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Friday, March 11, 2005

I Am Begging

Please read this post. Please consider what I am saying. Please pass it on. This is about the bankruptcy bill currently before Congress.

This website has excellent information about it.(Thank you, Marty at American On Line for sending this link!) There is still time to stop the bill. It is going back to the house now. Contact the president at president@whitehouse.gov and let him know that if he gets this bill he's going to have to veto it (Clinton did). Contact your congressional representative. This website has a list of all the senators who voted for it (every single Republican and far too many Democrats). Contact them. Write your local paper. Call your local paper. Go to church and talk to everyone there this Sunday. Take a paper with the list of your local representatives and get them to call. Put up a flyer at your local supermarket. The House must be deluged with objections before they vote on this. Time is of the essence.

Here is what an independent, highly respected investment advisor like the Motley Fool says. Ask yourself why someone like that thinks this is a bad bill? In all too many cases it will wipe out people who are responsible and hardworking who have suffered misfortune which is morally wrong and BAD FOR THE ECONOMY:
The expected changes are designed to make more people file Chapter 13 instead of Chapter 7, thereby leading to fewer debts being wiped out. Charge card companies that may benefit include MBNA (NYSE: KRB), American Express (NYSE: AXP), Capital One Financial (NYSE: COF), and Citigroup (NYSE: C). Krugman, who leans left of center, decried the changes as rewarding the credit card industry while hurting us: "The bill would make it much harder for families in distress to write off their debts and make a fresh start. Instead, many debtors would find themselves on an endless treadmill of payments."

The Consumer Federation of America is also on record as opposing the changes. It points out that the enormous law -- more than 500 pages long -- is chock-full of "loopholes" and "restrictions" that will make things tough for Americans in trouble. For example, your income over the past six months will partly qualify or disqualify you. But if you're in trouble because you just lost your job, that income isn't really there anymore.
I read the friggin' bankruptcy bill - all 500+ pages of it. It was not a pleasant experience, especially since you have to go interpolate the changes into existing law in some places to figure out what it is actually doing. But I did. Then I spoke to several people I know who are suffering financially (each one as a result of medical debt) and advised them to file bankruptcy within the next two months. One person I know of will not be able to. If this bill passes, he will not only lose his wife to cancer but their house as well.

It is a bad bill. To set up circumstances that favor unsecured lenders like credit card companies over gainful economic pursuits is terrible economics. Believe me, this bill is not in your interest, it is not in the economy's interest. It is in Providian's interest, MBNA's interest, but not in the country's interest. This bill basically takes away a judge's discretion to determine whether some of your debts are wiped out and you can keep your house, or whether you are forced into Chapter 13, in which you must pay some of your debts to keep assets such as your house and car. But if you fail to make your payments under Chapter 13, your bankruptcy is abrogated and creditors can go after your house, your car, etc. In all too many cases people will lose the assets they need to live and continue to earn an income. That costs you money. It's that simple. Do you have any idea of how many people live and work in their own homes, for example? This bill will be absolutely devastating for some rural areas. Choose between the credit card companies and the overall economy.

Do you understand what that means? If a person is forced into bankruptcy to stop wage garnishment for instance, and that person has a certain level of income, that person will be ordered to repay a portion of his debts over a period of 3 - 5 years. Well and good, if it was financial irresponsibility that brought him or her to that pass. But what if it was an ongoing circumstance like an illness, medical condition, or even worse, a child's illness? The likely result will be that such an individual or family will not be able to meet the repayment schedule and will lose his or her house. Is that fair? Is that what you want to happen? Will you enjoy supporting them on welfare when such a person has lost the car needed to get to work? It's going to happen.

Another problem with this bill is that it does nothing at all to curb truly abusive credit card lending practices. I have written about this problem here, and I have included a list of changes in the law which should be made before any bankruptcy reform bill is passed. Please ask your representative to incorporate these changes in law - doing this would stop a lot of unnecessary bankruptcies right now. I can tell you that lending practices have changed a lot just in the last 3 years, and not for the better. Irresponsible behavior should be taken into account before a person is protected from having to pay his or her debt. But a lifetime of responsible behavior and one year of bad luck should not wipe out everything a family has. Under this bill, it can.

Excellent post, as usual. Dingo, too, is on the same page- no surprise really- it's just a lousy bill.

The implications are huge.
GREAT post, MoM!
No, it is no surprise. Anyone who really looks the details figures out this bill is bad. Certainly this is not the kind of country we want to be.

I'm starting to wonder what those people we elect really do. They sure don't read the legislation they pass.

Esther, prod a few people into action. Every voice counts.
What I'd like to know is who wrote up the bill and who proposed it? I think if we single out the Congresscritters who did this, we might be able to make a punch that really hurts.
Do you mean pass the bill as it stands? If so, I don't agree. If you mean leave bankruptcy law as it is for now, I agree that would be a better option than passing such a bill without any consumer protections. Credit card practices alone as they have developed in the last three years have made this bill exceptionally dangerous. It will do nothing to change their practices - it will only encourage them.

The bill has been around for at least six years in essentially the same form. Clinton vetoed it once after it passed. Large creditors especially credit card companies were some of the ones pushing for it. Banking organizations. I don't know who originally sponsored it in Congress so long ago.
I love how congress tells us we need to be more responsible while creating the largest budget deficit in the history of our nation.
Right on. The irony is pretty excruciating, isn't it? And add to that that between income taxes and the social security tax, we are taxing people with relatively low incomes at historically unbelievably high rates....

Well, it's easy to see where our savings problem originated. This bill is not all bad, but it ignores some fundamental economic trends.
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