My recent work has documented the targeted solicitations from lenders that consumer debtors receive after filing Chapter 7 bankruptcy and highlighted the industry’s ability to profit from financially vulnerable consumers. One of that paper’s findings was ubiquity of credit card solicitations. Over 92 percent of debtors interviewed in the Consumer Bankruptcy Project reported that they had received a credit card solicitation. If they live in New Hampshire, bankruptcy debtors may need to accept one of those postbankruptcy credit cards if they want to stay in the good graces of the New Hampshire Bankruptcy Court. Why?
The main parking garage for the U.S. Bankruptcy Court in New Hampshire will no longer accept cash as payment for parking in the garage. The garage owner (a private company) has installed machines that require payment with a credit card to lift the gate to permit patrons to park. Apparently, there is virtually no street parking and few alternatives for garage parking (but note that I have not been to New Hampshire to verify this). The Bankruptcy Code requires attendance at a meeting of creditors (called a 341 meeting after applicable statute) and these meetings are held in the same building as the U.S. Bankruptcy Court in Manchester, New Hampshire. In addition to the new BAPCPA requirements of credit counseling, financial education, pay stubs, tax returns, consumer debtors now may need a credit card to receive a bankruptcy discharge.
Consumer debtors can expect most of their credit cards to be cancelled when the creditor receives notice of the bankruptcy. These Americans are instantly cardless, and as a matter of policy, we may want them to remain that way–at least for a short period after their bankruptcy. Indeed, if the debtor requires Chapter 13 bankruptcy, they are required to seek the permission of the trustee before incurring new postpetition credit. In New Hampshire, will the chapter 13 trustee view the need to park when attending the 341 meeting or a plan confirmation hearing as a valid reason to let debtors get new credit? Should Chapter 7 debtors accept one of the dozens of credit card offers they get in the first month of their bankruptcy or should they walk, bike, snowmobile, etc to the bankruptcy court?
Comments
8 responses to “Bankruptcy Court Tells Debtors To Charge It”
cute, but a bit over the top considering that there exists a mc/visa branded “card” that is debit not credit.
Your fictional debtor would just need a checking or savings account with that very common feature.
Or get a ride, take the bus,…
I assume that you are right that a debit card that is processed through the VISA or MC network would work at the parking garage, and I agree that if so, that would ameloriate much of the issue. However, the information distributed by the court employee said “credit cards only”–it didn’t say credit and debit cards, and I’m not sure that we can expect consumers to understand the mechanics of how different kinds of debit cards are processed–through a bank network with a PIN or through VISA as a pinless transaction. The message is the same–you need a credit card to get along in everyday America. Several debtors complained about this perceived reality in the after-bankruptcy interviews in the Consumer Bankruptcy Project, saying that they didn’t want a card but they were worried about being able to check in at an airline, rent a car, etc.
As to the bus, while Manchester has public transport, this seems to be the only location in the state for court, and debtors in rural areas do not have a public transportation option.
Oh, please — what BS. I know this area well, and there is usually ample street parking as well as a city garage less than 1/4 mile away which happily accepts cash. Sensationalism.
The expressway (VA 267) between Dulles Airport and Leesburg, VA is a toll road. When leaving Dulles the only way to pay at the un-manned booth is a credit (or presumably a debit) card or an electronic toll monitoring box that only “locals” would have; (in California we call it FasTrak). A visiting driver without a credit/debit card cannot access the expressway.
Ahh – an opportunity for my pet-peeve. Why the cavalier attitude toward debit cards? I can rarely see the justification in their use. It is a far greater hassle and disruption if one’s account is wiped out by something that goes wrong from its use.
Ah, that’s the Free Market making things better for all citizens. Oh wait, no…
Maybe Katie’s example is over the top (or maybe not). But the reality that not having a credit card can dramatically affect the life style of consumers in America is … well, real. Of course people can somehow get along, and many do. But its myopic to think that nothing changes when one no longer has access to a credit (or debit) card. Suppose your job involves sales and travel. You can’t rent a car without a credit card. You can purchase airline tickets, but its a lot harder. Suppose you are an over the road trucker. Ever thought about how much filling up the tank costs? What if you have a breakdown on the road? You could carry lots of cash, but if I were a trucker, I certainly wouldn’t take that chance.
Still, I’m amazed (and impressed) with the number of debtors who come out of bankruptcy vowing never to use a credit card again. And many of them somehow find a way to do it.
It’s amazing how the obvious irony of the situation appears to have been completely beyond the comprehension of the the posters up to now. Lends some degree of credence to the adage:
“They are propagandized the most, who think themselves propagandized the least.”
Of course if these posters have missed the irony – they’ll likely miss the above concept.