University Study Shows Newly-Bankrupt Consumers Receive More Than Twice As Many Credit Card Offers
By Jay Fleischman, New York Bankruptcy Lawyer on Aug 14, 2007 in Bankruptcy Myths, General Bankruptcy Information, Life After Bankruptcy
Katherine M. Porter, an associate professor at the University of Iowa and a principal investigator for the Consumer Bankruptcy Project, recently released the study “Bankrupt Profits: The Credit Industry’s Business Model for Postbankruptcy Lending.” Porter found that credit card issuers send more than twice as many card offers per month to consumers exiting Chapter 7 bankruptcy than to average Americans.
The study interviewed families at the one-year and three-year mark after emerging from bankruptcy. Porter found that nearly all the families had been offered new credit cards within a year after completing Chapter 7 bankruptcy. Of 341 families, nearly 88 percent received letters that mentioned their bankruptcy status. Twenty percent received solicitation letters from card issuers they had failed to pay as they went through the bankruptcy process.
Card issuers were successful in lobbying Congress to pass tougher bankruptcy filing requirements in the federal bankruptcy law enacted in October of 2005. Issuers argued that the stricter standards were needed to stop consumers that maxed out on their cards, then declared bankruptcy and wrote off their debts, according to Porter.
The study findings are counter to the issuers’ arguments, said Porter. Congress didn’t look hard enough at the behavior of credit grantors and instead focused on consumers, she said.
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Source: InsideARM.com
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