Bankruptcy Bill

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Bankruptcy Bill

If the Republicans and the bipartisan Democrats are so concerned about the economy, why are they pushing this bankruptcy bill?

President Bush and the spineless Democrats, may have just turned this recession

into a long hard recession! Democratic Senate leader Tom Daschle

agreed to limit the debate on a bill that seeks to make it harder for

individuals to wipe out their debts.

Under this Bankruptcy reform it will simply be impossible to wipe out debt through a trip

to bankruptcy court. That means many will still be responsible for paying

off debt even if it means taking the money out of alimony and child support.

According to the New York Times http://www.nytimes.com/2001/03/14/politics/14BANK.html?pagewanted=2

Perhaps the bill's most important provision is a requirement that people who meet a certain income test — generally, that they have enough income to pay off at least 25 percent of their debts over five years — be barred from filing under Chapter 7 of the bankruptcy code, which allows people to erase most of their unsecured debts.

Instead, they would be forced to file under Chapter 13, which requires some repayment under a court-approved plan. Currently, about three out of four people file for bankruptcy under Chapter 7. When debtors choose Chapter 13, it is often because they want to take advantage of the provision that allows them to keep their homes.

The bill would continue to allow the unemployed or people with relatively low incomes to file under Chapter 7, but it would impose several new logistical hurdles on them, including additional paperwork and the completion of a credit-counseling program.

Supporters of the law include the banking and credit card industry who claim

that bankruptcy laws are being abused by people who can afford to pay back

their debts.

"All of us end up paying for the unscrupulous who abuse our system," said

Senator Orrin G. Hatch, the Utah Republican who is chairman of the Judiciary

Committee. "People with high incomes can run up massive debts, and then use

bankruptcy to get out of honoring them."

Senator Charles Grassley R-Iowa has stated that consumer debt is

often the result "of the eroding moral values of some people."

Trouble is there are so many loopholes in the law for the wealthy people the

proponents claim to be targeting, that they are just outright lying when

they claim that the law is designed to curb such abuses. For instance.the

law does nothing to end the loophole that allows millionaires to hide their

assets by buying a mansion, which can be shielded from creditors under the

homesteading exemption.

There is also an exemption for wealthy people who owe at least 15 million dollars to Lloyd's of London.

excerpt from the Washington Post http://washingtonpost.com/wp-dyn/articles/A48588-2001Mar9.html

The provision is an attempt by American investors to win a long-running battle with Lloyd's that they have lost in British courts. Lloyd's depends on tens of thousands of wealthy individuals and companies to provide funds for underwriting its insurance. When Lloyd's suffered enormous losses in the late 1980s and 1990s, investors were expected to use their assets to cover the claims.

Many investors originally balked at the billions in losses, but most eventually settled, including many of the 3,000 American investors. But about 10 percent of the Americans refused, contending that they were misled about the risk and accusing Lloyd's of fraud.

The provision in the bankruptcy bill, which the Senate expects to vote on next week, would prevent Lloyd's from collecting money from those American investors, unless the insurer could prove its case in a U.S. court. U.S. courts have thus far refused to hear these cases, saying that British courts have jurisdiction over British contracts.

"This is another example of how hopelessly skewed the bankruptcy bill is," said Travis Plunkett of the Consumer Federation of America, a nonprofit advocacy group. "Wealthy investors get a bailout from their financial obligations, while Americans of modest means must confront harsh new bankruptcy barriers." Consumer groups say the bankruptcy bill will hurt middle and lower-income families struggling with debts because of divorce, ill health or job loss.

According to Tompaine.com http://www.tompaine.com/opinion/2001/02/14/index.html

Though the bill's proponents say its goal is to crack down on abuse, abusive filings are the exception, not the rule. The median income of the average American family filing for a Chapter 7 bankruptcy is just above $20,000 per year, Senator Chris Dodd (D-Conn.) said in a Senate conference report on the new bankruptcy bill on December 7, 2000. Most of those filing are single women/heads of household, elderly people struggling with medical costs, people who have lost their jobs, or families going through divorce.

Meanwhile their standards for extending credit have declined. According to Salon http://www.salon.com/politics/feature/2001/03/12/bankruptcy/index1.html

Yet that argument is belied by the credit industry's own aggressive marketing. Even while complaining of consumer irresponsibility, credit card companies are marketing their Visas and MasterCards and Discovers ever more aggressively, extending consumer credit to unheard-of heights, and returning with unprecedented profits. According to the Consumer Federation of America, in the third quarter of 2000 alone, credit companies mailed out 2.5 billion solicitations, extended 13 percent more credit than a year earlier and enjoyed profits at a five-year high.

Among the groups lobbying hard for the bill is a group called the National Consumer Bankruptcy Coalition (NCBC). This lobby was formed two years ago. It's members include Visa, Mastercard, MBNA America Bank, American Banking Association, and the American Financial Services Association.

According to Tompaine.com http://www.tompaine.com/opinion/2001/02/14/index.html

NCBC's nine reported members contributed more than $5 million to federal parties and candidates during the 1999-2000 election cycle, a 40 percent increase from the last presidential election year. That doesn't include the hundreds of thousands, in some cases millions, contributed by members of each individual trade association -- a roster that includes major political givers like credit card giant MBNA America Bank, a $3.1 million donor to political campaigns last year and the overall top contributor to Bush's presidential campaign.

But even that's not all the money that's being spent on this issue. Aside from banks, credit unions and finance and credit companies (which contributed at least $30 million during the last elections, more than two-thirds of which went to Republicans), gambling interests (which contributed $9.4 million; 51 percent to Democrats), including some of Las Vegas's biggest casinos, also are pushing for bankruptcy reform, according to their lobbying filings.

According to Salon http://www.salon.com/politics/feature/2001/03/12/bankruptcy/index.html

Credit card companies and banks together gave $37.7 million to candidates and parties in 2000, according to Federal Elections Commission figures analyzed by Public Campaign, the campaign-finance-reform lobby. That's up 75 percent from 1998. And 61 percent of last year's donations went to Republicans.

Bush and the Spineless Democrats claim to be concerned about the recession, but doesn't a law like this practically guarantee a prolonged recession? After all, poor people who are much more likely to spend their money, will be using it to pay off debt rather then spending it and generating economic growth. Bono of the band U2 is seeking debt relief in Congress for the third world because it is strangling third world economies. http://www.dropthedebt.org/ Might it have the same affect on the American economy? Are we going to become one of the debtor nations? Some how I don't think George's piddly tax cut is going to be enough to offset the damage done by this awful bill. The lies that the Republicans are being allowed to get away with over something that affects so many ordinary people, particularly in an economic downturn, and all the press can focus on is Mark Rich.

Now our Senate leader Tom Daschle has agreed to limit debate on something that obviously affects the natural constituencies of the Democratic Party. I just don't know how to contain my anger. Sometimes I think "The Democratic Underground" people should start putting our more spineless Congressmen on their top ten right wing jerks list. Needless to say, I think BI-partisanship is a real bummer. Everyday, I must defend the party from Green critics, and when some of our Democrats do everything they can to look as though they no different from the republicans, it makes it all the more hard. The thing is, it only takes a few of them to swing things in favor of the republicans to ruin our ability to function. 10 democrats in the House passed the tax bill. 8 democrats in the Senate allowed Ashcroft to be Attorney General. Just a few, to ruin things for all those sincere democrats, those serving in public office, and the party activists. Shame on you Tom Daschle!

If you would like to tell Tom Daschle how you feel this is his email address. web_comments@daschle.senate.gov

update 3/17/01

extend a big "Shame on you!" to the 36 democrats who eventually voted for the bill!

Daniel Akaka (Hawaii) senator@akaka.senate.gov

Max Baucus (Montana) http://www.senate.gov/~baucus/EmailMax.htm

Evan Bayh (Indiana) http://bayh.senate.gov/webmail.html

Joe Biden (Delaware) senator@biden.senate.gov

Jeff Bingaman (New Mexico) senator_bingaman@bingaman.senate.gov

John Breaux (Louisiana) senator@breaux.senate.gov

Robert Byrd (West Virginia) senator_byrd@byrd.senate.gov

Maria Cantwell (Washington) http://cantwell.senate.gov/mailform.html

Jean Carnahan (Missouri) senator_carnahan@carnahan.senate.gov