Dash for Bankruptcy Costs Discover Over $200 Million

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Dash

for Bankruptcy Costs Discover Over $200 Million

Morgan Stanley

announced Wednesday that its Discover Bank division will see

pre-tax charges in the fourth quarter of fiscal 2005 increase

by $200 to $250 million over those experienced in the third

quarter. Discover blames the charges on a rush of personal bankruptcies

declared to beat an October change in bankruptcy law.

Federal

bankruptcy legislation passed earlier this year makes it more

difficult for individuals declaring bankruptcy to be completely

shielded from creditors. While this promises to help credit

card companies recoup more money in future bankruptcies, Discover

and other credit card issuers are taking a short-term hit thanks

to the many consumers who rushed to beat the October 17th deadline.

Published 11/03/05 (Modified 01/21/13)