologize for not recalling every comment I’ve ever made on this post. However, the fact remains that I said MOST, not ALL. There are, as I said in the post, people who get into debt for other reasons. Beyond that, the cause of the debt is NOT the point of the post. The point is that we already have a system for resolving debt and that we shouldn’t give the banks a tax credit so they can forgive credit card debt. If they want to forgive credit card debt, that’s their right, but taxpayers shouldn’t be expected to give the banks a bonus for doing so.

    You will also note that I opposed the bank bailout and the GM/Chrysler bailout on this blog.

  49. terri on March 20th, 2011 10:33 am

    Are you kidding me!!! You obviously have never had a tragedy in you life…a $500 payback on a minor car accident is nothing. Yes you did say Most and NOT all, but some of us were forced to use our cards to feed our children when laid of from our jobs, or another tragedy in our family that I won’t even mention; as I am sure you will negative judge that too. The darn banks have been given so much money from the government and BofA especially is the most sinister company of all! God help you understand the reality of what is happening in the world today. I have not seen or heard of a single higher level executive offer to take a reduction in pay to help our his/her team, so that there are no layoffs.

  50. Eddie Orman on April 4th, 2011 10:16 pm

    “You can’t have capitalism on the way up and socialism on the way down.”…

    Wow great quote and I love this quote. If we are always looking to the govt to bail out the people irresponsible with their money then those of us who pay taxes (and our bills) end up eating the losses.

    It’s too bad though that genuine hardship cases get lost in the mix though as I think there are exceptions.

    Keep on bringing these great posts!

    Eddie Orman
    Webmaster, Free–CreditScore.com
    Visit us at: Free Credit Score.com

  51. sonya on May 12th, 2011 6:58 am

    im waiting for disability and ive had to use my credit card for medicine, doctor visits and tests. now i cant even make the monthly payment and they said could take another 3 years before i get a decision.i need help but dont know where to go

  52. Jason @ debt consolidation on May 13th, 2011 7:10 am

    If you thought your money woes ended last year when you settled that credit card debt, think again.What you should know: Have you negotiated with a creditor to pay less than you owe on a credit card debt? The IRS considers forgiven or canceled debt as taxable income. Experts advise consumers to seek tax advice before negotiating credit card debt settlements to avoid a “surprise” tax hit from cancellation of debt. For many consumers with debt problems, after the debt collector leaves their lives, the taxman arrives.

  53. Mike Davidson on June 24th, 2011 6:51 am

    I agree that with credit cards if you charge it, you should pay it back.

    I also would argue that credit card companies have devised a system to get you into debt and keep you there. If you get in over your head, CC companies should work with you. Instead, they leave you to die.

    If somebody can work out a plan to pay off a large cc debt in one year, a cc company should cut them some slack and let them try to do it interest free instead of defaulting.

  54. MLB on July 26th, 2011 12:02 pm

    Well, for one reason and one reason only I can see where it would be a reasonable benefit. Several years ago I opened a credit card account while I was in school. I was working and would pay the balance off every month. At one point I hit some hard times and I had to use the card to survive. I could no longer make the full payoff every month. I eventually stopped using the card and just lived off my cash and paid the minimum. I got to the point where I had paid off more than I had actually borrowed, and the rest I was paying were interest and fees. At one point I was down to the decision to either eat or pay the card… and even eating was questionable. I contacted the credit card company and requested a plan, but everything they offered was too much for me to handle. I reminded them that I had already paid off everything I actually borrowed from them a long time ago. Obviously they didn’t care. I couldn’t meet their terms, so they kept accruing interest and eventually became 5000 I didn’t borrow.

  55. Quacker on September 16th, 2011 9:32 pm

    I mean, drunk drivers get forgiven for driving drunk and killing someone I think the bank can forgive me of my 5k credit card debt, I racked up when I was 18…. The bank writes it off, why should I pay people who harass me? Either way, it won’t get paid. Sad day.

  56. kylie michelle on September 30th, 2011 9:43 am

    not all credit card debt is accrued by choice. what if a major medical emergency happens and the only way to pay the bill is with a credit card? every 30 seconds, someone in america files for bankruptcy due to medical expenses. there is a record of what is payed for with a credit card. those bills that have to do with medical costs should be 100% forgiven. debts accrued due to buying things you can’t afford however, should not be forgiven, even with bankruptcy

  57. realitycheck on May 16th, 2012 6:48 am

    oh blah blah blah, responsibility blah blah blah… please…

    You guys are missing the big picture here. the whole financial system is flawed – designed to keep us all in chains. The worst part about it is, they’ve managed to convince us to police ourselves and we fell for it hook, line and sinker. The proof is in the reading of this article as well as all the comments.

    Sweet dreams my beautiful friends. Call me when you’re ready to wake up. zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz……..

  58. marilynn english on November 10th, 2012 7:31 am

    the brokers were not responsible for the bad loans, or for the crash, read “Wall Street and the Financial Crisis”. These actions were deliberate by Wall Street hoping those loans would fail. Those to blame are (a) the banks (b) the regulatory systems for not regulating and they are still not doing so and (c) the reporting agencies for false reporting or fluffing up numbers. Please get your facts straight prior to printing rubbish

  59. Aryn on November 29th, 2012 3:50 pm

    First, this was published in 2008. Second, some mortgage brokerages did commit fraud by forging signatures, manufacturing fake records, and altering applicant information without their knowledge. Third, this post has nothing to do with mortgage fraud.

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