Good point Meya about the debt consolidation ads. To add to that, it will reduce the number of BK filings and because they can pay it back interest-free it will help that consumer to maintain their credit or get their credit back in order while they are getting back on their feet without getting ripped off by those debt consolidation places. And maybe we can see some relief from all them fees the banks charge: AF, fee for BT, phone fee, payment fee, cs fee, just because I called in fee , you name it are the results of the losses from BK filings and non-pays that are in the billions. I see it as a win-win

I saw this on the news yesterday. I think it is a smart move for those who are on the edge of bk or is suffering from the economic crisis. To me it is just another wrap around debt consolidations. I always see the ads on TV about companies that stop collections from calling your house and settling for pennies on a dollar. Creditors are going to settle that way, so why not introduce the 40/60 plan themselves!

This is a good discussion.

Are you saying that those who had no other choice but to file BK or was seriously financially distressed were not a responsible consumer? I am a responsible consumer but that does not negate the fact that if heaven forbid I were to get sick and get slapped with mounds of medical bills, still have to feed my family amongst income being drastically reduced let alone a credit card limit being decreased and I get behind on my bills that somehow I no longer fit into the responsible consumer category because I have now become seriously financially distressed and have to file BK or take the 40/60 offer?

The story is geared toward those experiencing serious hardships not those who just want to get out from under their debt just because they don't feel like they should pay. Mind you they still have to pay 60% or more of their debt just spreaded out over 5 years. The proposal is "up to 40%" of the debt. Or better yet, let them continue as they are doing and write it all off as in most cases of BK and we still pay high APR and continue to get our "consumer responsible" credit limits decreased for bs reasons.

This isn't fair for responsible consumers.

I think what they are saying is that if individuals are at a point where they CAN file BK, it would be better to negotiate a 40/60 rather than it being discharged in BK. Remember BK filings has been astronomical in the past 10 years, this has attributed to this so-called meltdown, I am not saying it is the source, I said attributed as well as loose purse strings brought on by Greenspan and Co.

Also take into consideration the lawsuit that Citi Bank settled on a while ago and part of the settlement states that any Citi card holder as of 2006 or before that has a balance of $1750 or more does not have to re-pay it, yet they still offered CLIs to those same people. Why? Revenue and Losses. In the case of the USA Today story, banks can forgive debt whenever they want, the current rules is that they have to take it as a loss within the same year which would not be cost-effective for them nor will it look good on Wall St. that they are taking a loss and that is why they want to get permission to spread these losses over the course of 5 years. I see their point from a financial perspective. I see your point about the irresponsibility of SOME people but I will also say that any of us can fall into the face of BK, losing a job or getting sick can make that happen. So if they can work this out, I am all for it. From a financial perspective, we all will benefit from it.

When you have time everyone please read this article:

http://www.usatoday.com/money/industries/banking/2008-10-30-credit-cards_N.htm?loc=interstitialskip

Can you believe this ? To actually forgive 40% of someone's debt and give them liberal time to pay off the remainder of what's owed ? So what about us who have paid on time, every time, not went out and charged something having no idea of how were going to pay it off, out utilization is under 3% and we have basically played by the rules? In a nutshell this is the irresponsible getting a second chance. Not cool..............