squashed by debtDuring the week of September 20, 1998, the US Senate agreed to debate a bill (S 1301), intended to make it more difficult for people of means to use bankruptcy to walk away from debt. Those who could pay at least 20 percent of their unsecured debt (credit card balances) would be steered by judges to file for Chapter 13 bankruptcy, which entails some repayment. They no longer would qualify for Chapter 7, which requires little or no repayment. The bill also would provide more collection tools to lenders such as credit card companies, stores and banks. An estimated 1.35 million Americans filed for bankruptcy last year, up 25 percent from 1996 and double the 1986 level, according to participants in the debate.


(Excerpted from "VOTES IN CONGRESS " )

  • Who will be helped and who will be hurt if this bill becomes law?
  • How would this legislation work as an incentive (or disincentive) to consumers?
  • How might creditor behavior change if this legislation is enacted?

According to some consumer advocates, creditors have been guilty of aggressively marketing to consumers who have just filed for bankruptcy.

Read the article, "US Consumer Debt Soars $7 Billion in One Month "

  • What consumer group seems to be the target of a marketing push for new credit cards?
  • What do you suppose is behind the increase in the volume of home equity loans coupled with the decline in revolving consumer loans?

Many consumers are attempting to manage heavy loads of unsecured credit card debt. It makes sense to carefully evaluate the consequences of choosing to own and use a credit card.

Visit the Bankrate website to read "Understanding the Fundamentals: Credit Card Basics ."

  • According to the article, what are the pros and cons of having a credit card?
  • Can you think of more pros and cons?

Read Foil the 6 Most Common Consumer Credit Complaints to learn about the credit problems some consumers have experienced.

  • What's the best strategy for reducing credit card debt? Pay off smaller balances first and then tackle the larger ones?
  • What is a potential drawback of obtaining a credit card with a low interest rate?