It seems that many credit card holders, even those with 'strong credit records' are becoming unable to repay their balances, and can't qualify for any repayment options. (Big Surprise!)
The card companies wanted federal approval for a program to forgive up to 40% of the debt.
At first, this sounded like a good plan to me, but there was a catch: The companies wanted to be able to defer official recognition of any losses to them for several years, making their current books look healthier and saving the bad news for later years, when, presumably, the bottom line would be flush again and could take the hit.
The gov said a firm 'No' to that. Probably a wise idea. Better to take your lumps all at once and get it over with.
Besides, the article noted that only about 50,000 credit card holders would likely be involved in the program, which seems like it was targeted at higher income customers with very large limits and therefore huge balances.
The assistance was to come in the form of forgiven debt, which the borrower would not have to declare as income on their taxes for several years. When they finally did declare it, the credit companies would then declare the loss. Really does sound like a sweetheart deal between the credit companies and their richest customers.
No plan that helps so few when many, many, more are in trouble should ever be approved.
Glad it got canned, then...
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