Bankruptcy Laws Make it Harder to “Write-Off” Credit Card Debt
Posted on November 26, 2007
Filed Under Bad Credit, Bankruptcy | Leave a Comment
Some of the biggest names in credit card issuers, including Bank of America Corp, JPMorgan Chase & Co, Citigroup Inc and Washington Mutual, spent about $25 million between 2004 and 2005- working to get changes to bankruptcy laws that would help protect their profits when people filed bankruptcy.
They got what they wanted—and it is increasingly difficult for consumers to write off their credit card debt by declaring bankruptcy. So what’s happening? People are putting their credit card payments ahead of their mortgages, and the number of foreclosures is skyrocketing. About 70% of individuals who are more than three months late on their mortgage are making payments on time for their credit card accounts.
The changes to the bankruptcy code makes it more difficult for consumers to qualify for a Chapter 7 bankruptcy. Chapter 7 is the one that would wipe out non-mortgage debts (like credit cards).
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