Friday, February 11, 2005

UPDATE: The Price of Getting Sick

Last week, I made note of a Harvard study released in Health Affairs, which concluded than nearly 50% of personal bankruptcies in America were as a direct result of medical costs associated with an illness or hospitalization. The bottom line is that, contrary to conventional wisdom (said "wisdom" being propagated by credit card companies), it doesn't take a major financial setback to push the average person into bankruptcy court.

When I wrote the original "Price of Getting Sick" posting last week, I opined that this was the year in which credit card companies and banks would get lucky with bankruptcy reform, a topic that's been back-burnered since late in the Clinton administration.

This morning, I find I was right. They're working fast. It's not taking the GOP long to pay back their "base":

Republican leaders in Congress began clearing the way yesterday for swift passage of legislation backed by the credit card industry and opposed by consumer groups that would make it harder for consumers to wipe out debt through bankruptcy...

Even after someone has gone through bankruptcy proceedings, it takes a long, long time to get back on their feet. The Baron's of the Manor are now poised to make personal financial recovery an absolutely impossible feat for many people. In other words, a lifetime of (for lack of a better phrase) indentured servitude.

No word yet if the bill will be amended to include a provision for debtors prisons.

Kate has written previously about becoming almost Calvinistic regarding personal finances - in other words, cut up the credit cards (save one or two low limit / low rate cards for emergencies), quit buying "on time", and get out of debt. Oh, and don't get sick.

In a rare total lack of snarkiness on my part, anyone currently residing on the financial edge should get in touch with a lawyer ASAP. Two weeks from now, the opportunity to petition for relief from one of life's most onerous problems (and more importantly, protect assets such as a house from seizure) may no longer be available.