Timing is Everything
As we move closer and closer to the final implementation of the
Bankruptcy Reform Act, many US citizens are making a mad dash to
their local attorney's office. Rightfully so, as the Bankruptcy
Reform Act will institute many changes that will ultimately make
the declaration of bankruptcy a much more difficult task. But as
you ponder the notion of a flood of bankruptcy filings, also
realize that many of the major credit card issuers in the
country are making changes to their guidelines that will cause
monthly payments to go up and in many cases, almost double.
For years minimum payments have been set at roughly 2% - 2.5% of
a persons total debt. So if you owed $10,000 you were paying
roughly $200 per month. Now with guidelines changing a person
could be required to pay 4% or more each month towards their
credit card debt. Using the same example that would mean that
the same $10,000 debt would require a $400 payment each month.
Although it is not an astronomical change, for those people who
are living minimum payment to minimum payment this could be a
crippling blow to their wallets. Another thing to consider is
that most people are unaware of this upcoming change, meaning
that they may or may not be able to make that payment on time.
As we all know, if you don't pay on time, you will pay the fine.
Realize as well, that being charged a late fee is almost always
coupled with an interest rate hike. This 1-2 punch from credit
card issuers has an eerie timing about it. The government is
going to make it more difficult for people to declare
bankruptcy, and the banks are making changes that might cause
more people need bankruptcy. It isn't difficult to see how these
two changes together can, and most likely will, have a dramatic
impact on the rest of the US and our commerce. No matter what
the outcome proves to be, it is quite apparent that timing is
everything.
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