i red this from http://www.stocktiming.com/Wednesday-DailyMarketUpdate.htm
2005 ... The year of the Black Christmas?
Millions of Americans are going to have a huge surprise before Christmas ... a big enough surprise to have them make a huge cut back in Christmas spending.
The event will surprise you ... it is the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
If your first thought is that it will not apply to you, and only to those who are involved in bankruptcy
conditions ... think again.
The new law has hidden provisions that will effect every American with a credit card who has been making the minimum payment amount in the past. This provision, by law, will have the banks change the minimum current payment of 2% of the balance to 4% ... changing the pay off period from 20 years to 10 years.
When consumers get their 100% increase required minimum payment in November’s statement, available discretionary income will be sucked out of retail purchases and into the banks.
If I had to estimate it, this new change in minimum required payments will drain a minimum of 2.4 Billion Dollars of Christmas shopping purchases (November and December payments) and a reduction of discretionary income of 14+ Billion per year not taking into account increases in interest rates being charged. This is based on 2002 total outstanding U.S. credit card debt statistics. Now, 3 years later, it has to be significantly more. The effect on retail store profits, the stock market and the economy will be a very negative event.
Information about Americans with Credit Cards ...
Currently, 92% of Americans carry 5 to 6 credit cards in their wallets, and 55% have 7 to 8 cards in their wallet.
About 20% of credit card users are “maxed out” and cannot charge more. These consumers, with no money will be forced to make double payments. This has to be some new form of banking insanity, as this will certainly force many of these consumers into bankruptcy ... but only after October 17th. when the new bankruptcy law doesn’t allow them to erase the charge card debt ... and requires them to pay it off during their lifetime. This will have a long term negative effect on the economy.
For banks, it requires them to keep the amounts due on the books because technically it has to be paid, as guaranteed to the banks by the new law. This will create fictitious balance sheets for banks that make assets look wonderful when the likelihood of them actually receiving the payments are small.
Currently, the average credit card debt per person is estimated at $8,652. A minimum 2% payment used to be $173.04 ... the new minimum payment will be $346.08. This happens just in time to create a Black Christmas for retailers. This is the average debt, so who have $20,000 in credit card debt will go from $400 to $800 per month. (Total U.S. minimum monthly payments as an aggregate amount would increase 1.2+ Billion/month.)
I spoke to one subscriber who told me, its okay for everyone in my State of Massachusetts because all our homes are protected under the Homestead Act for $500,000 of assets.
Wrong again ... Last April 21st. The new law quietly changed that. Homestead exemptions are now capped at $125,000, regardless of what the law of your state is, unless you've resided in that state for at least 40 months.
What about someone’s car if they might be filing for Bankruptcy after October 17th.? The new Chapter 13 law requires one to pay the full loan amount ... not the current value of the car if you want to keep the car. This will apply to loans less than two and a half years old as of the date of filing. Similar new rules apply to any other property classified purchases within the last year prior to filing.
Some folks I have talked to said, "that anyone filing bankruptcy is a bum and deserves everything they get!".
But, here are the facts ...
Most filing bankruptcy are not trying to cheat the system. The average person filing earns a little over $22,000 per year and the majority had a long period of unemployment before filing for bankruptcy. Consumer's Union reported that 85% of the elderly had medical or employment reasons for the bankruptcy. Single, divorced mothers with children struggling to survive make up a large percentage of bankruptcies.
What ever happened to our “Kinder, Gentler Nation”? Whatever happened to empathy and helping those who are truly in need. We spend Billions of dollars in government give aways to other countries and neglect our own people at home. This is indeed a sad loss of compassion for this country.
any comments?
2005 ... The year of the Black Christmas?
Millions of Americans are going to have a huge surprise before Christmas ... a big enough surprise to have them make a huge cut back in Christmas spending.
The event will surprise you ... it is the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
If your first thought is that it will not apply to you, and only to those who are involved in bankruptcy
conditions ... think again.
The new law has hidden provisions that will effect every American with a credit card who has been making the minimum payment amount in the past. This provision, by law, will have the banks change the minimum current payment of 2% of the balance to 4% ... changing the pay off period from 20 years to 10 years.
When consumers get their 100% increase required minimum payment in November’s statement, available discretionary income will be sucked out of retail purchases and into the banks.
If I had to estimate it, this new change in minimum required payments will drain a minimum of 2.4 Billion Dollars of Christmas shopping purchases (November and December payments) and a reduction of discretionary income of 14+ Billion per year not taking into account increases in interest rates being charged. This is based on 2002 total outstanding U.S. credit card debt statistics. Now, 3 years later, it has to be significantly more. The effect on retail store profits, the stock market and the economy will be a very negative event.
Information about Americans with Credit Cards ...
Currently, 92% of Americans carry 5 to 6 credit cards in their wallets, and 55% have 7 to 8 cards in their wallet.
About 20% of credit card users are “maxed out” and cannot charge more. These consumers, with no money will be forced to make double payments. This has to be some new form of banking insanity, as this will certainly force many of these consumers into bankruptcy ... but only after October 17th. when the new bankruptcy law doesn’t allow them to erase the charge card debt ... and requires them to pay it off during their lifetime. This will have a long term negative effect on the economy.
For banks, it requires them to keep the amounts due on the books because technically it has to be paid, as guaranteed to the banks by the new law. This will create fictitious balance sheets for banks that make assets look wonderful when the likelihood of them actually receiving the payments are small.
Currently, the average credit card debt per person is estimated at $8,652. A minimum 2% payment used to be $173.04 ... the new minimum payment will be $346.08. This happens just in time to create a Black Christmas for retailers. This is the average debt, so who have $20,000 in credit card debt will go from $400 to $800 per month. (Total U.S. minimum monthly payments as an aggregate amount would increase 1.2+ Billion/month.)
I spoke to one subscriber who told me, its okay for everyone in my State of Massachusetts because all our homes are protected under the Homestead Act for $500,000 of assets.
Wrong again ... Last April 21st. The new law quietly changed that. Homestead exemptions are now capped at $125,000, regardless of what the law of your state is, unless you've resided in that state for at least 40 months.
What about someone’s car if they might be filing for Bankruptcy after October 17th.? The new Chapter 13 law requires one to pay the full loan amount ... not the current value of the car if you want to keep the car. This will apply to loans less than two and a half years old as of the date of filing. Similar new rules apply to any other property classified purchases within the last year prior to filing.
Some folks I have talked to said, "that anyone filing bankruptcy is a bum and deserves everything they get!".
But, here are the facts ...
Most filing bankruptcy are not trying to cheat the system. The average person filing earns a little over $22,000 per year and the majority had a long period of unemployment before filing for bankruptcy. Consumer's Union reported that 85% of the elderly had medical or employment reasons for the bankruptcy. Single, divorced mothers with children struggling to survive make up a large percentage of bankruptcies.
What ever happened to our “Kinder, Gentler Nation”? Whatever happened to empathy and helping those who are truly in need. We spend Billions of dollars in government give aways to other countries and neglect our own people at home. This is indeed a sad loss of compassion for this country.
any comments?
