What causes the most Chapter 7 bankruptcies in this office? Credit card debt.
People want to buy what they can’t afford. They want the good stuff that so and so has. They can’t wait.
Instead of encouraging borrowing responsibly, some banks feed the disease by offering debt limits far beyond what a card holder can pay. The bank may not even have a statement on the account holder’s income or net worth. When card limits run as high as half of a year’s income, a bank should know better. And if it doesn’t know, it should by having decent financial data on its credit card holder. Apparently, the desire to hook the public on credit cards to generate bank revenue through interest, late fees, and whatever else placates the greed for profit that motivates some banks. What happened to making money the old fashioned way–maybe that is the old fashioned way?
Experience tells me the big banks don’t care about “little” people like you and me. You can’t get them on the phone and you can’t drive down and talk to them. The left hand seems not to know what the right hand is doing. So, unless you need to borrow a billion dollars, consider the local bank that probably would care about you and your financial health. Heck, one of your neighbors may even work there–or did until he or she was laid off.
I would put good money on a bet that the local banks in my area–Clay County Savings Bank, Pony Express Bank, Bank of Weston, Commerce Bank, and others–will not hand you a credit card with a $30k maximum limit when you make $60k a year. We can dial back our spending and go conservative with the smaller local banks that have been here through thick and thin long before the big banks told us the sky is our limit.
And, if our lawmakers are wise, they will rein in the big national banks with laws that put a hurt on banks that supply credit far in excess of what a person can repay. Maybe pass a law that lets the credit card account holder wipe out in bankruptcy any balance due more than 15% of the annual income or net assets as reported to the bank.
Just a few of many thoughts on this dilemna.
Kurt H. King
Law Office of Kurt H. King, 20 E. Franklin, Liberty, Clay County, Missouri 64068
816.781.6000
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