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Tuesday, February 7, 2012

the Big Business of Economic Suffering

Let us say a magic wand could be waived and there was no more bankruptcies, car repossessions or home foreclosures..  All debt in arrears were instantly and magically paid.

Question:  How (if at all) would economy be affected?

-  To start there'd be no need for bankruptcy attorneys and the thousands of dollars in fees they receive to represent you in bankruptcy court, or to take a portion of your monthly payments if you filed a Chapter 13 (repayment of a portion of your debts)  vs Chapter 7 (all debts wiped off books).  And so much money to be made if the debtor appeals the judge's findings..

So all those attorneys with their hundreds of thousands of dollars in student loans are out of work unless they go into different fields.  (And could you imagine those poor, poor bloodsuckers' fate if there was no crime, car accidents or divorces?)

And remember, bankruptcy attorneys advertise heavily on local TV stations and newspapers, so that ad revenue is gone--  'Poof!'

-  No need for bankruptcy judges either, so they'd have to find another area of law to express their intimidation of others.  In fact, the entire court system would lose out on all the money brought in annually from filing fees, sheriff's notices of services to your doorstep, etc Also, less bailiffs, sternographers, etc..
-  The post office would lose even more revenue than it does now.  Here's some fun math:  The average debtor receives at minimum 6 pieces of mail per month from creditors, legal offices, collection agencies, etc issuing warnings or threats.  Stamps cost 45 cents each so x 6 = $2.70/mo x 12 months = $32.40.

In 2011, over 1.5 million people filed for bankruptcy, so let's use that figure to demonstrate the number of Americans still waiting to file this year: 1.5 million people x $32.40 = $48.6 million.  That's how much, generally speaking, the US Post office generates in income annually Solely based on snail mail notices and warning letters to debtors.

-  Of course no need for collection agencies if nothing to collect so there goes thousands upon thousands of low paying, low skilled jobs held by mostly high school graduates with tough voices and tougher attitudes.

-  The repo industry takes a financial hit as well.. everyone from the people who literally take possession of  the debtor's car, HDTV, etc.. to the people who sell it to others at auction.

-  Then there's the good' ole credit companies and banks themselves..  How can they possibly offer people cards with 25-30% APR if everyone's credit score is in good shape and not damaged for 7-10 years from a bankruptcy?  How could a credit card like Orchard Bank get away with offering credit cards to those with bad credit for annual fees of $100-200 if no one with bad credit is to be found?  So many of those entry and mid-level jobs at banks and credit companies would have to be eliminated because no one to gouge.. tsk tsk..
So you see, bankruptcy is really good business.   It stimulates the US economy, which is why no one in a position of power wishes to do the slightest thing to make repayment of debts and avoidance of filing bankruptcy easier for those whose lives are being systematically destroyed.

To the government, you are not a person but  a statistic.  And you serve three functions:  Pay taxes, obey the law, and consume.   If you run out of money, use credit.  When that runs out, the mechanisms are in place to financially profit from your downfall.  And once you survive bankruptcy, mechanisms are in place to profit as you try rebuilding your life.   Once you succeed at restoring your credit and beginning your new life... well...  Happy Consuming!