Banks asking for credit card debt forgiveness...

[Engineer]

Click me!

Hurry guys, run out there and max those cards out. Your bailout might be coming, lol. In all seriousness, what does this mean? Why does the government have to "forgive" the debt? Shouldn't the bank simply forgive debt or is this something to do with writing it off, etc?

I want my bailout too!!!

 

[MotF Bane]

Wonderful. :/

 

[JS80]

WHERE DO I SIGN UP?

lol this is fucking bullshit

 

[Infohawk]

And there would be a tax benefit. Borrowers would be able to defer payment of income taxes they owe on the forgiven part of the debt until after the remainder was paid off. The lenders could wait until then to book their loss on the forgiven debt.

"Both parties win," Talbott said.

But the people of the US lose.

This sounds awful. It's none of my business if lenders want to give up their rights to go after debtors, but I'm not paying for it and the government shouldn't have to give up taxes.

 

[frostedflakes]

Good to hear banks working with customers. As long as this doesn't involve more handouts from the government, I'm all for it. Of course, these customers credit ratings should be ruined IMO so they have to live within their means for a while before they even think about getting another card, borrowing for a home, etc.

Interesting quote at the bottom. Nice to know there are some people out there who are willing to take responsibility for their actions and aren't always looking for a handout.

June Selby, who nearly filed for bankruptcy three years ago when she was buried under nearly $32,000 in school loans, saw both sides but said she didn't like the idea of anyone getting a free ride.

Selby, 60, worked with credit counselors to pay off nearly half the balance and is on track to be debt free by 2011.

"If (the proposal) makes it possible to maintain a sense of integrity and pay back debt without going into bankruptcy, that's one thing," said Selby, a certified nurse in Lawrenceville, Ga.

But she said she was against the idea of a free handout for people who've simply been irresponsible.

"There just has to be some accountability. Nobody is bailing me out. I had to work very hard to keep from bankruptcy and foreclosure," she said.

 

[Thump553]

From the linked article, here is the reason:

And there would be a tax benefit. Borrowers would be able to defer payment of income taxes they owe on the forgiven part of the debt until after the remainder was paid off. The lenders could wait until then to book their loss on the forgiven debt.

The program would allow forgiveness of only up to 40% of the debt, and you would still be liable for income tax on the amount of the forgiven debt, it just won't come due until you have finished paying the bank. Mighty genereous of them, isn't it?

If anyone is in this situation, talk to an attorney or a good tax expert. If you are insolvent you are not liable for income tax on forgiven debt. For example, if you file bankruptcy (Ch 7 or 13) you do not incur this income tax liability.

Hardly a win-win situation, this is more of a win for the bank with a minor benefit for the debtor (the amount of forgiven debt less the income tax liability incurred, factor in the continued pain of paying the bank).

Edit: to answer the OP's question, the bank wants this program so they can hide their losses until the payment plan is done, so their books now look better than they actually are.

 

[ponyo]

Of course the banks are not doing this out of the goodness of their heart. But this sounds better than lot of the recent BS.

Nice guys finish last.

 

[sandorski]

Being a Banker right now must be more awesome than usual.

 

[chess9]

This is the next shoe to drop because credit card losses are getting out of control. Toss in some high unemployment numbers in the coming months and the banks will have serious losses.

I don't see why we should keep bailing out banks. Since I didn't support the first bailout bill, I can't think of any reason why I would support this one. But, I'll let LegendKiller come in and give us another legend about why this is good for the 'markets'.

-Robert

 

[Jhhnn]

Heh. I suspect lenders are trying to have it both ways- "Forgive" debt to get massive write-offs, then slam consumers for huge interest fees on what's left, using the principle of "global default".

Beware of bankers bearing gifts- read the fine print very, very carefully...

Hell, you may need a team of financial experts to even understand the fine print...

 

[Drift3r]

Originally posted by: Jhhnn
Heh. I suspect lenders are trying to have it both ways- "Forgive" debt to get massive write-offs, then slam consumers for huge interest fees on what's left, using the principle of "global default".

Beware of bankers bearing gifts- read the fine print very, very carefully...

Hell, you may need a team of financial experts to even understand the fine print...

Of course this is a fucking scam. Does anyone with a IQ above 70 believe these banks are truly trying to help out those in debt out of the goodness of their hearts? They saw what they could get with housing loan scam they pulled now they want to see how much the Fed's will cough up for credit card debits. I have a very strong feeling very little if any of this will go toward helping those truly in debt. Of course the apologist for the banks will make more excuses as to why these banks are victims in all of this despite the fact that they are the ones in control of the loan/credit card situation from start to end.

 

[dmcowen674]

Originally posted by: Drift3r

Originally posted by: Jhhnn
Heh. I suspect lenders are trying to have it both ways- "Forgive" debt to get massive write-offs, then slam consumers for huge interest fees on what's left, using the principle of "global default".

Beware of bankers bearing gifts- read the fine print very, very carefully...

Hell, you may need a team of financial experts to even understand the fine print...

Of course this is a fucking scam. Does anyone with a IQ above 70 believe these banks are truly trying to help out those in debt out of the goodness of their hearts?

They saw what they could get with housing loan scam they pulled now they want to see how much the Fed's will cough up for credit card debits. I have a very strong feeling very little if any of this will go toward helping those truly in debt.

Of course the apologist for the banks will make more excuses as to why these banks are victims in all of this despite the fact that they are the ones in control of the loan/credit card situation from start to end.

This is still part of the Republican tactics.

Giving a name to something that has the exact opposite meaning.

This is the ultimate Screw the Consumer Over Act.

 

[jpeyton]

Christmas is going to be awesome this year.

 

[alphatarget1]

Well... A lot of the debt is interest (very high interest) accured... If the consumers can at least pay back the principal + some interest it wouldn't sound so bad.