Sen. Chuck Schumer (D-N.Y.) warned Republicans on Sunday that they are “playing with fire” by threatening to shut down government over their opposition to raising the debt ceiling and passing a budget in March.
As CEO of Wallace & deMayo, P.C., my law firm handled hundreds of millions of dollars in delinquent debts for over twenty years. Our job was to collect from debtors who failed or refused to pay their honest obligations.
Collecting past due debts is not a pleasant job. It involves negotiating with the debtor, trying to negotiate a settlement in which the parties reach a meeting of the minds to amicably resolve a contract debt. If an amicable arrangement is not possible, the filing of legal action to enforce payment is the only remaining option for the creditor.
During my twenty plus years in the industry I became familiar with a pattern of behavior about delinquent debtors in general. They almost always go through a period of time when the burdensome stress of debt is simply too much to bear. So, they are in denial that they are broke.
During this period of denial, there is a tendency to postpone the inevitable—the day when the consumer has to admit they are bankrupt. It’s painful to watch because the pattern is almost always the same. The consumer opens new credit card accounts, in order to obtain a cash advance to make a payment on the past due debt of another credit card. Another tactic is to transfer the past due debt of one credit card to a new credit card account created by the debtor.
As their debt problem worsens, the debtor will often resort to obtaining loans from family and friends. In other words, the tendency is to exhaust all remedies before admitting they are broke.
Listening to Senator Schumer’s comments reminded me of all those years in which I had to deal with debtors who were in denial about their bad debts. It’s sad to watch our national leaders overtly in denial about our nation’s honest obligations. It’s pathetic to watch them try to convince the American public that somehow we can borrow or spend our way out of the unsustainable debt burden. They are behaving exactly like a typical debtor.
There will be a day of reckoning — a day when the USA has to admit it cannot pay its debts. Every American family understands the need to balance the checking account, and it’s so unfortunately sad that our own government is unable to face up to the reality that we are a nation in denial. Our nation is still borrowing from Peter to pay Paul, except in this case Peter is not a relative, but rather China.Powered by Sidelines