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.
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