Poverty deemed as #1 reason for massive credit card debt

["Taiwan Church News" <enews@pctpress.org>]

3108 Edition

September 19-25, 2011

Headline News

Poverty deemed as #1 reason for massive credit card debt

Reported by Chiou Kuo-rong

Written by Lydia Ma

“Poverty is the main source of credit card debt!” That is Lin Yung-shung’s 
answer whenever anyone asks him why credit card debtors find it impossible to 
pay their bills. Lin is a church elder of Chinan Presbyterian Church and a 
consultant for Debtors Association. His answer often surprises people as 
they’re accustomed to assuming that overspending and wastefulness are the chief 
reasons why so many people are drowning in credit card debt.

Members of Debtors Association assembled at Liberty Square in Taipei on 
September 18, 2011, where they performed a short play to explain why so many 
people have credit card debt. The play was about collusion between businessmen 
and government officials to beguile average consumers – an illustration of how 
banks have been taking advantage of legal mechanisms such as minimum payments 
and revolving credit to mislead consumers into making purchases and borrowing 
money that turn out to be high-interest loans.

Lin underscored that whenever credit card debts reach litigation, courts rarely 
listen or side with consumers, which is the main reason for this rally at 
Liberty Square. Though consumers are legally protected by the Debt Liquidation 
Act that allows them to settle their debts through mediation with banks via 
debt liquidation and other means, only 24% of debts are reevaluated and reduced 
during litigation and merely 9.5% of debts are forgiven. Such ratios are 
extremely low in contrast to the USA, Japan, and Germany, whose ratios can 
reach up to 90% or so.

The reason for these low ratios in Taiwan is because the courts basically don’t 
allow debt forgiveness or debt reduction, which is actually contrary to the 
Debt Liquidation Act. “Under such circumstances, the Debt Liquidation Act is 
merely an illusion and the courts aren’t doing their jobs in solving social 
problems,” he said.

According to reports from DGBAS, about 1.5 million people in Taiwan are living 
on deficits.

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