t r u t h o u t : : Special Interests "Giddy" Over Bankruptcy Victory
As well they should - they're having their cake and eating it, too:
Supporters of the legislation beat back a variety of attempts to force lenders to cut fees, expand disclosure and curtail what critics have called the abusive marketing tactics of banks and credit card companies. The supporters also fended off a series of amendments that would have curtailed what critics said were the abusive bankruptcy practices of corporations like Enron and WorldCom...
...When it takes effect, six months after it is signed by the president, the new law will disqualify many families from taking advantage of the more generous provisions of the current bankruptcy code, which since 1898 has permitted bankruptcy filers to extinguish their debt for a "fresh start."
In its place, the bill would impose a means test that would force many people to file for bankruptcy protection under Chapter 13, which requires a repayment plan. The means test would not be applied to debtors who earn less than the median income in their state. Those who earn more than that, and can pay at least $6,000 over five years, would have to seek protection under Chapter 13, rather than the more generous provisions of Chapter 7.
Of course, now that consumers can no longer declare bankruptcy to rid themselves of debt - why, I'm sure lenders' rates will just drop through the floor!
Supporters of the legislation beat back a variety of attempts to force lenders to cut fees, expand disclosure and curtail what critics have called the abusive marketing tactics of banks and credit card companies. The supporters also fended off a series of amendments that would have curtailed what critics said were the abusive bankruptcy practices of corporations like Enron and WorldCom...
...When it takes effect, six months after it is signed by the president, the new law will disqualify many families from taking advantage of the more generous provisions of the current bankruptcy code, which since 1898 has permitted bankruptcy filers to extinguish their debt for a "fresh start."
In its place, the bill would impose a means test that would force many people to file for bankruptcy protection under Chapter 13, which requires a repayment plan. The means test would not be applied to debtors who earn less than the median income in their state. Those who earn more than that, and can pay at least $6,000 over five years, would have to seek protection under Chapter 13, rather than the more generous provisions of Chapter 7.
Of course, now that consumers can no longer declare bankruptcy to rid themselves of debt - why, I'm sure lenders' rates will just drop through the floor!
posted by Management at 12:01 PM
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House Passes Bankruptcy Bill; Overhaul Now Awaits President's Signature
By Stephen Labaton
The New York Times
Friday 15 April 2005
Washington - The House overwhelmingly approved a major overhaul of the nation's bankruptcy laws on Thursday, completing Congressional action on the measure and sending it to President Bush.
The 302-to-126 vote adopted the first significant revision of the bankruptcy laws in 27 years and is the culmination of years of intensive lobbying by the nation's largest banks, credit card companies and retailers, who have complained about what they say is a rising tide of abusive bankruptcy filings.
It is a victory for Mr. Bush, who supported the measure, and a setback for civil rights, labor and consumer organizations. They say the new law will be a huge giveaway to special interests at the expense of middle- and lower-income families.
Those groups say that abuses of the bankruptcy system are episodic, not systemic, and that the increase in filings over the last 30 years is a symptom of other societal problems, like the growing number of uninsured families facing high medical bills. They also link the increase to the sharp rise in promotion by credit card companies, banks and retailers of easy credit often accompanied by hidden and high fees.
Supporters of the legislation beat back a variety of attempts to force lenders to cut fees, expand disclosure and curtail what critics have called the abusive marketing tactics of banks and credit card companies. The supporters also fended off a series of amendments that would have curtailed what critics said were the abusive bankruptcy practices of corporations like Enron and WorldCom.
In a statement, President Bush commended the vote. "These common-sense reforms will make the system stronger and better so that more Americans - especially lower-income Americans - have greater access to credit," he said.
The Senate passed the same bill last month by a vote of 74 to 25.
When it takes effect, six months after it is signed by the president, the new law will disqualify many families from taking advantage of the more generous provisions of the current bankruptcy code, which since 1898 has permitted bankruptcy filers to extinguish their debt for a "fresh start."
In its place, the bill would impose a means test that would force many people to file for bankruptcy protection under Chapter 13, which requires a repayment plan. The means test would not be applied to debtors who earn less than the median income in their state. Those who earn more than that, and can pay at least $6,000 over five years, would have to seek protection under Chapter 13, rather than the more generous provisions of Chapter 7.
The median income for a family of four in 2003 was $65,093, ranging from $45,867 in New Mexico to $82,561 in Massachusetts, according to the United States Census Bureau.
The bill would also impose significant new costs on those seeking bankruptcy protection and give lenders and businesses new legal tools for recovering debts. It would make it more difficult for some people to try to shelter their assets through the purchase of expensive homes in states like Florida and Texas, which have homestead exemptions. It also imposes new barriers to filing a series of successive bankruptcy filings over the years.
Supporters of the measure were giddy on Thursday. The National Retail Federation issued-and then tried to rescind-a statement it had inadvertently sent out by e-mail hours before completion of the measure, applauding Congress for approving the bill.
"It feels like we've been waiting as long to pass bankruptcy reform as Washington spent trying to get baseball back in town," said Steve Pfister, the senior vice president for government relations at the retail federation. "The House hit one out of the park today. Now we're just waiting for President Bush to cross home plate by signing this bill into law."
Mr. Pfister said the legislation would lower costs for all consumers because they wind up making up the difference on the unpaid debts of those who abuse the system.
But others disagreed.
Opponents of the legislation said that the move by Congress was a harsh attack on the poorest and most needy and came just one day after the House adopted a measure of huge potential benefit to the wealthiest when it voted to eliminate the estate tax.
"The G.O.P. is practicing Robin Hood in reverse," said Representative John Conyers Jr. of Michigan, the ranking Democrat on the House Judiciary Committee. "Last night they repealed the estate tax, a gift to the wealthiest individuals in our society. Today they pushed through the special-interest bankruptcy bill, punishing the very poorest members of society. This shows all the world that all of that talk about values in the last election was just that - talk."
In fact, 73 Democrats joined the 229 Republicans in voting to approve the measure. It was opposed by 125 Democrats and Bernard Sanders of Vermont, the lone Independent in the House.
The legislation had been opposed by many bankruptcy law professors and judges who testified in recent months that it was unnecessary and would create more problems than it would solve. They said that it would impose new obstacles on many middle-income families seeking desperately needed protection from creditors, and that it would take far longer for those families to start over after suffering serious illnesses, unemployment and other calamities.
In a letter to Congress two months ago, 104 bankruptcy law professors predicted that "the deepest hardship" would "be felt in the heartland," where the filing rates are highest -Utah, Tennessee, Georgia, Nevada, Indiana, Alabama, Arkansas, Ohio, Mississippi and Idaho. A study conducted by legal and medical specialists at Harvard University of 1,771 personal bankruptcy filers in five federal courts found that about half were forced into bankruptcy because of heavy medical costs.
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