NEWS: Quick! Go Bankrupt!

Under the revised law, debtors who earn more than the median income in their state and who can repay at least $6,000 of their debt over five years will no longer be able to have their debts wiped out for a fresh start under the more generous provisions of Chapter 7 of the bankruptcy code. Instead, they will have to seek protection under Chapter 13, which requires a repayment schedule. In addition, under the new provisions, they will have to enroll in a court-supervised financial counseling program.

The rise, which lawyers and bankruptcy experts say is driven in large part by people who say they fear that it will become much more difficult to escape debt and seek a clean slate under the new law, appears to have caught some bankers and lawyers by surprise.

When the new bankruptcy bill was passed by Congress last spring, bankers predicted it would turn many people away from the protection of the courts by making it harder to extinguish debt. That may still turn out to be the case. But thus far, it has been a rush to the courts in many places.

[Dolores] Hawks, who is 56...lives in Ontario, Ore., just over the Idaho state line. After years of odd jobs, she took out loans on credit cards to go to business school and learn office skills. Once out of school, she found she had a rare nerve disease that she said kept her from holding a job. The debts piled up, even after she got rid of her credit cards.

She paid just enough to satisfy the credit card minimum payment, she said, but never advanced out of the loop of perennial debt on the interest.

"I was paying interest on the interest," Ms. Hawks said, "it was $5,000, and I never got ahead of it. Month after month after month. Finally, I just got tired of it. I said, 'I've had enough.' "

She had heard enough about the changes in the bankruptcy law to feel that it was important to file this summer rather than wait until all provisions of the new law took effect in October, she said. "I had to do something," said Ms. Hawks, who now lives on $656 a month in Social Security disability. "I decided to do it now rather than later."

Keith said:
But what did they do about predatory lending practices? Oh yeah, that's right, nothing.

jake_lex said:

I think I'd rather borrow money from the Mob than get a credit card with certain companies. At least with the Mob, you know when to pay and what happens if you miss your payment.

padriec said:
Protecting rich bankers at the expense of the poor, the sick and the unlucky. Bushonomics at its best. Here's to hoping that a human makes it into the White House in 2008.

sixtenblue said:

Sorry, Pad, but many prominent Democrats backed this one. In fact, there was little, if any, organized Democrat resistance to this little gem of corporate ass kissing legislation. Bush economics? Nope. Economics of the rich and powerful - quite bipartisan.

padriec said:
Protecting rich bankers at the expense of the poor, the sick and the unlucky. Bushonomics at its best. Here's to hoping that a human makes it into the White House in 2008.

sixtenblue said:
Sorry, Pad, but many prominent Democrats backed this one. In fact, there was little, if any, organized Democrat resistance to this little gem of corporate ass kissing legislation. Bush economics? Nope. Economics of the rich and powerful - quite bipartisan.

Holden_Caulfield said:

I wouldn't call 151 legislators voting against the measure little, if any, resistance.

sixtenblue said:

"Organized resistance" means a concerted effort to oppose the bill. For example, in the Senate 14 Demos voted AYE, while 25 voted against, with Hillary conspicuously abstaining (she's a prime example of what's wrong with the Democratic party). Fully 35% of the Demos voted for the bill in the Senate. This does not show organized resistance. Point taken, I hope.

Let's move on to the House vote, where GovTrack tells us that 73 Democrats voted YES vs. 128 against. Again, that's quite a large block of pro-S 256 Democrat support. A huge block, in fact. Far from organized resistance. In fact, this vote shows organized capitulation, nothing less.

Sorry, Dems . . .I love you quite a bit . . . but you aren't what you say you are. I know that hurts, and the fact that your votes for Democratic candidates are, more or less wasted in that they don't get you what you want, is a bitter pill. Who are you going to put your faith in? Hillary? Obama? God, but that is sad. You MUST demand more from your representatives. Supporting the charade only betrays your future. Believe me, I wish progressives did have a Party to turn to in the United States. I really, really do.

bones_708 said:
I guess few if anyone sees bankruptcy as a bad thing. I'm not really talking about this law in paticular, but if the debt is your's you should pay it. The "get out of jail free card" has been used to often if you ask me. Chapter 7 is great for the debter, but chapter 13 seems fare to both parties so whats the problem?

bones_708 said:
I guess few if anyone sees bankruptcy as a bad thing. I'm not really talking about this law in paticular, but if the debt is your's you should pay it. The "get out of jail free card" has been used to often if you ask me. Chapter 7 is great for the debter, but chapter 13 seems fare to both parties so whats the problem?

s5 said:

the problem is that lenders haven't been responsible about who they extended credit to. as just one example, they flood college age kids with credit card offers, approve all of them, keep raising the credit limits, and later on, they secretly raise their interest rates when the debtor is late on a single payment. suddenly the debt is impossible to pay. yet despite their predatory practices, credit card companies whined to congress and got their way.

the bottom line is that responsibility goes both ways. if consumers keep defaulting on their credit, the correct solution, from the bank's perspective, is to stop handing out credit cards like candy. instead they changed the rules in the middle of the game, and it's going to fuck over millions of people and harm the economy in the process.

and just in time for christmas. retailers and small businesses live and die by their fourth quarter sales, but thanks to the new rule (part of this new bankruptcy law), minimum payments are set to double. this is going to fuck over millions of retailers and small businesses, now that their customers have less disposal income than they did before the new rules.

this law is bad for everyone, except the banks. which is why citizens on both sides of the political fence were united in opposition to this law before it passed. (seriously. go back and read freerepublic. i've never seen so many hard right conservatives rage against a bill that lefties were just as opposed to.) but congress was deaf to the people who pay their salaries. disgusting. no one who voted for this travesty deserves reelection.

bones_708 said:

I understand those issues *shrug* I just see it different. The higher min payment will be a good thing in a few years tho I know it will fuck somepeople (maybe me) for a while, but the idea that you can pay your min and never pay your card off? Thats kind of fucked. I also see that they are not removing chapter 7 just raising the bar for who can use it. My point stands that I think if you can pay you should. Blaming the lenders while may be valid should not excuse personal responsability.

MisterSatan said:
Man, now I wanna file for bankruptcy just out of spite.

Attack_Macaque said:
Not mentioned in this article is the fact that, in conjunction with this bankruptcy law taking effect, banks are also being required to change their minimum monthly payment requirements in order to "encourage" people to pay off their debt faster. Many people are going to see their monthly payments double, literally overnight, and those who aren't able to meet these payments are going to be faced with the new requirements of the bankruptcy law. Couple that with the continually rising price of gasoline and rising interest rates, not just for credit card debt but also for auto and home equity loans, and you have a recipe for economic disaster for many people.

And yes, this is the fault of the Republicans. The fact that this bill was backed by a few DINO turncoats like Joe "MBNA" Biden doesn't change the fact that it was proposed by Republicans, passed with virtually no Republican opposition in a Republican-controlled Congress, and signed into law by a Republican president with a shit-eating Republican smirk on his face. What's really funny is that many of the people who are going to find themselves on the receiving end of this right-wing assfucking are people who used their votes to put the Republicans into power because they couldn't stand the thought of gay people being allowed to marry and evolution being taught in their public schools. Yeah, karma's a bitch, ain't it?

s5 said:

if you're concerned about personal responsibility, then you should be outraged that congress has just given an entire industry a blank check to behave as recklessly as they want, with absolutely no consequences. believe it or not people work for banks, and they too have the obligation to behave responsibly. congress, however, seems to disagree.