John Edwards on the Bankruptcy Bill
Subtitled, "The Right Way to Flip-Flop":
Like a lot of Democrats, I voted for a bankruptcy reform bill before. I can't say it more simply than this: I was wrong.
The bill is supposed to crack down on irresponsible borrowers. That's the right thing to do. The problem is that this bill imposes big burdens on families who did everything right but went broke just because they lost a job or lost their health insurance. And, even more than the legislation I supported, this bill doesn't crack down on the real abusers.
Like a lot of Democrats, I voted for a bankruptcy reform bill before. I can't say it more simply than this: I was wrong.
The bill is supposed to crack down on irresponsible borrowers. That's the right thing to do. The problem is that this bill imposes big burdens on families who did everything right but went broke just because they lost a job or lost their health insurance. And, even more than the legislation I supported, this bill doesn't crack down on the real abusers.
posted by Management at 9:27 PM
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This morning Elizabeth Warren and her students invited me to say a few words about the bankruptcy reform bill. I'm grateful for the opportunity.
I'm now spending a lot of my time tackling the challenges of poverty, but I learned a lot about bankruptcy on the campaign trail last year. I saw how many good families end up broke and poor, and
how they need the safety net of a fair bankruptcy law if they're going to get back on their feet.
Like a lot of Democrats, I voted for a bankruptcy reform bill before. I can't say it more simply than this: I was wrong.
The bill is supposed to crack down on irresponsible borrowers. That's the right thing to do. The problem is that this bill imposes big burdens on families who did everything right but went broke just because they lost a job or lost their health insurance. And, even
more than the legislation I supported, this bill doesn't crack down on the real abusers.
Two million Americans go bankrupt every year, but you might never know it. People keep it to themselves. They're ashamed about what has happened to them. But they aren't alone-these families are our neighbors, our brothers, our friends. And I've listened to so
many people tell me how their life was on track until hardship hit. Thanks to Professor Warren, we now know that half of families going broke suffered illnesses or high medical costs.
These men and women want to pay their own way, but they can't. They can't because the hospital wants $135,000 to cover the heart operation and the plant just cut back their hours. They can't because the bank is about to foreclose on a predatory loan unless
they can pay $40,000 in 48 hours. They can't because they lost their job and now the electric company wants a few hundred dollars more just to turn on the lights.
This bill won't do anything to give struggling families more security. It will only make it harder for good and decent people to start over. The new means test that will mean hundreds of dollars in new legal fees for families who barely have money to put
food on the table.
If we want real reform, we shouldn't punish every hard-working family looking for another chance. But we should get serious about the biggest abuses.
In some states, a multimillionaire CEO can drive his company into the ground, declare bankruptcy, and still keep his mansion-tennis court, Jacuzzi, and all. The 2001 bill at least stopped that by capping the "homestead exemption" at $125,000. This bill will
allow many multimillionaires to protect their mansions if they plan ahead.
We've also seen the credit card companies and predatory lenders become more aggressive. Today, many Americans have seen their interest rates triple to 29% or higher-not because they missed a payment, but just because they lost a job and needed another loan. Many more Americans are losing their homes because lenders
have hidden points and fees in their loans. These companies are making billions by kicking people when they're down. This bill does nothing to stop them.
Unfortunately, we know what the outcome today is going to be. But that doesn't mean we should give up the fight-it means we have to fight harder. If we want to stop bankruptcies, we need to address their real causes, like rising health costs. We need to stop the
abuses by the credit card companies and the predatory lenders. We need to make sure all families, and especially those who are poor, can build their savings and assets so they have some security if something goes wrong. It won't be easy, but it can be done.
That's what being American is about--standing with people who are struggling to do right, and taking on anyone who tries to take advantage of them.
If you want to learn more about the work I'm doing, I hope you'll check out my webpage.
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