Tougher Bankruptcy Law Haunts Card Issuers, For Now

Law360, New York (February 9, 2006, 12:00 AM EST) -- After spending more than eight years and $100 million lobbying for tougher bankruptcy laws, early estimates suggest that credit card companies are seeing their efforts boomerang with losses of hundreds of millions of dollars in uncollectible debt.

According to a recent Federal Reserve survey, the stampede of consumer bankruptcy filings induced by the enactment of last October’s bankruptcy law has increased fourth-quarter chargeoffs taken by banks on credit card loans.

While the survey, released earlier this week, showed that only about half of the banks reported...
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