Credit Card Companies want to forgive 40% of debt

ith defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills. Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy. The new pilot program, which the banks hope will become permanent, could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower’s financial situation, up to a maximum of 40 percent. “There’s obviously a financial benefit to the financial institutions to step up to the plate right now,” said Susan Keating, president and chief executive of the National Foundation for Credit Counseling. “We absolutely support the proposal.”

This means Cap One and Discover are in big trouble if the above is happening

I saw this somewhere as well and it is ridiculous. Great lesson to teach people if you spend to much or you get under water in your mortgage the gov’t will come in so don’t worry about spending more then you make…and where is my bailout for not over spending…I guess more taxes is my present… And another lesson the Obama govt teaches america if you are making too much money we’ll tax you more, i.e. rich people and Exxon for example and if you do shitty we will throw money your way, i.e. poor people, finance companies, auto industry… this is completely messed up thinking and needs to stop.

Time to buy an LCD?

^^^Yea I guess so the gov’t is footing the bill.

Is the U.S. government footing the bill or are banks simply going to try to work with the customers to recover as much debt as possible, then write off the rest? “Current government rules don’t allow lenders to offer repayment plans that reduce the amount of principal owed and borrowers to repay the balance over a period of several years. In cases where the principal can be reduced, under credit card settlements, borrowers normally are required to pay off the remainder over months rather than years.”

as long as the credit report agencies are involved (and some kind of negative scores goes on teh deadbeat’s records) its fine. otherwise its outrageous.

Yeah this would kill your credit if you agreed for them to forgive your debt. Sounds like a mainstream publicized personal bankruptcy program.