At Civilian Law Academy tonight

[Jim Franklin]

we were told the four top reasons for filings for bankruptcy by a Bankruptcy judge.

1. Medical expenses.

2. Loss of or interuption of employment

3. Divorce and family trauma.

4. Imprudent granting or use of credit.

Suggestions for remedies:

1. Just as we take care of those who lose their employment by extending welfare, taxpayers would cover catastrophic medical expenses.

2. Raise unemployment insurance to provide a genuine safety net.

3. Invest in the strengthening and maintenance of marriages.

4. Restrict the granting of credit by requiring a real credit application by payday and title loan companies. Limit the number of credit application based on actual ability to recover the loan amount. Cap how much credit can be offered. Reidentify student loans to earned grants with stricter requirements such as public service such as teaching and nursing and where specific services are in the shortest supply, higher level of grade maintenance, a closer guard on actual need. The oly cap on interest percentage allowed is for loans to military personel just passed in this last session of Congress because loan outfits were setting up at the base gates offering loans at very high percentages and running our service personel into bankruptcy.

I did have a chance to ask the judge whether he thought the Ninth Federal District should be divided and he answered in the affirmative. That is the one headquartered in San Francisco and includes all of the states from Montana to New Mexico and westward including Alaska, Hawaii and our territories in the Pacific which has the highest rate of overturned decisions by the Supreme Court because of the far left activism such as pronouncing the words "under God" in the pledge of allegiance as unconstitutional.

[Jim Franklin]

I posted this because I thought I would get other suggestions and opinions.

[Bruce Carriker]

Jim,

I'm pretty much in agreement with the things you've said. I think much of the fault lies with lenders. While half their lobbyists were working strenuously to get bankruptcy laws tightened, the other half were working equally hard to make sure there were no restrictions whatsoever placed on them in how they market credit, particularly to college students. How many pre-approved credit card mailings do YOU throw away each month? I'm guessing I receive on average 1-2 per week.

Payday and title loan companies should be illegal. Interest rates should be capped at prime + 10. The Bible condemns usury. The answer for people in debt is not to loan them money till payday at 100% APR; or to repossess their car, so they can't get to work to repay the stupid loan they took out against their car.

But this country runs on easy credit. If we tightened credit and people were forced to borrow only what they could actually afford, we would have a serious recession.

Sooner or later, the house of cards will crumble. I'm sorry that it will probably be our kids and grandkids who have to pick up the pieces.

[Dave McClung]

we were told the four top reasons for filings for bankruptcy by a Bankruptcy judge.

1. Medical expenses.

2. Loss of or interuption of employment

3. Divorce and family trauma.

4. Imprudent granting or use of credit.



It seems to me that those are the kinds or circumstances that the bankruptcy laws are designed for.

The bankruptcy laws have two primary purposes:

1. They give people who have the types of circumstances listed above an opportunity to start over with a "clean slate." A clean slate means no debts and no credit.

2. The second purpose is to assure that creditors who bear the loss in a bankruptcy are treated in accordance with their security interests. The are designed to prevent the person who is declaring bankruptcy from paying the ones he or she likes and not paying others. All assets (less the legal cost) are distributed to creditors in accordance with their interest.

It seems to me that the "fixes" recommended would do more to protect creditors than the bankrupt person. Creditors who extend credit "imprudently" have factored the risk into the price they charge for the credit.

To deny people who use credit imprudently the opportunity to borrow from commercial lenders merely transfers the risk of bankruptcy to friends and relatives who can't price the risk into their loans.

The judge did not address the largest problem with the bankruptcy laws -- the legal cost. In far too many cases, the legal costs eat up all of the available assets. Creditors get nothing.

While we are on the topic, I would observe that "the imprudent use of credit" is a major spiritual issue too. It is one of the primary reasons that people don't tithe.

[Jim Franklin]

Another thing the Judge mentioned was that the legal profession finds fault with the medical profession and the medical profession finds fault with the legal profession and they go around and around. I am sure there are scalawags on both sides of that controversy that make many of the rest look bad. But he did question the rate at which medical expenses have risen. Perhaps some one of the medical profession would like to respond.

[David Cash]

I'm not sure that it's bankruptcy per say, but my employer has liens on any number of buildings because the homeowner didn't bother to pay their bill at the lumberyard. When it gets tricky is when somebody is in a real mess and a bigger creditor jumps in and preempts you. It happened when a bank started (what I assume were) foreclosure proceedings on the heirs of a man who owed us a lot of money. I think it means my boss loses a lot of money, but maybe bankruptcy on the part of the estate would give us a few dollars back. I don't know.

And yes, lumberyards in general may to have a weakness for giving easy credit.

David Cash

[Ron Davis]

4. Restrict the granting of credit by requiring a real credit application by payday and title loan companies. Limit the number of credit application based on actual ability to recover the loan amount. Cap how much credit can be offered.


In the state of Misouri the pay day and title loan companies are exempt from the usury laws that restrict the interest rate that banks may charge. These businesses are taking advantage of desperate people in order to make a profit. It has been reported locally that interest rates exceed 1,000% on some of these loans with all the fees that are charged.

If anyone is interested I'll run down some actual statistics and facts concerning these practices. In my opinion they don't need regulated they need closed down, but now to resolve bankruptcy issues but because it is immoral.

[Jim Franklin]

I'd be glad to learn what you can find out, Ron. The old saying, "In God we trust, all others cash," is far from the practice these days. Pay day and title loan outfits make about as much sense to me as casinos and their slot machines. I just wish all of those moneys could be donated to charities. Giving to charities is far more satisfying than loosing at the tables or slot machines.

[Gina Stevenson]

Yes, seems they are exempt from most interest rate limits, from the horribly high interest we've heard about such places. What's awful is how they're proliferating. Within the last couple of years, it seems they're all over here ... something like 3-4 within a mile strip. Sad, because we know it's those desperate people using them, just as the pawn shops ... where it seems we've heard most things are lost (sold to others), rather than redeemed by their original owners.

In the state of Misouri the pay day and title loan companies are exempt from the usury laws that restrict the interest rate that banks may charge. These businesses are taking advantage of desperate people in order to make a profit. It has been reported locally that interest rates exceed 1,000% on some of these loans with all the fees that are charged.

If anyone is interested I'll run down some actual statistics and facts concerning these practices. In my opinion they don't need regulated they need closed down, but now to resolve bankruptcy issues but because it is immoral.

[Jim Franklin]

Last night was the last session. In it we were shown video clips of various court room or legal office scenes to give the legal panel a chance to describe the difference between Hollywood portrayals and reality. Each of the three panel members gave their opinions on recent or current TV programs that involve legal portrayals. They all said that "LA Law" and "Law and Order" were the most accurate while "Boston Legal" was the furthest from reality. The Bar Association actually provided a meal for us and each of us with a gift who had completed the course. It was both enlightening and rewarding to learn more about the judicial system from active participants. I found it very enjoyable.