Bankruptcy

What is the Difference Between a Crack Dealer and a Creditor Soliciting a Bankruptcy Debtor?

By Nathalie Martin

The crack dealer leaves you alone once you're broke, right? I know bankruptcy debtors are seemingly better credit risks than average people because they cannot get another bankruptcy discharge for 8 years, and because they seemingly have less debt, but most people still find it unbelievable that creditors hotly pursue bankruptcy debtors in order to give them more credit. My view is that these creditors are also hoping to fuel credit addiction. One would hate to have people outside the credit market too long. They might get used to it. Katie Porter?s work on credit card solicitations and bankruptcy debtors is ground-breaking. I had almost forgotten about the intense solicitation of credit to bankruptcy debtors until I went back into the clinic this semester. A new thing since my last clinic semester (Summer 2003) is that the solicitations come sooner now, within days of the filing and certainly before the discharge. Also, the clear (rather than unspoken) theme of the solicitations is that the debtors have been through a hard time, that these financial problems are not their fault, and that the time has come to treat oneself. As both Katie and Elizabeth Warren have noted elsewhere on this blog, this is a far cry from what creditors said about debtors during bankruptcy reform. The ads also suggest that buying a car now, right after filing for bankruptcy, can improve your entire life. For example, check out this ad, received yesterday, just THREE days after filing for bankruptcy:

"As a soon to be discharged chapter 7 bankruptcy case, you will be receiving a lot of solicitations over the next couple of months. We here at Karl Malone Toyota are writing to you today, our neighbor, with an honest approach to selling you a vehicle. Karl Malone Toyota realizes that the last three months have been very hard for you and we would like to be the first to invite you to or showroom. Karl Malone Toyota welcomes the opportunity to show you what we can do to help you regain the excellent credit rating that you earned in the past.

First of all, I would like to dispel some myths about people who have filed bankruptcy. It will not take seven years to reestablish your good credit; this can be done quite easily, in less than a year. You will be able to once again have unsecured credit cards or a mortgage in the very near future. In order for these things to happen, you must act to rebuild your credit immediately. While you won?t be able to go and get a mortgage right away, you can easily receive a secured car loan today at Karl Malone Toyota. Our Automotive Finance Team here is second to none. They secure automobile loans for recently filed or open bankruptcy every day.

Are there advantages to buying a new or pre-owned car or truck today at Karl Malone? Absolutely! Aside from treating yourself to a new or pre-owned car or truck from our huge inventory, you will be immediately posting positive high credit to all three credit bureaus. A payment history of as little as three months on a vehicle will provide you with numerous unsecured credit card offers. As you continue to re-establish your excellent credit rating, the bankruptcy will no longer weigh in the credit decisions banks make about you. In less than two years, you can buy in the home of your dreams, with unsecured credit cards and a beautiful and reliable vehicle. It is all up to you. Give me a call today at? "

Please forgive the analogy, but this reminds me of ads for certain feminine products, claiming that with the use of these products, one can scuba dive, horseback ride, swim, and so on. Is the implication that one can do these things now, even if one could not do so before? Amazing all the good that one car loan can bring?

Full post as published by Credit Slips on May 30, 2008 (boomark / email).