Bankrupcy and the bloggosphere...

An unlikely alliance has tried to - and failed - to fight the new bankrupcy bill that makes it harder to declare bankrupcy.

Most people - including Jane Galt's excellent summary - cast the debate into two sides - customers who declare bankrupcy and and credit card companies who tend to encourage it.

There is a third party that I think tends to get lost in the debate - the majority of credit card users, who bear the costs of bankrupcy. See, the way I look at it, when Big Evil Credit Card Company has to write off bad loans, they don't take it out of the CEO's salary. They increase their fees, interest rates, and decrease rewards programs so that they can pay for that bad debt. Making it harder to file for bankrupcy may hurt the poor, or those who have been unlucky and run up medical bills or been jobless, or those who don't bother reading the fine print on credit card applications. However, it also helps people who use credit responsibly.

Mad Anthony says this as someone who loves credit cards. I use the float on them as an interest free loan - it lets me buy stuff and not have to pay for it for a month. I also try to primarily use rewards cards - Discover Gas for gas and Amex for everything else. More bankrupcy costs may well lead banks to cut payment time and decrease reward programs, hurting credit users like myself.