GA Considers Taking Options From People in Financial Straits | Beaufort County Now | The response to the COVID-19 outbreak has caused an economic downturn in America. | john locke foundation, general assembly, taking options, financial straits, coronavirus, covid-19, september 7, 2020

Coronavirus Disease 2019 (COVID-19)

GA Considers Taking Options From People in Financial Straits

Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Brenee Goforth.

    The response to the COVID-19 outbreak has caused an economic downturn in America. Many businesses and families will likely have to make difficult choices about their finances for months — potentially years — to come. One option available to many North Carolinians is debt settlement, a private alternative to filing for bankruptcy. This week, JLF's Jon Sanders analyzed a North Carolina House Bill that would prohibit this practice. Sander writes:

  • North Carolina's economy is reeling under the impacts of the COVID-19 pandemic and Gov. Roy Cooper's drastic restrictions. With businesses locked down or only allowed to open halfway at best, families are piling on loans to keep afloat while businesses that still can are taking on enormous debts to survive...
  • The last thing policymakers should do is make things even harder for people trying to piece their lives back together. But that would be the effect of expanding North Carolina's prohibition against debt settlement, which is what House Bill 1067 would do.

    Sanders explains debt settlement:

  • Currently, debt settlement companies in NC cannot receive their fee until after their client's debt has been settled...
  • A North State Journal op-ed from Tomas Gordon, CEO of the debt settlement firm ClearOne Advantage, explains how debt settlement works for those who need it[:]
    • Debt settlement offers financially distressed consumers a federally regulated, private-sector alternative to bankruptcy, enabling them to settle their debts for less than they owe and to remain productive, contributing members of their communities. Debt settlement companies negotiate with consumers' creditors to settle debts for less than what the consumers owe, providing a much-needed lifeline in the midst of economic uncertainty.
    • A May 2020 study by Harvard Kennedy School Professor Will S. Dobbie found that "individuals enrolling in debt settlement programs receive an average debt write-down of 33.2% on settled accounts after accounting for fees." The same study found that, on average, consumers in debt settlement programs see $2.64 in debt reduction for every $1 in fees.

    HB 1067 would remove this option for persons headed towards insolvency. Sander writes:

  • From a distance, paying a fee to someone to help settle your debt sounds like being taken advantage of when you already can't afford it. Closer up, however, seeing your debt reduced by two and half dollars for every dollar you pay in fees sounds like a rational decision, especially to avoid bankruptcy and the fallout from that.
  • Worse outcomes tend to happen when paternalistic policymakers decide that other people are making irrational choices that aren't in their best interests and the only way to save them is to take those choices away. A general rule of thumb for policymaking should be that more choices are better.

    Read Sanders' full brief HERE. Read more from Sanders on the John Locke Foundation website HERE.


HbAD0

Latest Op-Ed & Politics

Judicial Watch’s Twitter account was purged of nearly 200,000 followers, and I’ve lost over 10 percent of my followers.
Mary Kay Linge writes for the New York Post about one U.S. senator’s interesting take on the second impeachment of Donald Trump.
Yes, it’s January, not June, and you may feel as if you’re finally settling into a routine during a challenging school year.
The Supreme Court tossed two lawsuits accusing former President Donald Trump of violating the Emoluments Clause of the Constitution on Monday, ending a roughly four-year legal battle over the former president’s businesses.
Commissioners Vote To Keep Budget Deliberations Away From the Public
Bars that had their liquor licenses suspended due to COVID-19 shutdowns may have gotten a reprieve, thanks to a deal announced by the head of the House ABC Committee and the chairman of the state ABC Commission.
Nancy Murdoch examines information on the Covid 19 vaccine

HbAD1

So much is made of the Cancel Culture, which is as real as Trump Derangement Syndrome; however, the Impeachment Culture, as an offshoot of this Cancel Culture, has NOW won the day for the religiously Woke.
Although Twitter had not taken large-scale action against popular Antifa Twitter accounts during President Trump’s tenure, allowing Antifa more latitude to organize their efforts at creating chaos, this week, after President Biden was inaugurated, Twitter suspended some of those Antifa-related accou
Biden caught on camera admitting he does not know what he is signing, but does so anyway
Now that President Biden has been sworn in as the 46th president, he wants to hit the ground running and attend to urgent priorities.
Brittany Bernstein of National Review Online highlights one disappointing opening-day action from the new Biden administration.
Is the “Jet Pack Guy” who has been spotted several times flying miles in the sky near Los Angeles airport really a “guy”? Or is it just a drone dressed up to look like a guy?
The fall 2020 semester did not go as planned for most students and many felt that their universities failed them.
Ross Marchand writes for the Martin Center about the new president’s approach to higher education policy.

HbAD2

 
Back to Top