God help the poor. I said it to my wife in November 2000, and I'm saying it again now.
If the federal government had set forth with the intent of crushing the lower and middle classes this coming winter, it couldn't have done a much better job.
The first blow is set to land on Monday. That's when a new federal law goes into effect, making it
very difficult for individuals to claim bankruptcy. Now, I'm not going to claim that nobody has abused the existing bankruptcy laws -- I know a few people who have.
However, it has also been my personal observation that most people honor their debts as best that they are able, and view bankruptcy as a 'worst case survival' alternative should all else fail. It's a safety net, and that safety net is being cut down.
The next blow is due to land in November. That's when another new federal law goes into effect,
increasing and potentially doubling the minimum payment required on credit card debts. For someone with a marginal credit rating and the average household amount of credit card debt, $10,000, that could easily mean a $250/month increase in monthly minimum payments.
Predatory lenders like Capital One and Providian thrive on people who are deep in debt. Combined with the ridiculous interest rates they're able to ask (I've seen them well over 20%), they make a tidy profit on late payment fees -- often $30/month or more.
For a lower-middle class family that's struggling, often it comes down to a decision of whether to pay the credit card bill on time or to put groceries in the cupboard, and that extra $30 fee seems unavoidable.
The minimum payment increase alone might be enough to drive a number of households close to the poverty level into bankruptcy. Oh, wait... isn't that interesting?
The killing blow will land sometime over the next few months, when
energy costs are expected to spike 50% or more. That might not seem like a huge deal to those living in warmer states, but here in the north, and through the midwest, it's a disaster.
At current gas and fuel oil prices, a good-sized, older house or duplex (like those that make up the lower class neighborhoods in Erie and Pittsburgh, and many throughout rural PA in general) can cost up to $300/month to heat during a cold snap. Bump that up to $450.
I started writing this thinking that rising energy costs were more a result of bad luck than government SNAFU, but that's not really true. We have the war in Iraq to thank in major part for the rising cost of oil, excabarated by
repeated supply-chain disruptions in Iraq. (Those ongoing 'last throes' we keep hearing about.) Thanks, George.
And finally, to add assrape to injury, my home state of Pennsylvania has recently enacted legislation to
reduce the minimum delinquency period required prior to shutoff for utilities. The float time between delinquency and shutoff of a utility can be a lifesaver for a poor family (literally, in the winter).
I don't know offhand if the electric and gas suppliers are still restricted from shutting off utilities during the winter months, but I sure hope so. Otherwise, we're going to be seeing frozen bodies pulled out of the houses of seniors on fixed incomes, as well as an increase in carbon monoxide poisonings and fire casualties resulting from the use of unsafe heating sources.
Like I said, God help the poor.
energy costsiraq warbankruptcy lawminimum credit paymentspoverty in Americapredatory lending
Generally, I try not to toot my own horn, but I do carve a badass pumpkin. That's an original design, not a Pumpkin Masters stencil.
