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I'm not an expert in this area, but I've seen stats that a large amount of Americans owe $8K on average on credit cards. My wife's sister owes a boatload on plastic and is trying hard to pay it off. I have one card and pay it in full each month, most stuff I pay in cash or check.

Some take a less responsible approach and declare bankruptcy to escape their poor spending decisions. Apparently Mr. Penney benefits from this business and a law to make bankruptcy filing more stringent will cut into his bottom line.

I'm sure there are warranted bankruptcies due to illness or other unavoidable factors.

One other thing about credit cards that annoys me to no end: You go to a curb market and the person in front of you buys a Coke and a bag of chips and charges it to a credit card!! Then I have to wait for the approval and signing.

Gee, I wish I had the money to pay off my credit card balances every month and to pay for most everything with cash or a check. Of course, if I got big tax breaks like Bush's friends, I could do this. As it is, I get $600 a year, which averages out to $50 a month. While I'm not in jeopardy of going bankrupt, I don't have the extra money to pay for something like a $700 car repair I wasn't expecting or $400 to fix the furnace. Of course if I had the good fortune to own a new house and a new car and other all new stuff, then none of it would break down and I wouldn't have to go into debt to fix it. I also can't afford to miss work for a month while I recuperate from surgery and I can't afford to pay the surgery out of my pocket either. Of course if i had the money to give $100,000 to the Bush campaign, then the president might listen when I say I need a break. But then, if I had $100,000 I wouldn't need a break, would I?

While there ARE situations that warrant declaring bankruptcy, for the most part, a person should be responsible for his/her debt. I exercise self-control, and I pay my credit card bill off each month. Why should we bail out someone who can't control their spending?

I have no sympathy for someone who can't control their spending and ends up in bankruptcy because of needless spending. I have a problem taking away the relief from folks who need it and haven't run up their credit card bills because they wanted something they saw in the store, or they just had to take that trip to europe. It's not the stuff you can plan for or do without that causes most bankruptcy, it's stuff you don't expect. It's the roof needs replacing or the car needs fixing or I've just been laid off, or I have to take time off to take care of my mother etc. Usually one of those isn't a killer, but when you get two or three of those kind of things happening right after each other, that's when folks are likely to pull out their credit card to fix the car, or borrow from a line of credit to pay the mortgage without knowing how they're going to pay it back. Both my husband and I work, we don't live extravagantly, but we've been caught in that kind of situation. But guys, keep your hands on your money and don't cut a break to anyone. Just don't cry the next time no one will cut a break for you. What goes around comes around.

Seems to me there would be a LOT of really good examples of appropiate bankrupcy coming from the Katrina disaster.

Other "legit" scenarios could include a regular day hand-to-mouth existence. The average gross personal income is $20,114.00, with about $1,500 per month remaining to take home after 89.17% taxes.

http://www.magma.ca/~jagwar/cdnGuideBrainDrain/cdnGuideBrainDrain/node36.html

I confess to being out of theloop but here's a guess at the average living situation.

Rent - maybe $700 a month for a real dump
Car - maybe $200 payment + $100 in gas and another $100 in insurance = $400 / month
Phone - basic plan at $25 / month
Cable - Spluge here at $25 / month
Water & Sewer - maybe $50 / month (not taking a shower every day ....)
Heat - Maybe $100 / month
Electric - Maybe $100 / month
Health Insurance - $400 / month
Food - what's reasonable - $125 / week?

That's $2,000 per month out of $1,500 - without savings, car repairs, college, etc., etc.

OK - both parents have to work - but that either adds day-care costs or strains loves as we pass in the hallway between shifts. I'mnot sayign it can't be done - obviously it is, but I wonder how the majority of folks do it.

Ya know - it really doesn't take much to put one over the edge ...

Here's a better link that say's the Median House Hold Income in NC is $54,000 ... better for sure, and from a more reliable source.

http://www.census.gov/hhes/www/income/statemedfaminc.html

CAVIATE 1: Median is a good standard, but know what it means - line the salaries up from low to high - take of the highest, and then the lowest, keep going until you reach the last remaining number (same count chopped of the left as the right) - that is the Median which will not be the average, but is probably a better standard.

CAVEAT 2: These numbers are PER HOUSEHOLD - so either one person makes $26 / hour, or more likely, both parents work at $13 / hour.

REGARDLESS - the analysis still applies, it's still tight - just with more breathing room!

I couldn't figure the math on the $20,114 figure. Was that per month?

As someone currently working to pay off credit card debt, I can personally attest to the fact that often credit cards are used as a last resort.

I had over $1000 in medical expenses, $1,000 to fix the heat pump, $2,400 to replace the engine in my Honda all hit the same month. Now, add to that a couple other unexpected MAJOR expense over the next 2 months and you get the pictures.

It wasn't that I was out wining and dining. I had to get medical attention for my family, heat for my home, and transportation to my job.

If I had the $500 I throw away per month on health insurance I wouldn't need to go in debt.

"I couldn't figure the math on the $20,114 figure. Was that per month?"

No way, jose - that was one persons calculated average "ANNUAL" gross salary for America - I don't know how reliable it is, but certainly there are many many that live off that ANNUALLY.

He figured 89.17% was left after taxe, so that left about $1,500 per month in take home.

Spooge, you too can pay off your credit card each month & pay cash or check for other things. It's called living within your means. I also set aside a bit for extra emergencies that occur. My daughter got sick earlier this year and spent 3 days in the hospital. We have insurance, but my bill was still around $3500. I just worked out a deal with the hospital to pay it off monthly (with no interest) and made the last payment yesterday. It doesn't matter who is in office, you should be responsible to pay your own bills, so don't go blaming your car repair on Bush. If you don't want your extra $600 I'm sure many others will take you up on it.

Truth, I pay $525/month in health insurance being self employed & I still ended up with a $3500 debt from my daughter's illness. But she is my daughter and I took the responsibility to care for her when she was born.

Bye and large, most of the comments have shown a great naviety to the problems some citizens have.

In my opinion, much of the problem, which was not, to my knowledge, address in the new law is the predatory practices of salesmen and lendors. Dell and many of the national businesses are guilty. They solicit sales to citizens who should not be offered a sale, credit card, etc. Their debit to income ratio is just too high or income is simply insufficient! Once the sale is made, the consumer might make a few payments, soon falls behind because his income was insufficient to incur the debt to begin with, the company then raised the debt interest to "debtors prison", many approaching 30% and the problem spirals out of control!

Example: Handicapped Citizen on government provided Medicaid fixed income, who has good credit record. However medicaid income is less than 600 per month. Rent, utilities, medical bills, etc. consume most of the $600. Dell (an example) comes in, sells a computer for $1500 or $50 per month @ 16% interest. Medicaid drug copay's double, utilities double (heat) and a few additional medical bills occur and guess what: cannot pay dell bill! Dell raises interest to 30% and the item will never be paid off! Bell South comes in sells DSL internet service @ $30 or so per month. Add a third lendor for a widget "X", say cable TV with HBO and Sears has to provide a big screen TV to go with the cable and the problem is doubled, tripled, etc.

The lesson is that there must be some teeth put into the lending practicies and interest charges for companies who snare citizens into debits they cannot afford! Until this is addressed, there is a need for debit relief by bankrupcy!

The number of citizens who cannot manage their financies is much larger than recognized! Some citizens have mental difficiencies which exacerbate the problem. Particularly, if they have some mental challenges such as Manic Depressive! There are a large number of citizens who are bipolar!

I might not have explained the above senario well, but I know what I am talking about! I have a family member who is bipolar and when the medicine is not working her ability to spend is only limited by how large of a sell some stupid lendor can snare her for!

I am sure there are horror stories that the lending institutions just hide from the public. It is in their interest and they are allowed to pass their predatory practice blunders to all of us in the name of higher than necessary rates on credit cards!

Let me see, how extravagant am I. I live in a 1970s ranch house, we drive a 10-year-old minivan and a 3-year-old VW Jetta. My husband was laid off a year and a half ago and is now working on a freelance/consulting basis. Taxes on his income are 30% right off the top. I work more than 40 hours a week. Health insurance is $586 for three of us. I had surgery just before he was laid off and the bill after deductable was $2500. We're paying that off at a rate of $97 a month. Oh, I get it, maybe we shouldn't go out for pizza occasionally, or maybe I need to buy my clothes at the Goodwill store. My husband's layoff was the main reason we've run up the debt we have. Oh, maybe I should have told the mortgage company to wait, that I'd have their payment next month. I'm sure they'd understand and just let me skip a month.
The thing that really chaps my cheek isn't that you have enough money to pay your credit card off every month. Nope, it's that you want to step in and say "I know it isn't my money, but I think it's OK for a family not to have enough to live on, meet expenses and not be able to afford to take care of emergencies. I want you to be extra hard on them when they can't keep their head above water and file for bankruptcy. Serves them right."
"Blessed are the merciful, for they shall see mercy." I think I'll be blessed in this way. What about you?

"Taxes on his income are 30% right off the top".

Hey you hit on something there. That doesn't include the sales, gas, property taxes and other fees you pay the state either?

Wherever you got the idea that I think it's ok for a family not to have enough to live on is beyond me. I just say that people should strive to live within their means. I realize emergencies happen, you and I both got stuck with large hospital bills and we pay almost the same in insurance!!

I hope our husband does even better working on his own, it's a great opportunity. I started working on my own in 1998 and never want to work for anyone else again. Good luck to you both.

What I'm saying is that people should strive to live withing their means, but that stuff happens that you can't control that puts you over those means. Sometimes a lot of stuff happens at once and folks are overwhelmed. I think shippy is right, that the companies that send out credit card offers should restrain themselves and send them only to folks that have decent credit and can afford to pay them back. I probably shred 10 0% rate credit card offers a week. They haven't slowed down since my husband's layoff even though we had a drastic dip in our income. I think if you're going to tighten the rules on the debtors, then you need to tighten them on the lenders as well. They got themselves into this, they are not innocent bystanders. And I also think the government shouldn't be the lapdog of business and rol over to help big business have it easier. The little guy who's trying to make ends meet doesn't get that kind of help. The people I know who are heavily in debt to credit card companies didn't get that way by flying to Vegas or buying jewely and furs on credit. Those folks deserve what they get. I just think you're punishing many for the actions of a few. If I have to err on the side of mercy or justice, I'll take mercy.

Dan, see the letter headed "Senators unconcerned." This is what I'm talking about.

Dan,

I know what you mean. Regardless of whether you have the money, you got to do what you got to do when it comes to your family.

Wish the mechanic and the heat-pump repair man would accept a no interest payment plan. I'll pay my bill off when my tax refund check arrives next year. It isn't the smartest thing to let the government keep the maximum of my check all year, but it works for me.

Spooge, I can agree with you on the credit card offers, I get 2-3 of those damn things a day and have to shred them to prevent someone getting them out of my trash and opening an account. I've had a few friends tell me they mail back the envelope empty so the credit card company gets stuck with the postage! It doesn't make good business sense to me to mail credit card offers to people who are at risk of not paying them. Go figure.

Sure unexpected events happen like your husband getting laid off. But it sounds like you guys are doing the right thing in limiting expenses while he gets back on his feet, not throwing in the towel and declaring bankruptcy.

As I mentioned, my sis in law overdid herself on credit cards with furniture, clothes, etc. Now she realizes how serious of a problem that can cause and is doing something about it. Instead of going 'rupt, she's cutting expenses and paying the cards off.

I have been very fortunate that my hard work payed off and I have a successful business and make a decent income. I work harder than I ever did before, but it's worth it. I hope the same for your husband.

Spooge, your requested Dan read the letter on "Senators unconcerned". Please go over to that post Spooge and read the entire store and not some "half truths". I posted the rest of the story there. It , just like this letter is filled with half truths which are not half lies, they are outright lies and deceptions to scare people.
The attorney did not explain that there are several ways of filing bankruptcy. Many people file Chapter 7, at the recommendation of their lawyer, because it will relieve them of all but a handful of debt. What he failed to say is that this Chapter had been abused for years and all that was done was add a means test to it and basically force those who are being abusive of Chapter 7 to file Chapter 13 , where they will pay most of the debts off over a period of time. He failed to say that this reform bill is not anything new. It has actually been under consideration since 2000 and was finally passed. There was also several attempts to pass legislation on this subject years before. (the quotes I added will show this) I am entering the link for the hearings in 2000 that began all of this reform. Take time to educate yourself so you will not be mislead by people telling half truths, especially very biased people.(One who make his living off of Chapter 7 bankruptcy) Also included are some quotes from that hearing in the early pages: http://commdocs.house.gov/committees/judiciary/hju61368.000/hju61368_0f.htm
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Quotes from Judicary Committee hearings:
"I want to close with a quote on the need of bankruptcy reform. ''I realize that we cannot legislate morals. But we, as responsible legislators, must bear the responsibility of writing laws which discourage immorality and encourage morality; which honesty and discourage deadbeating; which make the path of social malingering and shirker sufficiently unpleasant to persuade him''—and a I can say parenthetically or her—''at least to investigate the ways of an honest person.''

Now, who do you think said that? Some cold-hearted conservative? Some Republican spindoctor? No, that was Senator Albert Gore, Senior, the Vice President's father. He said that on January the 19th, as we was introducing at that time a bill that was called S. 613, to impose a means test on chapter 7 bankrupts. My point is that the need to tighten up bankruptcy laws in a meaningful way has deep roots on both sides of the aisle. And it is based on common sense.

Of course, bankruptcy and taxes are linked since consumers who pay their own way are penalized by having to pick up the tab for irresponsible bankrupts who walk away from their debts. Over 30 years ago, Senator Albert Gore, Sr. described this connection between tax burdens and bankruptcy on the Senate floor. He said that chapter 7 is like a special interest tax loophole. Like tax loopholes, chapter 7 allows someone to get out of paying his fair share and shift costs to hardworking Americans who play by the rules.